<PAGE> 1
As filed with the Securities and Exchange Commission on July 22, 1998
Registration Statement No. 333-______
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PAXSON COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4832 59-3212788
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
---------------------
SEE TABLE OF ADDITIONAL REGISTRANTS
---------------------
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
(561) 659-4122
(Address, including zip code, and telephone number,
including area code, of registrants'
principal executive offices)
---------------------
ANTHONY L. MORRISON, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
(561) 659-4122
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
DAVID L. PERRY, JR., ESQ.
HOLLAND & KNIGHT LLP
625 N. FLAGLER DRIVE, SUITE 700
WEST PALM BEACH, FLORIDA 33401
PHONE: (561) 833-2000
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13 1/4% Cumulative Junior Exchangeable Preferred
Stock, par value $.001 per share............... 20,000 shares $10,000 $200,000,000 $59,000
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13 1/4% Exchange Debentures due 2006............. (2) -- -- (2)
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Guarantees of the 13 1/4% Exchange Debentures due
2006........................................... (3) -- -- (3)
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</TABLE>
(1) Represents the aggregate liquidation preference and liquidation preference
per share of the 13 1/4% Cumulative Junior Exchangeable Preferred Stock
being offered in exchange for outstanding securities of the registrant.
(2) Such indeterminate principal amount of Registrant's 13 1/4% Exchange
Debentures due 2006 as may be issuable upon exchange of the 13 1/4%
Cumulative Junior Exchangeable Preferred Stock. Pursuant to Rule 457(i), no
additional registration fee is required.
(3) This Registration Statement covers the Guarantees of the 13 1/4% Exchange
Debentures due 2006 to be issued by each of the Registrant's subsidiaries,
for which no additional consideration is to be received and therefore no
additional registration fee is required.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
INCORPORATION/ CLASSIFICATION IDENTIFICATION
NAME FORMATION NUMBER NUMBER
---- --------------- -------------- --------------
<S> <C> <C> <C>
PAXSON COMMUNICATIONS MANAGEMENT COMPANY................ Florida 8741 59-3212233
EXCEL MARKETING ENTERPRISES, INC........................ Florida 7313 59-2907133
PAXSON COMMUNICATIONS TELEVISION, INC................... Florida 4833 59-3283729
PAXSON COMMUNICATIONS OF ATLANTA-14, INC................ Florida 4833 59-3235962
PAXSON ATLANTA LICENSE, INC............................. Florida 4833 59-3291854
PAXSON COMMUNICATIONS OF BOSTON-60, INC................. Florida 4833 59-3283737
PAXSON BOSTON LICENSE, INC.............................. Florida 4833 59-3283741
PAXSON COMMUNICATIONS OF DALLAS-68, INC................. Florida 4833 59-3283742
PAXSON DALLAS LICENSE, INC.............................. Florida 4833 59-3283743
PAXSON COMMUNICATIONS OF NEW LONDON-26, INC............. Florida 4833 59-3283739
PAXSON COMMUNICATIONS OF PHILADELPHIA-61, INC........... Florida 4833 59-3283731
PAXSON PHILADELPHIA LICENSE, INC........................ Florida 4833 59-3283730
PAXSON COMMUNICATIONS OF MIAMI-35, INC.................. Florida 4833 65-0471066
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC............... Florida 4833 59-3233735
PAXSON SAN JOSE LICENSE, INC............................ Florida 4833 59-3233733
PAXSON COMMUNICATIONS OF TAMPA-66, INC.................. Florida 4833 59-3227558
PAXSON COMMUNICATIONS OF LOS ANGELES-30, INC............ Florida 4833 59-3295991
PAXSON LOS ANGELES LICENSE, INC......................... Florida 4833 59-3295992
PAXSON COMMUNICATIONS OF MINNEAPOLIS-41, INC............ Florida 4833 59-3295983
PAXSON COMMUNICATIONS OF ST. LOUIS-13, INC.............. Florida 4833 59-3295985
PAXSON MINNEAPOLIS LICENSE, INC......................... Florida 4833 59-3295988
PAXSON COMMUNICATIONS OF ORLANDO-56, INC................ Florida 4833 59-3297996
PAXSON COMMUNICATIONS OF HOUSTON-49, INC................ Florida 4833 76-0461469
PAXSON HOUSTON LICENSE, INC............................. Florida 4833 76-0461475
INFOMALL TV NETWORK, INC................................ Delaware 7313 59-3298735
PAXSON COMMUNICATIONS OF CLEVELAND-67, INC.............. Florida 4833 59-3319725
PAXSON COMMUNICATIONS OF WASHINGTON-60, INC............. Florida 4833 59-3319720
PAXSON WASHINGTON LICENSE, INC.......................... Florida 4833 59-3319719
PAXSON COMMUNICATIONS OF PHOENIX-13, INC................ Florida 4833 59-3295991
PAXSON PHOENIX LICENSE, INC............................. Florida 4833 65-0625875
INFOMALL LOS ANGELES, INC............................... Florida 4833 58-2217093
PAXSON COMMUNICATIONS OF MILWAUKEE-55, INC.............. Florida 4833 65-0625874
PAXSON COMMUNICATIONS OF DENVER-59, INC................. Florida 4833 65-0603895
PAXSON COMMUNICATIONS OF NEW YORK-43, INC............... Florida 4833 65-0611723
PAXSON NEW YORK LICENSE, INC............................ Florida 4833 65-0611721
PAXSON COMMUNICATIONS OF AKRON-23, INC.................. Florida 4833 65-0611718
PAXSON AKRON LICENSE, INC............................... Florida 4833 65-0611729
PAXSON COMMUNICATIONS OF DAYTON-26, INC................. Florida 4833 31-1446001
PAXSON COMMUNICATIONS OF BATTLE CREEK-43, INC........... Florida 4833 65-0628620
PAXSON COMMUNICATIONS OF ALBANY-55, INC................. Florida 4833 65-0628627
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
INCORPORATION/ CLASSIFICATION IDENTIFICATION
NAME FORMATION NUMBER NUMBER
---- --------------- -------------- --------------
<S> <C> <C> <C>
PAXSON COMMUNICATIONS OF RALEIGH DURHAM-47, INC......... Florida 4833 65-0628624
PAXSON COMMUNICATIONS L.P.T.V., INC..................... Florida 4833 65-0641981
PAXSON DAYTON LICENSE, INC.............................. Florida 4833 65-0645190
PAXSON DENVER LICENSE, INC.............................. Florida 4833 65-0645191
PAXSON COMMUNICATIONS OF PROVIDENCE-69, INC............. Florida 4833 65-0643775
PAXSON COMMUNICATIONS OF GREENSBORO-16, INC............. Florida 4833 65-0653894
PAXSON GREENSBORO LICENSE, INC.......................... Florida 4833 65-0653901
PAXSON COMMUNICATIONS OF TULSA-44, INC.................. Florida 4833 65-0653898
PAXSON SPORTS VENTURES COMPANY.......................... Florida 7313 65-0684001
PCC DIRECT, INC......................................... Florida 7313 65-0684251
PAXSON COMMUNICATIONS OF OKLAHOMA CITY-62, INC.......... Florida 4833 65-0682182
PAXSON ALBANY LICENSE, INC.............................. Florida 4833 65-0736665
PAXSON COMMUNICATIONS OF SACRAMENTO-29, INC............. Florida 4833 65-0685880
PAXSON SACRAMENTO LICENSE, INC.......................... Florida 4833 65-0685878
PAXSON COMMUNICATIONS OF SEATTLE-33, INC................ Florida 4833 65-0686130
PAXSON SEATTLE LICENSE, INC............................. Florida 4833 65-0717339
PAXSON COMMUNICATIONS OF SAN JUAN, INC.................. Florida 4833 58-2219553
PAXSON COMMUNICATIONS OF BOSTON-46, INC................. Florida 4833 65-0686132
PAXSON COMMUNICATIONS OF PHOENIX-51, INC................ Florida 4833 65-0686052
PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC............ Florida 4833 65-0688715
PAXSON LITTLE ROCK LICENSE, INC......................... Florida 4833 65-0688718
PAXSON COMMUNICATIONS OF BIRMINGHAM-44, INC............. Florida 4833 65-0688713
PAXSON BIRMINGHAM LICENSE, INC.......................... Florida 4833 65-0688718
PAXSON SPORTS OF MIAMI, INC............................. Florida 7313 59-3227303
PAXSON COMMUNICATIONS OF SALT LAKE CITY-30, INC......... Florida 4833 65-0717339
PAXSON SALT LAKE CITY LICENSE, INC...................... Florida 4833 65-0748582
PAXSON OKLAHOMA CITY LICENSE, INC....................... Florida 4833 65-0741346
PAXSON COMMUNICATIONS OF WASHINGTON-66, INC............. Florida 4833 65-0735951
PAXSON COMMUNICATIONS OF SCRANTON-64, INC............... Florida 4833 65-0735747
PAXSON SCRANTON LICENSE, INC............................ Florida 4833 65-0735746
PAXSON COMMUNICATIONS OF KANSAS CITY-50, INC............ Florida 4833 65-0712686
PAXSON KANSAS CITY LICENSE, INC......................... Florida 4833 65-0712711
PAXSON MILWAUKEE LICENSE, INC........................... Florida 4833 65-0740615
PAXSON COMMUNICATIONS OF HARTFORD-18, INC............... Florida 4833 65-0725446
PAXSON COMMUNICATIONS OF PITTSBURGH-40, INC............. Florida 4833 65-0731832
PAXSON COMMUNICATIONS OF DETROIT-31, INC................ Florida 4833 65-0735187
PAXSON DETROIT LICENSE, INC............................. Florida 4833 65-0735190
PAXSON PITTSBURGH LICENSE, INC.......................... Florida 4833 65-0735178
PAXSON COMMUNICATIONS OF ROANOKE-38, INC................ Florida 4833 65-0741687
PAXSON ROANOKE LICENSE, INC............................. Florida 4833 65-0741692
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
INCORPORATION/ CLASSIFICATION IDENTIFICATION
NAME FORMATION NUMBER NUMBER
---- --------------- -------------- --------------
<S> <C> <C> <C>
PAXSON COMMUNICATIONS OF FRESNO-61, INC................. Florida 4833 65-0742713
PAXSON FRESNO LICENSE, INC.............................. Florida 4833 65-0742709
PAXSON COMMUNICATIONS OF NASHVILLE-28, INC.............. Florida 4833 65-0744429
PAXSON TENNESSEE LICENSE, INC........................... Florida 4833 65-0744418
PAXSON COMMUNICATIONS OF CEDAR RAPIDS-48, INC........... Florida 4833 65-0744431
PAXSON CEDAR RAPIDS LICENSE, INC........................ Florida 4833 65-0744422
PAXSON COMMUNICATIONS OF BUFFALO-51, INC................ Florida 4833 65-0744433
PAXSON BUFFALO LICENSE, INC............................. Florida 4833 65-0744425
PAXSON COMMUNICATIONS OF GREEN BAY-14, INC.............. Florida 4833 65-0744427
PAXSON GREEN BAY LICENSE, INC........................... Florida 4833 65-0744417
PAXSON COMMUNICATIONS OF TUCSON-46, INC................. Florida 4833 65-0744426
PAXSON TUCSON LICENSE, INC.............................. Florida 4833 65-0744415
PAXSON COMMUNICATIONS OF NEW YORK-31, INC............... Florida 4833 65-0752309
PAXSON MIAMI-35 LICENSE, INC............................ Florida 4833 65-0752329
PAXSON TAMPA-66 LICENSE, INC............................ Florida 4833 65-0752325
PAXSON COMMUNICATIONS OF HAWAII-66, INC................. Florida 4833 65-0754528
PAXSON HAWAII LICENSE, INC.............................. Florida 4833 65-0754523
PAXSON COMMUNICATIONS OF LOS ANGELES-63, INC............ Florida 4833 65-0759231
PAXSON COMMUNICATIONS OF ALBUQUERQUE-14, INC............ Florida 4833 65-0766945
PAXSON COMMUNICATIONS OF FAYETTEVILLE-62, INC........... Florida 4833 65-0771647
PAXSON FAYETTEVILLE LICENSE, INC........................ Florida 4833 65-0771656
OCEAN STATE TELEVISION, L.L.C........................... Delaware 4833 59-3500171
UNITED BROADCAST GROUP II, INC.......................... Texas 4833 01-1758633
PAXSON COMMUNICATIONS OF CHARLESTON-29, INC............. Florida 4833 65-0780847
PAXSON CHARLESTON LICENSE, INC.......................... Florida 4833 65-0780849
JETSTAR DEVELOPMENT, INC................................ Florida 65-0779396
PAX NET, INC............................................ Delaware 4833 65-0789886
PAXSON TELEVISION PRODUCTIONS, INC...................... Florida 7812 65-0791898
PAXSON COMMUNICATIONS OF SYRACUSE-56, INC............... Florida 4833 65-0795912
PAXSON SYRACUSE LICENSE, INC............................ Florida 4833 65-0795915
PAXSON COMMUNICATIONS OF DECATUR-23, INC................ Florida 4833 65-0808800
PAXSON DECATUR LICENSE, INC............................. Florida 4833 65-0808801
PAXSON COMMUNICATIONS OF MEMPHIS-50, INC................ Florida 4833 65-0804519
PAXSON COMMUNICATIONS OF KNOXVILLE-54, INC.............. Florida 4833 65-0804455
PAXSON COMMUNICATIONS OF NEW ORLEANS-49, INC............ Florida 4833 65-0804451
PAXSON COMMUNICATIONS OF PORTLAND-23, INC............... Florida 4833 65-0806275
PAXSON ORLANDO LICENSE, INC............................. Florida 4833 65-0806278
PAXSON COMMUNICATIONS OF CHICAGO-38, INC................ Florida 4833 65-0806274
PAXSON CHICAGO LICENSE, INC............................. Florida 4833 59-3498673
PAXSON COMMUNICATIONS OF NORFOLK-49, INC................ Florida 4833 65-0814356
PAXSON ALBUQUERQUE LICENSE, INC......................... Florida 4833 65-0813266
PAXSON COMMUNICATIONS OF DAVENPORT-67, INC.............. Florida 4833 65-0813879
PAXSON DAVENPORT LICENSE, INC........................... Florida 4833 *
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
INCORPORATION/ CLASSIFICATION IDENTIFICATION
NAME FORMATION NUMBER NUMBER
---- --------------- -------------- --------------
<S> <C> <C> <C>
PAXSON COMMUNICATIONS OF DES MOINES-39, INC............. Florida 4833 65-0813632
PAXSON DES MOINES LICENSE, INC.......................... Florida 4833 65-0813637
PAXSON COMMUNICATIONS OF GREENVILLE-38, INC............. Florida 4833 65-0813242
PAXSON GREENVILLE LICENSE, INC.......................... Florida 4833 65-0813243
PAXSON COMMUNICATIONS OF JACKSON-51, INC................ Florida 4833 65-0815794
PAXSON JACKSON LICENSE, INC............................. Florida 4833 65-0815796
PAXSON COMMUNICATIONS OF MOBILE-61, INC................. Florida 4833 65-0815802
PAXSON MOBILE LICENSE, INC.............................. Florida 4833 65-0815806
PAXSON COMMUNICATIONS OF ODESSA-30, INC................. Florida 4833 65-0813873
PAXSON ODESSA LICENSE, INC.............................. Florida 4833 65-0813869
PAXSON PORTLAND LICENSE, INC............................ Florida 4833 65-0812841
PAXSON COMMUNICATIONS OF SHREVEPORT-21, INC............. Florida 4833 65-0813244
PAXSON SHREVEPORT LICENSE, INC.......................... Florida 4833 65-0813247
PAXSON COMMUNICATIONS OF SPOKANE-34, INC................ Florida 4833 65-0815799
PAXSON SPOKANE LICENSE, INC............................. Florida 4833 65-0815800
PAXSON COMMUNICATIONS OF ST. CROIX-15, INC.............. Florida 4833 65-0815807
PAXSON ST. CROIX LICENSE, INC........................... Florida 4833 65-0815808
PAXSON COMMUNICATIONS OF SPRINGFIELD-34, INC............ Florida 4833 65-0813669
PAXSON SPRINGFIELD LICENSE, INC......................... Florida 4833 65-0812840
S & E NETWORK, INC...................................... Puerto Rico 4833 58-2219553
CHANNEL 56 OF ORLANDO, INC.............................. Florida 4833 59-3288262
TRAVEL CHANNEL ACQUISITION CORPORATION.................. Delaware 4833 65-0766049
PAXSON COMMUNICATIONS OF WEST PALM BEACH-67, INC........ Florida 4833 65-0823013
PAXSON COMMUNICATIONS OF LEXINGTON-67, INC.............. Florida 4833 65-0826029
PAXSON LEXINGTON LICENSE, INC........................... Florida 4833 65-0826033
PAXSON COMMUNICATIONS OF PORTLAND-22, INC............... Florida 4833 65-0826031
PAXSON SALEM LICENSE, INC............................... Florida 4833 65-0826037
PAXSON COMMUNICATIONS OF SAN ANTONIO-26, INC............ Florida 4833 65-0826035
PAXSON COMMUNICATIONS OF FARGO-27, INC.................. Florida 4833 65-0831708
PAXSON TULSA LICENSE, INC............................... Florida 4833 65-0829209
PAXSON KNOXVILLE LICENSE, INC........................... Florida 4833 65-0829210
PAX NET TELEVISION PRODUCTIONS, INC..................... Florida 7812 65-0830580
PAXSON COMMUNICATIONS OF WAUSAU-46, INC................. Florida 4833 65-0831709
PAXSON WAUSAU LICENSE, INC.............................. Florida 4833 65-0834744
PAXSON FARGO LICENSE, INC............................... Florida 4833 65-0834741
PAXSON COMMUNICATIONS LICENSE COMPANY, LLC.............. Delaware 4833 *
COCOLA MEDIA CORPORATION OF SAN FRANCISCO............... California 4833 77-0448296
CHANNEL 44 OF TULSA, INC................................ Delaware 4833 86-0838608
COCOLA MEDIA CORPORATION OF FLORIDA..................... Delaware 4833 77-0406411
</TABLE>
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* Applied for.
<PAGE> 6
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JULY 22, 1998
PROSPECTUS
$200,000,000
(PAXSON LOGO)
PAXSON COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE SHARES OF ITS 13 1/4% CUMULATIVE JUNIOR EXCHANGEABLE PREFERRED
STOCK, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING SHARES OF ITS 13 1/4% CUMULATIVE JUNIOR EXCHANGEABLE
PREFERRED STOCK
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME ON ________ ,
1998, UNLESS EXTENDED
---------------------
Paxson Communications Corporation (the "Company") hereby offers to exchange,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (the "Exchange Offer"), up to 20,000
shares of the Company's new 13 1/4% Cumulative Junior Exchangeable Preferred
Stock, par value $.001 per share (the "New Junior Preferred Stock") that have
been registered under the Securities Act of 1933, as amended (the "Securities
Act") for up to 20,000 shares of the Company's outstanding 13 1/4% Cumulative
Junior Exchangeable Preferred Stock, par value $.001 per share (the "Original
Junior Preferred Stock"). The Original Junior Preferred Stock and the New Junior
Preferred Stock are sometimes referred to herein collectively as the "Junior
Preferred Stock."
The terms of the New Junior Preferred Stock are substantially identical in
all respects (including liquidation preference, dividend rate and maturity) to
the terms of the Original Junior Preferred Stock for which it may be exchanged
pursuant to this Exchange Offer, except that shares of the New Junior Preferred
Stock will be freely transferable by holders thereof (other than as provided in
the next paragraph) and issued free of any covenant restricting transfer absent
registration. For a complete description of the terms of the New Junior
Preferred Stock, see "Description of the New Junior Preferred Stock and New
Exchange Debentures". There will be no cash proceeds to the Company from the
Exchange Offer.
The Original Junior Preferred Stock was sold on June 10, 1998, in a
transaction not registered under the Securities Act in reliance upon exemptions
provided therein (the "Private Offering"). Accordingly, shares of Original
Junior Preferred Stock may not be offered, resold or otherwise pledged,
hypothecated or transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The New Junior Preferred Stock
is being offered to satisfy the obligations of the Company under the
Registration Rights Agreement (as defined herein) relating to the Original
Junior Preferred Stock. See "The Exchange Offer -- Purpose and Effect of the
Exchange Offer." Every holder receiving shares of New Junior Preferred Stock in
the Exchange Offer, other than a broker-dealer, will represent that it is not
engaging in or intending to engage in a distribution of such shares of New
Junior Preferred Stock. The Company is making the Exchange Offer in reliance on
the position of the staff of the Commission as set forth in Exxon Capital
Holdings Corp., SEC No-Action Letter (April 13, 1989), Morgan Stanley & Co.,
Inc., SEC No-Action Letter (June 5, 1991) and Shearman & Sterling, SEC No-Action
Letter (July 2, 1993). Based on the positions expressed in these no-action
letters addressed to other parties in other transactions, shares of New Junior
Preferred Stock issued pursuant to the Exchange Offer in exchange for shares of
Original Junior Preferred Stock may be offered for resale, resold or otherwise
transferred by the holders thereof (other than any holder which is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such shares of New Junior Preferred Stock are
acquired in the ordinary course of such holders' business and such holders have
no arrangement with any person to participate in the distribution of such shares
of New Junior Preferred Stock. Any holder who acquired shares of Original Junior
Preferred Stock in the Private Offering and who participates in the Exchange
Offer for the purpose of participating in a distribution of the New Junior
Preferred Stock may not rely on these no-action letters and would have to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any secondary resale. This Prospectus may not be used by such
holders to satisfy these requirements. Each broker-dealer that receives shares
of New Junior Preferred Stock for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any resale
of such shares of New Junior Preferred Stock. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. See "The Exchange Offer -- Purpose and Effect of the Exchange
Offer" and "Plan of Distribution." Broker-dealers may use this Prospectus, as
amended or supplemented, in connection with resales of the shares of New Junior
Preferred Stock received in exchange for the shares of Original Junior Preferred
Stock where such shares of Original Junior Preferred Stock were acquired by such
broker-dealer as a result of market making activities or other such trading. The
Company has agreed that, for a period of 180 days after the Expiration Date (as
defined herein), it will make this Prospectus available to any broker-dealer for
use in connection with any such resale.
There is no established trading market for the Junior Preferred Stock. Any
shares of Original Junior Preferred Stock not tendered and accepted in the
Exchange Offer will remain outstanding. The Company does not currently intend to
list the New Junior Preferred Stock on any securities exchange. To the extent
that shares of Original Junior Preferred Stock are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered shares of Original Junior
Preferred Stock could be adversely affected. No assurances can be given as to
the liquidity of the trading market for either the Original Junior Preferred
Stock or the New Junior Preferred Stock. The Junior Preferred Stock is expected
to be eligible for trading in the Private Offerings, Resales and Trading through
Automated Linkages (PORTAL) market.
The Exchange Offer is not conditioned on any minimum number of shares of
Original Junior Preferred Stock being tendered for exchange. The Exchange Offer
will expire at 5:00 P.M., New York time, on ________ __ , 1998, unless extended
(the "Expiration Date"). The date of acceptance for exchange of shares of
Original Junior Preferred Stock will be the first business day following the
Expiration Date. Shares of Original Junior Preferred Stock tendered pursuant to
the Exchange Offer may be withdrawn at any time prior to the Expiration Date;
otherwise, such tenders are irrevocable. The Company will pay all expenses
incident to the Exchange Offer.
(continued on next page)
---------------------
HOLDERS OF ORIGINAL JUNIOR PREFERRED STOCK SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 18.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR INADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is ________ , 1998.
<PAGE> 7
(continued from cover page)
Holders of the Junior Preferred Stock are entitled to receive, when, as and
if declared by the board of directors of the Company out of funds legally
available therefor, cash dividends or, subject to certain conditions, dividends
in the form of additional shares of Junior Preferred Stock. All dividends on the
Junior Preferred Stock will be cumulative, whether earned or declared, from the
Issue Date and will be payable at a rate equal to 13 1/4% per annum of the
liquidation preference per share, payable semi-annually beginning November 15,
1998 and accumulating from the Issue Date. Dividends may be paid, at the
Company's option, on any dividend payment date, either in cash or by the
issuance of additional shares of Junior Preferred Stock (and payment of cash in
lieu of fractional shares) having an aggregate liquidation preference equal to
the amount of such dividends. If dividends for any period ending after May 15,
2003, are paid in additional shares of Junior Preferred Stock, the dividend rate
will increase by 1% per annum for such dividend payment period.
The Junior Preferred Stock is redeemable, at the Company's option, in whole
or in part, at any time on or after May 15, 2003, at the redemption prices set
forth herein, plus, without duplication, accumulated and unpaid dividends to the
date of redemption. In addition, prior to May 15, 2001, the Company may, at its
option, use the net proceeds of one or more Public Equity Offerings (as defined
herein) or Major Asset Sales (as defined herein) to redeem up to an aggregate of
35% of the shares of Junior Preferred Stock (whether initially issued or issued
in lieu of cash dividends) at 113.25% of the aggregate liquidation preference
thereof, plus, without duplication, accumulated and unpaid dividends to the
redemption date. The Company is required to redeem all of the then outstanding
Junior Preferred Stock on November 15, 2006 at a redemption price of 100% of the
liquidation preference plus accumulated and unpaid dividends to the date of
redemption. Upon a Change of Control (as defined herein), the Company is
required to offer to purchase each holder's Junior Preferred Stock at a price
equal to 101% of the liquidation preference thereof, plus, without duplication,
accumulated and unpaid dividends to the date of purchase. The Junior Preferred
Stock ranks junior to all other existing classes of preferred stock and senior
to the Convertible Preferred Stock (as defined herein) and to the Common Stock
(as defined herein). As of March 31, 1998, pro forma for the Transactions (as
defined herein), there would have been outstanding $350.7 million of
Indebtedness (as defined herein) and $228.0 million aggregate liquidation
preference of Preferred Stock ranking senior to the Junior Preferred Stock.
Subject to certain conditions, the Junior Preferred Stock is exchangeable
in whole or in part on a pro rata basis, at the option of the Company, on any
dividend payment date, for the Company's 13 1/4% Exchange Debentures due 2006
(including any such securities paid in lieu of cash interest, as described
herein, the "New Exchange Debentures"); provided, that immediately after giving
effect to any such partial exchange, certain minimum amounts of Junior Preferred
Stock and/or New Exchange Debentures remain outstanding. Interest on the New
Exchange Debentures will be payable at a rate of 13 1/4% per annum and will
accrue from the date of issuance thereof. Interest on the New Exchange
Debentures will be payable semi-annually in cash or, at the option of the
Company, on or prior to May 15, 2003, in additional New Exchange Debentures, in
arrears on each May 15 and November 15, commencing on the first such date after
the exchange of Junior Preferred Stock for the New Exchange Debentures. The New
Exchange Debentures will mature on November 15, 2006 and will be redeemable, at
the option of the Company, in whole or in part, on or after May 15, 2003, at the
redemption prices set forth herein, plus accrued and unpaid interest to the date
of redemption. In addition, prior to May 15, 2001, the Company may, at its
option, use the net proceeds of one or more Public Equity Offerings or Major
Asset Sales to redeem up to an aggregate of 35% of the aggregate principal
amount of New Exchange Debentures (whether issued in exchange for Junior
Preferred Stock or in lieu of cash interest payments) at the redemption prices
set forth herein, plus, without duplication, accrued and unpaid interest to the
redemption date; provided, that after any such redemption certain minimum
amounts of New Exchange Debentures and/or Junior Preferred Stock remain
outstanding. Upon a Change of Control, each holder of the New Exchange
Debentures is entitled to require the Company to purchase such holder's New
Exchange Debentures (whether issued in exchange for Junior Preferred Stock or in
lieu of cash interest payments) at the redemption prices set forth herein, plus,
without duplication, accrued and unpaid interest to the redemption date;
provided, that after any such redemption certain minimum amounts of New Exchange
Debentures and/or Junior Preferred Stock remain outstanding. Upon a Change of
Control, each holder of the New Exchange Debentures is entitled to require the
Company to purchase such holder's New Exchange Debentures at a price equal to
101% of the principal amount thereof, plus, without duplication, accrued and
unpaid interest to the date of purchase.
The New Exchange Debentures will be subordinated to all existing and future
Senior Debt (as defined herein) of the Company. In addition, the New Exchange
Debentures will rank pari passu with the Company's 11 5/8% Senior Subordinated
Notes due 2002 (the "Existing Notes") and any of the Company's Existing Exchange
Debentures (as defined herein) and will rank pari passu or senior to any
Indebtedness that expressly provides that it ranks pari passu or subordinate to
the New Exchange Debentures, as the case may be. The New Exchange Debentures
will be unconditionally guaranteed, jointly and severally, on a senior
subordinated unsecured basis, by each of the Company's subsidiaries (the
"Guarantors") and will be subordinated in right of payment to all existing and
future Senior Debt of the Guarantors. As of March 31, 1998, pro forma for the
Transactions, there would have been $122.7 million of Indebtedness ranking
senior to the New Exchange Debentures and $228.0 million ranking pari passu with
the New Exchange Debentures.
<PAGE> 8
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration Statement on Form S-4 with respect to the shares of
New Junior Preferred Stock being offered hereby (including all exhibits and
amendments thereto the "Registration Statement"). This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement. For further information
with respect to the Company and the securities offered hereby, reference is made
to the Registration Statement. Each statement made in this Prospectus concerning
a document filed as an exhibit to the Registration Statement is qualified in its
entirety by reference to such exhibit for a complete statement of its
provisions.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports and
other information with the Commission. Reports, proxy statements, and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C., and at the following regional offices: 7 World Trade Center, Suite 1300,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies can be obtained by mail from the
Commission's Public Reference Section, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a Web site
that contains reports, proxy statements and other information regarding the
Company, the address of which is http://www.sec.gov. Reports, proxy statements,
and other information concerning the Company can also be inspected and copied at
the offices of the American Stock Exchange at 86 Trinity Place, New York, NY
10006.
---------------------
FORWARD-LOOKING STATEMENTS AND ASSOCIATED CONSIDERATIONS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT THE
COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE.
THESE FORWARD-LOOKING STATEMENTS ARE MADE PURSUANT TO THE "SAFE HARBOR"
PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT OF 1995 AND INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING THOSE IDENTIFIED BELOW, WHICH COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. THE
WORDS "BELIEVE," "EXPECT," "INTEND," "ANTICIPATE" AND SIMILAR EXPRESSIONS
IDENTIFY CERTAIN OF SUCH FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE
DATES ON WHICH THEY WERE MADE. ALL STATEMENTS HEREIN, OTHER THAN THOSE
CONSISTING SOLELY OF HISTORICAL FACTS, THAT ADDRESS ACTIVITIES, EVENTS OR
DEVELOPMENTS THAT THE COMPANY EXPECTS OR ANTICIPATES WILL OR MAY OCCUR IN THE
FUTURE, INCLUDING SUCH THINGS AS BUSINESS STRATEGY, MEASURES TO IMPLEMENT
STRATEGY, COMPETITIVE STRENGTHS, GOALS, PROJECTED REVENUES, COSTS AND OTHER
FINANCIAL RESULTS, REFERENCES TO FUTURE SUCCESS AND OTHER EVENTS MAY BE
FORWARD-LOOKING STATEMENTS. STATEMENTS HEREIN ARE BASED ON CERTAIN ASSUMPTIONS
AND ANALYSIS MADE BY THE COMPANY IN LIGHT OF ITS EXPERIENCE AND ITS PERCEPTION
OF HISTORICAL TRENDS, CURRENT CONDITIONS AND POTENTIAL FUTURE DEVELOPMENTS, AS
WELL AS OTHER FACTORS IT BELIEVES ARE APPROPRIATE IN THE CIRCUMSTANCES. WHETHER
ACTUAL RESULTS, EVENTS AND DEVELOPMENTS WILL CONFORM WITH THE COMPANY'S
EXPECTATIONS IS SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES AND IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS, EVENTS AND DEVELOPMENTS TO DIFFER
MATERIALLY FROM THOSE REFERENCED IN, CONTEMPLATED BY OR UNDERLYING ANY FORWARD-
LOOKING STATEMENTS HEREIN, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY.
THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS, OR OTHERWISE. READERS ARE CAUTIONED NOT TO
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<PAGE> 9
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. FACTORS TO CONSIDER IN
EVALUATING ANY FORWARD-LOOKING STATEMENTS AND THE OTHER INFORMATION CONTAINED
HEREIN AND WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE ANTICIPATED IN
THE FORWARD-LOOKING STATEMENTS OR OTHERWISE ADVERSELY AFFECT THE COMPANY'S
BUSINESS INCLUDE THOSE SET FORTH IN THE "RISK FACTORS" SECTION OF THIS
PROSPECTUS.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
and the Company's Proxy Statement, dated March 18, 1998, for the Company's 1998
Annual Meeting of Shareholders as heretofore filed by the Company with the
Commission pursuant to the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Exchange Offer shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any information contained in a document incorporated by
reference or deemed to be incorporated by reference herein shall be deemed
modified or superseded, for purposes of this Prospectus, to the extent that a
statement contained herein or in any subsequently filed document that is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any document incorporated by reference in this Prospectus, other than exhibits
to any such document not specifically described above. Requests for such
documents should be directed to Paxson Communications Corporation, 601
Clearwater Park Road, West Palm Beach, Florida 33401, Attention: Director of
Investor Relations (telephone number (561) 659-4122).
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<PAGE> 10
CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA
All market rank, total market television household data and total market
cable television household data has been obtained from U.S. Television Household
Estimates for September 1997 and cable household data for January 1998, as
prepared by Nielsen Media Research ("Nielsen") for each designated market area
("DMA"), except that television and cable household data for San Juan has been
obtained from Strategic Research Corporation as of April 1998 and television and
cable household data for Christiansted, U.S.V.I. has been obtained from BIA
Consulting as of January 1998. The Company has sought to obtain the most recent
data available and does not assume responsibility for the accuracy or
completeness of such data.
Set forth below are certain terms commonly used in the broadcast television
industry that are used in this Memorandum. Unless the context otherwise
requires, such terms shall have the respective meanings set forth below.
1996 Act................... The Telecommunications Act of 1996.
Communications Act......... Communications Act of 1934, as amended.
DMA or market.............. Designated Market Area. There are 211 DMAs in the
United States with each county in the continental
United States assigned uniquely to one DMA. Ranking
of DMAs is based upon Nielsen estimates of the
number of television households.
EBITDA..................... Operating income (loss) excluding nonrecurring
items including 1997 compensation associated with
Paxson Radio asset sales and relocation costs, plus
time brokerage fees, depreciation, amortization and
other non-cash charges, including amortization of
programming rights, and option plan compensation,
minus programming payments (including a ratable
portion of programming deposits). Although EBITDA
is not calculated in accordance with GAAP, it is
widely used as a measure of a company's ability to
service and/or incur debt. EBITDA should not be
considered in isolation from or a substitute for
net income, cash flows from operations and other
income or cash flow data prepared in accordance
with GAAP, or as a measure of profitability or
liquidity.
FCC........................ Federal Communications Commission.
Local/national spot
advertising.............. Broadcast television advertising consisting
primarily of spots of 30 seconds and shorter
duration designed to reach targeted individual or
groups of television markets included within a
particular programmer's distribution system. Local
spots are sold to local advertisers within a given
television market. National spots are sold to
national advertisers within a group or groups of
television markets.
Network spot advertising... Broadcast television advertising consisting
primarily of spots of 30 seconds and shorter
duration aired on a particular programmer's
distribution system.
Prime time................. Monday through Saturday 8:00 PM to 11:00 PM and
Sunday 7:00 PM to 11:00 PM.
Time brokerage agreement... An agreement under which a television programmer
agrees to purchase from a broadcast station
licensee substantially all of the broadcast time on
a station, provides programming and sells
advertising during the purchased time, receives all
the revenue derived from advertising sold during
the purchased time, pays certain expenses of the
station and performs other functions, with the
licensee retaining responsibility for ultimate
control of the station in accordance with FCC
policies. A time brokerage agreement is also known
in the broadcast industry as a "local marketing
agreement." See "Business -- Federal Regulation of
Broadcasting."
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<PAGE> 11
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus and in the documents
incorporated by reference herein. Except as otherwise indicated by the context,
references in this Prospectus to the "Company" include Paxson Communications
Corporation and its direct and indirect subsidiaries. Capitalized terms used
without definition in the following summary are defined elsewhere in this
Prospectus. Unless otherwise indicated, pro forma information in this Prospectus
gives effect to the Transactions (as defined).
THE COMPANY
Paxson Communications Corporation owns and operates the largest group of
broadcast television stations in the United States. The Company commenced its
television operations in early 1994 in anticipation of the deregulation of the
broadcast industry and has expanded in response to federal regulatory changes
that increased the number of broadcast television stations permitted under
common ownership. Upon the completion of the Transactions, the Company will have
88 owned, operated or affiliated stations (including six low-power stations) in
85 U.S. markets containing over 74 million broadcast television households, or
approximately 74% of all U.S. television households (including Puerto Rico and
the Virgin Islands), and will be the only television broadcaster with full-power
stations in all of the top 20 U.S. markets and in 43 of the top 50 U.S. markets.
Management believes that the Company has created a valuable national television
broadcast distribution infrastructure that would be both expensive and difficult
to replicate. The Company has obtained two appraisals which have valued its pro
forma owned and operated stations in a range between $1.5 billion and $1.9
billion (see "Business -- Appraisals"). As of March 31, 1998, the pro forma book
value of the Company's assets was approximately $1.4 billion.
The Company intends to launch its PAX NET programming service on August 31,
1998. PAX NET is the brand name for the programming that the Company expects to
provide, 24 hours per day and seven days per week, to its owned, operated or
affiliated television stations and to certain cable systems and satellite
television providers. PAX NET programming will generally consist of
family-friendly, traditional entertainment programs that have had, or are
having, successful first runs on television in terms of audience ratings.
Management believes that the value of the Company's extensive broadcast
properties will be enhanced by converting to PAX NET programming from the
current long-form paid programming inTV format. The Company intends to sell
airtime for "spot" advertisements during PAX NET programming to commercial
advertisers, enabling the Company to participate in the approximately $37
billion local, national and network television spot advertising market rather
than the management-estimated $2 billion long-form paid programming market into
which the Company currently sells nearly all of its available airtime.
Management believes that the launch of PAX NET will enable the Company to
combine many of the favorable attributes of traditional television networks and
network-affiliated television stations under one operation.
In general, broadcast television networks provide spot advertisers with
significant "reach," or access to viewers, through their extensive nationwide
distribution systems. Although most networks own stations in some of the top 20
U.S. markets, they are able to provide nationwide reach only through affiliation
agreements with non-owned stations (a "network affiliate") which agree to
broadcast network-provided programming during certain times of the day,
including prime time. Most broadcast television networks invest considerable
financial resources to either develop or obtain new first-run programming, the
success of which is dependent upon attaining sufficient audience ratings and
advertising support. Substantially all of a network's revenues are derived from
the sale of advertising airtime during network programs.
Network-affiliated stations are typically independently-owned rather than
network-owned. A network affiliate broadcasts network-provided programming at
times stipulated by the network. At all other times, the network affiliate may
broadcast other programming, such as syndicated shows and other non-network
programming, which it generally purchases or produces. As part of its agreement
with the network, an affiliate relinquishes to the network substantially all of
the commercial airtime available during network programming hours, including the
desirable prime time periods. The network affiliate retains control of nearly
all of the
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<PAGE> 12
commercial airtime available during non-network programming hours, which it is
able to sell to local and national spot advertisers who typically pay rates that
are more than 50% higher per viewer than those paid by network advertisers.
Network-affiliated stations must incur significant costs for programming and
promotion during non-network programming hours to generate revenue.
Management believes that the launch of PAX NET will enable the Company to
combine under one operation many of the favorable characteristics of traditional
television networks and network-affiliated television stations described above.
Similar to traditional television networks, the Company will provide advertisers
with nationwide reach through its extensive television distribution system.
Since the Company owns and operates almost all of its television distribution
system, it will receive advertising revenue from the entire broadcast day,
unlike a traditional network, which receives advertising revenue only from
commercials aired during limited network programming hours. To maximize
revenues, the Company intends to allocate its advertising inventory among local,
national and network advertisers purely according to demand, rather than
allocating airtime to network advertisers as mandated by a network affiliation
agreement. Further, the Company expects that its station group will enjoy
various economies of scale due to its size and centralized operations, resulting
in programming, promotional, research, engineering, accounting and
administrative expenses that are substantially lower per station than those of a
typical network-affiliated station.
BUSINESS STRATEGY
The Company will seek to maximize its cash flow by maintaining an efficient
operating structure and centralizing many functions that traditionally are
managed at the local station level, optimizing the mix of advertising sales to
achieve the highest possible rates and providing viewers with a schedule of
high-quality destination programming. The principal components of the Company's
business strategy are as follows:
- Maintain a Centralized, Low-Cost Operating Structure. The Company
intends to maintain a low-cost operating structure by centralizing many
station functions, including programming, promotions, advertising,
research, engineering, accounting and sales traffic control. Under its
current inTV format, the Company averages twelve employees per station.
In anticipation of the launch of PAX NET, each of the Company's stations
will be adding an average of six local sales and sales-related employees
whose compensation will be largely dependent upon the amount of local
advertising sold. Accordingly, the Company estimates that each of its
stations will average only 18 employees, compared to an average of 100
employees at network-affiliated stations, and an average of 60 employees
at independent stations in markets of similar size to the Company's.
Unlike other stations, the Company's stations will not be required to
purchase programming individually since they will broadcast PAX NET
programming 24 hours per day. In addition, the Company's stations will
not produce local news programs, thereby avoiding the significant costs
often associated with such production.
As part of its low-cost operating strategy, the Company intends to
promote the PAX NET brand and each of its local television stations by
utilizing a centralized advertising and promotional program. All print
and radio promotional advertisements will be produced at the Company's
headquarters, which will avoid duplicating such operations at the local
stations and the associated local promotional personnel expenses. All
advertisements and other promotional material will share the same basic
content but will be customized to identify and highlight each local
market. Management believes that the Company will have substantial
leverage to negotiate volume discounts on the procurement of print
materials and media time used to promote PAX NET programming and the
Company's television stations.
- Achieve Programming Economies of Scale. The Company seeks to achieve
economies of scale as it purchases PAX NET programming for all of its
stations. The Company has purchased programming centrally and will be
able to deliver its programming by satellite to its stations 24 hours per
day and seven days per week. Each station will offer substantially the
same programming schedule. Generally, the Company has negotiated license
agreements entitling it to exclusive nationwide distribution rights
(regardless of delivery medium) for a fixed cost, independent of the
number of households which will receive such programming. By utilizing a
centralized programming acquisition strategy, the Company
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<PAGE> 13
expects to incur programming costs per station significantly lower than
those of comparable television stations in similar markets.
- Maximize Advertising Sell-Through and Revenue. Following the launch of
PAX NET, the Company will have access to multiple sources of advertising
revenue: network spot, national spot, local spot and long-form paid
programming. Industry data has shown that an advertiser seeking to target
viewers within specific markets typically purchases airtime at rates 50%
to 100% higher per viewer than those for a single commercial aired across
an entire network. Since networks and station affiliates are usually
owned by different entities, the allocation of spots between local,
national and network advertisers is relatively fixed by an affiliation
agreement. The Company, however, will retain the flexibility to allocate
airtime among various categories of advertisers and will seek to maximize
revenue by optimizing the mix of advertising time it sells among local,
national and network advertisers as well as its current base of long-form
paid programming advertisers. To better allocate its available
advertising airtime, the Company is implementing a new proprietary sales
traffic system designed to deliver to the Company's sales force accurate
and timely data on its available advertising inventory and the demand for
its inventory.
- Provide Proven Family-Friendly Programming. The Company intends to build
the brand recognition of and attract viewers to PAX NET by offering
syndicated family-oriented programming which achieved successful audience
ratings during its original network run. Certain of the programs
purchased by the Company (Touched By An Angel, Promised Land and
Diagnosis Murder) are still in production, and their new episodes
continue to attract significant viewership. The Company has generally
sought to purchase one-hour dramas since management believes that such
programming is more cost efficient than programs of shorter duration.
Consistent with its family-friendly programming strategy, the Company has
agreed to air original children's programming produced by a subsidiary of
The Walt Disney Company. As the brand recognition of PAX NET becomes
established, management believes that PAX NET will become a "destination
channel" to which viewers will turn regularly for family-friendly
programming, and that PAX NET will attract advertisers who want to reach
the broad and desirable viewer demographics attracted by such
programming.
- Continue Airing Profitable Long-Form Paid Programming. The Company
intends to carry a reduced but still significant schedule of long-form
paid programming, including infomercials, primarily during the day on
weekends and during certain hours of weekday mornings. Under its current
inTV programming format, the Company has generated in excess of 30% of
its revenue from weekend daytime programming. Management believes that
network-affiliated stations charge rates for long-form paid programming
which are several times the Company's current rates for similar time
periods and that as PAX NET becomes established as a "destination
channel," the Company can increase its long-form paid programming rates
to such levels. In addition, since the Company will reduce its inventory
of airtime available to long-form paid programmers upon the launch of PAX
NET, management believes that the Company will be able to sell such
airtime at premium rates. As a result, management believes that long-form
paid programming will provide a significant and stable base of revenue
for the Company as it implements the entertainment component of its PAX
NET strategy.
- Expand PAX NET Distribution. Pro forma for the Transactions, the
Company's station group will serve markets comprising approximately 74%
of all U.S. television households (including Puerto Rico and the Virgin
Islands). The Company intends to continue expanding the distribution of
its PAX NET programming service through the addition of broadcast
television station affiliates as well as certain cable systems and
satellite television providers. The Company intends to expand its
distribution to reach as many U.S. television households as possible in
an economically beneficial manner. The Company has entered into an
agreement with a subsidiary of Tele-Communications, Inc. ("TCI"), whereby
the Company will receive cable carriage of its PAX NET programming on TCI
cable systems in certain markets not currently served by the Company's
broadcast television station group. The Company continues to seek to
enter into distribution agreements to reach other markets not currently
served by its television group, with the goal of generating incremental
revenue from additional distribution outlets and leveraging its
relatively fixed cost operating structure to increase cash flow.
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<PAGE> 14
STATION PORTFOLIO
The following table lists the owned, operated or affiliated stations which
the Company anticipates will air PAX NET programming. This list includes pending
transactions and stations currently under construction. The Company does not
expect that all stations will be completed or will air PAX NET programming by
the announced date of PAX NET's launch. See footnotes to table for additional
information.
PAX NET TELEVISION DISTRIBUTION
(TELEVISION AND CABLE HOUSEHOLDS IN THOUSANDS)
<TABLE>
<CAPTION>
NATIONAL TOTAL TOTAL
TV MARKET MARKET CABLE MARKET TV
RANK MARKET(1) STATION CHANNEL HOUSEHOLDS(2) HOUSEHOLDS(2)
- --------- --------- ------- ------- ------------- -------------
<C> <S> <C> <C> <C> <C>
1 New York, NY WPXN 31 4,825 6,756
2 Los Angeles, CA KPXN 30 3,133 5,009
3 Chicago, IL WCFC(3) 38 1,950 3,140
4 Philadelphia, PA WPPX 61 2,033 2,659
5 San Francisco, CA KKPX 65 1,640 2,298
6 Boston, MA WPXB 60 1,694 2,174
6 Boston, MA* WBPX(4) 46 -- --
7 Washington, D.C. WPXW 66 1,331 1,928
7 Washington, D.C. WWPX(5) 60 -- --
8 Dallas, TX KPXD(6) 68 989 1,899
9 Detroit, MI WPXD 31 1,191 1,782
10 Atlanta, GA WPXA 14 1,144 1,675
11 Houston, TX KPXB 49 918 1,624
12 Seattle, WA KWPX 33 1,104 1,514
13 Cleveland, OH WVPX 23 1,026 1,469
14 Minneapolis, MN KPXM 41 746 1,448
15 Tampa, FL WXPX 66 1,043 1,436
16 Miami, FL WPXM 35 993 1,386
17 Phoenix, AZ KBPX 13 755 1,289
17 Phoenix, AZ* KPPX(7)(8) 51 -- --
18 Denver, CO KPXC 59 741 1,199
19 Pittsburgh, PA Channel 40(3) 40 899 1,140
20 Sacramento, CA* KSPX 29 726 1,127
21 St. Louis, MO WPXS(5) 13 585 1,109
22 Orlando, FL WOPX 56 796 1,041
24 Portland, OR KPXG 22 611 976
25 Indianapolis, IN WIPX-LP(9) 51 618 957
27 Hartford, CT* WHPX(4) 26 792 916
29 Raleigh, NC WFPX 62 512 826
29 Raleigh, NC WRPX(5) 47 -- --
31 Kansas City, MO KPXE 50 518 792
32 Milwaukee, WI WPXE(5) 55 477 791
33 Nashville, TN WNPX 28 496 789
34 Columbus, OH WCPX-LP(9) 62 473 739
36 Salt Lake City, UT KUWB(10) 30 387 690
36 Salt Lake City, UT KCSG(13) 4 -- --
37 Grand Rapids, MI WZPX(5) 43 412 659
38 San Antonio, TX* Channel 26(7)(8) 26 422 649
39 Norfolk, VA WPXV 49 474 636
40 Buffalo, NY WAQF(3)(7) 51 475 630
41 New Orleans, LA* WPXL 49 455 623
42 Memphis, TN* WFBI 50 390 614
43 West Palm Beach, FL WPXP(11) 67 496 593
44 Oklahoma City, OK KOPX 62 374 593
46 Greensboro, NC WGPX 16 367 577
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
NATIONAL TOTAL TOTAL
TV MARKET MARKET CABLE MARKET TV
RANK MARKET(1) STATION CHANNEL HOUSEHOLDS(2) HOUSEHOLDS(2)
- --------- --------- ------- ------- ------------- -------------
<C> <S> <C> <C> <C> <C>
47 Wilkes-Barre, PA* WQPX(7)(8) 64 452 566
48 Albuquerque, NM Channel 14(3)(7)(15) 14 332 560
49 Providence, RI WPXQ(7)(12) 69 433 559
51 Birmingham, AL WPXH 44 363 547
52 Albany, NY WYPX 55 376 509
53 Dayton, OH WDPX 26 351 503
54 Jacksonville, FL WPXJ-LP(9) 41 376 502
55 Fresno, CA KPXF 61 263 496
56 Little Rock, AR* KYPX(7)(8) 42 301 481
57 Charleston, WV* WKRP(7)(8) 29 353 480
58 Tulsa, OK KTPX 44 299 468
61 Las Vegas, NV KVPX-LP(9) 59 302 450
62 Mobile, AL Channel 61(3)(7)(15) 61 324 450
64 Knoxville, TN* WPXK 54 299 441
66 Toledo, OH WLMB(13) 40 274 408
67 Lexington, KY WAOM(3)(7) 67 277 403
68 Roanoke, VA WPXR 38 263 402
69 Des Moines, IA Channel 39(3)(7)(15) 39 233 383
70 Green Bay, WI WPXG(7) 14 226 381
71 Honolulu, HI* KPXO(7) 66 333 380
72 Syracuse, NY* WAUP(7)(8) 56 279 378
73 Spokane, WA Channel 34(7) 34 233 375
75 Rochester, NY(14) WAQF(3)(7) 51 267 367
76 Shreveport, LA Channel 21(7) 21 217 366
80 Portland, ME Channel 23(7)(8) 23 266 350
81 Champaign, IL WPXU 23 249 331
83 Ft. Myers, FL W57CJ(9) 57 253 320
86 Chattanooga, TN W55CD(9) 55 217 310
87 Cedar Rapids, IA KPXR 48 198 308
89 Davenport, IA Channel 67(3)(7)(15) 67 202 302
90 Jackson, MS Channel 51(3)(7)(15) 51 177 297
95 Evansville, IN WTSN(9)(13) 63 168 274
105 Lansing, MI(14) WZPX(5) 43 157 236
106 Greenville, NC WEPX(3)(7) 38 152 234
120 Eugene, OR KROZ(13) 36 138 210
121 Monterey/Salinas, CA(14) KKPX 65 160 206
131 Bakersfield, CA(14) KPXF 61 129 176
136 Wausau-Rhinelander, WI* WAZW(3)(7) 46 86 163
150 Odessa, TX Channel 30(7)(8) 30 98 134
156 Anchorage, AK KDMD(13) 33 72 122
159 Palm Springs, CA KVCC(9)(13) 58 102 112
187 Tuscaloosa, AL WJRD(9)(13) 49 48 59
NR Juneau, AK KUBD(13) 4 5 5
NR San Sebastian, PR WJWN 38 -- --
NR Ponce, PR WKPV 20 -- --
NR San Juan, PR WJPX 24 661 1,140
NR Christiansted, VI Channel 15(3)(8)(15) 15 18 36
------ ------
TOTAL PAX NET
COVERAGE(2) 49,993 74,332
====== ======
</TABLE>
- ---------------
* Operated or to be operated pursuant to a time brokerage agreement; except
as noted, the Company has an agreement and/or an option to acquire a 100%
ownership interest.
NR Not ranked
(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
5
<PAGE> 16
(2) Figures represent total cable and television households in each market only
and are not necessarily indicative of the number of households reached by
each station in its market; "--" indicates second station in market; totals
do not double count markets where the Company has more than one station.
(3) Pending acquisition.
(4) The Company does not own, and has no option to acquire, the station;
station will become an affiliate upon acquisition by DP Media, Inc. and the
Company will have a right of first refusal upon a proposed sale of the
station.
(5) Affiliate station; the Company has an option to acquire, or first right of
refusal upon a proposed sale of, the station.
(6) The Company has an 80% ownership interest in this station.
(7) Station is currently under construction or not operating commercially.
(8) 49% ownership interest with an option for the remaining 51%.
(9) A low power station; other low power stations the Company owns or operates,
which simulcast programs aired on an owned and operated full-power
television station in the same market, are not presented.
(10) The Company has a contract to exchange this station for station KUPX,
channel 16, in Salt Lake City.
(11) 90% ownership interest.
(12) 50% ownership interest.
(13) Affiliate station.
(14) Additional markets served by an out-of-market station.
(15) Application for construction permit pending.
6
<PAGE> 17
COMPANY HISTORY
The Company was founded in 1991 by Lowell W. "Bud" Paxson who personally
financed the Company's early growth and continues to lead the Company as
majority stockholder and chief executive officer. Mr. Paxson has been at the
forefront of several innovative broadcasting concepts over the last fifteen
years, including his leadership role in the early growth of electronic retailing
as the creator and co-founder of Home Shopping Network, Inc. and Silver King
Communications, Inc. Mr. Paxson was one of the first radio operators to take
advantage of changes in the law applicable to multiple radio station ownership
and the overall number of stations permitted under common ownership as he built
Florida's largest radio group. In 1997, the Company sold two business segments,
Paxson Radio and Paxson Network-Affiliated Television. Paxson Radio's assets,
which included the Company's radio and billboard operations and an agreement to
purchase three additional radio stations, were sold for aggregate consideration
of approximately $629 million, consisting of approximately $602 million of cash
and the assumption of the purchase commitment for the three stations, resulting
in a pre-tax gain of approximately $305 million. Paxson Network-Affiliated
Television's assets, which consisted of two traditional network affiliated
stations, were sold for aggregate consideration of approximately $119 million,
resulting in a gain of approximately $69 million.
Since commencing its television operations in early 1994, the Company has
established the largest owned and operated broadcast television station group in
the United States. The Company's stations currently broadcast long-form paid
programming, consisting primarily of infomercials, under its inTV format. Upon
the launch of PAX NET, the Company's stations will air traditional entertainment
programming and a reduced amount of long-form paid programming. See
"Business -- Business Strategy." The Company's Class A Common Stock is listed on
the American Stock Exchange under the symbol "PAX". The Company's principal
executive offices are located at 601 Clearwater Park Road, West Palm Beach,
Florida 33401 and its telephone number is (561) 659-4122.
RECENT DEVELOPMENTS
On June 10, 1998, the Company completed the Private Offering and issued
20,000 shares of Original Junior Preferred Stock with an aggregate liquidation
preference of $200 million, generating net proceeds to the Company of $190
million. Concurrently with the Private Offering, the Company issued and sold $75
million aggregate liquidation preference of 9 3/4% Series A Convertible
Preferred Stock, par value $.001 per share (the "Convertible Preferred Stock"),
and warrants to purchase an aggregate of 240,000 shares of Class A Common Stock
at an exercise price of $16.00 per share in a private placement not registered
under the Securities Act (the "Convertible Preferred Offering" and, collectively
with the Private Offering, the "Offerings"), generating net proceeds to the
Company of $71.5 million.
In May 1998, the Company refinanced substantially all of its outstanding
debt under its existing credit facility with a $122 million senior credit
facility maturing June 2002 (the "Credit Facility"). Under the terms of the
Credit Facility, the outstanding debt is secured by substantially all of the
Company's assets and bears interest at a base rate plus 1.75% or LIBOR plus
2.75%, at the Company's option. The Credit Facility requires the Company to
maintain compliance with certain financial ratios subsequent to March 2000 and
contains other restrictions. The Credit Facility requires quarterly principal
payments commencing December 31, 2000.
On May 14, 1998, the Company announced the appointment of Jeffrey Sagansky
as the Company's Chief Executive Officer and President. Prior to joining the
Company, Mr. Sagansky served as co-president of Sony Pictures Entertainment
since October 1996. From September 1994 to October 1996, Mr. Sagansky served as
executive vice president of Sony Corp. of America. Prior to joining Sony, he was
president of CBS Entertainment, where under his leadership CBS developed such
critically acclaimed series as Touched By An Angel, Dr. Quinn, Medicine Woman,
Promised Land, The Nanny, Chicago Hope, Picket Fences and Northern Exposure.
Also on May 14, 1998, the Company announced the election of William E.
Simon Jr., to the position of vice chairman of the Company. Mr. Simon is the
executive director of William E. Simon & Sons, L.L.C., a private investment firm
and merchant bank. As part of the Convertible Preferred Offering, an affiliate
of
7
<PAGE> 18
Mr. Simon purchased from the Company $10 million aggregate liquidation
preference of Convertible Preferred Stock and warrants to purchase 32,000 shares
of Class A Common Stock at an exercise price of $16.00 per share. The Company
also issued to such affiliate additional warrants entitling the holder to
purchase 155,500 shares of Class A Common Stock at an exercise price of $16.00
per share.
THE TRANSACTIONS
In conjunction with the Private Offering and the Convertible Preferred
Offering, the Company intends to effect the Proposed Acquisitions and the Sale
Transactions (collectively with the Private Offering, the Convertible Preferred
Offering and the application of the proceeds thereof, the "Transactions").
THE PROPOSED ACQUISITIONS
The Company has entered into agreements (subject to various conditions
including the receipt of regulatory approvals) to acquire or operate 30
additional television stations for total consideration of $414.8 million, of
which $78.6 million has been funded as of March 31, 1998 in the form of advances
and escrow deposits. The Company expects to spend the balance of $336.2 million
to acquire such stations and $88.4 million in capital expenditures to complete
the construction of certain new stations and to upgrade certain of the Company's
existing stations. The station acquisitions and capital expenditures are
collectively referred to herein as the "Proposed Acquisitions." See "The
Transactions -- The Proposed Acquisitions." The Company is adding the Proposed
Acquisitions primarily to expand the reach of its broadcast television
distribution infrastructure and to increase its national presence.
THE SALE TRANSACTIONS
The Company has entered into agreements to sell or monetize its investment
in four broadcast television stations, one radio station and a minor league
hockey team for aggregate net proceeds of $78.1 million (collectively, the "Sale
Transactions"). The Company anticipates completing the Sale Transactions during
1998. See "The Transactions -- The Sale Transactions."
8
<PAGE> 19
THE EXCHANGE OFFER
Resale..................... 20,000 shares ($200.0 million aggregate liquidation
preference) of Original Junior Preferred Stock were
sold in the Private Offering by the Company on June
10, 1998 to CIBC Oppenheimer Corp. (the "Initial
Purchaser"). The holders of Original Junior
Preferred Stock and New Junior Preferred Stock are
collectively referred to herein as the "Holders."
The Company is making the Exchange Offer in
reliance on the position of the staff of the
Commission as set forth in certain no-action
letters addressed to other parties in other
transactions. The Company has not, however, sought
its own no-action letter, and there can be no
assurance that the staff of the Commission would
make a similar determination with respect to the
Exchange Offer as in such other circumstances.
Based on these interpretations by the staff of the
Commission, the Company believes that the shares of
New Junior Preferred Stock issued pursuant to this
Exchange Offer in exchange for shares of Original
Junior Preferred Stock may be offered for resale,
resold and otherwise transferred by a holder
thereof other than (i) a broker-dealer who
purchased such shares of Original Junior Preferred
Stock directly from the Company to resell pursuant
to Rule 144A or any other available exemption under
the Securities Act or (ii) a person that is an
"affiliate" (as defined in Rule 405 of the
Securities Act) of the Company, without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
such shares of New Junior Preferred Stock are
acquired in the ordinary course of such Holder's
business and that such Holder is not participating,
and has no arrangement or understanding with any
persons to participate, in the distribution of such
shares of New Junior Preferred Stock. Holders of
shares of Original Junior Preferred Stock accepting
the Exchange Offer will represent to the Company in
the Letter of Transmittal that such conditions have
been met.
Any Holder who participates in the Exchange Offer
for the purpose of participating in a distribution
of the shares of New Junior Preferred Stock may not
rely on the position of the staff of the Commission
as set forth in these no-action letters and would
have to comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any secondary resale transaction.
This prospectus may not be used by such Holders for
any secondary resale. A secondary resale
transaction in the United States by a Holder who is
using the Exchange Offer to participate in the
distribution of shares of New Junior Preferred
Stock must be covered by a registration statement
containing the selling securityholder information
required by Item 507 of Regulation S-K of the
Securities Act. Each broker-dealer (other than an
"affiliate" of the Company) that receives shares of
New Junior Preferred Stock for its own account
pursuant to the Exchange Offer must acknowledge
that it acquired the shares of Original Junior
Preferred Stock as the result of market-making
activities or other trading activities and will
deliver a prospectus in connection with any resale
of such shares of New Junior Preferred Stock. The
Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales
of
9
<PAGE> 20
shares of New Junior Preferred Stock received in
exchange for shares of Original Junior Preferred
Stock where such shares of Original Junior
Preferred Stock were acquired by such broker-dealer
as a result of market-making activities or other
trading activities. In addition, pursuant to
Section 4(3) of the Securities Act, all dealers
effecting transactions in the shares of New Junior
Preferred Stock, whether or not participating in
the Exchange Offer, may be required to deliver a
Prospectus. The Company has agreed that, for a
period of 180 days after the date of this
Prospectus, it will make this Prospectus available
to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution." Any
broker-dealer who is an affiliate of the Company
may not rely on such no- action letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any secondary resale transaction.
See "The Exchange Offer -- Purpose and Effect of
the Exchange Offer" and "Plan of Distribution."
The Exchange Offer......... The Company is offering to exchange pursuant to the
Exchange Offer up to $200.0 million aggregate
liquidation preference of shares of New Junior
Preferred Stock for up to $200.0 million aggregate
liquidation preference of shares of Original Junior
Preferred Stock. The terms of the shares of New
Junior Preferred Stock are substantially identical
in all respects (including liquidation preference,
dividend rate and maturity) to the terms of the
shares of Original Junior Preferred Stock for which
they may be exchanged pursuant to the Exchange
Offer, except that the shares of New Junior
Preferred Stock are freely transferable by Holders
thereof (other than as provided herein), and are
not subject to any covenant restricting transfer
absent registration under the Securities Act. See
"The Exchange Offer -- Terms of the Exchange" and
"The Exchange Offer -- Procedures for Tendering."
The Exchange Offer is not conditioned upon any
minimum number of shares of Original Junior
Preferred Stock being tendered for exchange.
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time on , 1998,
unless extended (the "Expiration Date").
Conditions of the Exchange
Offer.................... The Company's obligations to consummate the
Exchange Offer are subject to certain conditions.
See "The Exchange Offer -- Conditions to the
Exchange Offer." The Company reserves the right to
terminate or amend the Exchange Offer at any time
prior to the Expiration Date upon the occurrence of
any such conditions.
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to the
Expiration Date; otherwise, all tenders will be
irrevocable.
Procedures for Tendering
Shares of Original Junior
Preferred Stock.......... See "The Exchange Offer -- Procedures for
Tendering."
Federal Income Tax
Consequences............. The exchange of shares of Original Junior Preferred
Stock for shares of New Junior Preferred Stock
should not be a taxable exchange for federal income
tax purposes. See "Certain Federal Income Tax
Considerations."
10
<PAGE> 21
Effect on Holders of the
Original Junior Preferred
Stock.................... As a result of the making of this Exchange Offer,
and upon acceptance for exchange of all validly
tendered shares of Original Junior Preferred Stock
pursuant to the terms of this Exchange Offer, the
Company will have fulfilled its obligations
contained in the Registration Rights Agreement and,
accordingly, there will be no increase in the
interest rate on the shares of Original Junior
Preferred Stock pursuant to the applicable terms of
the Registration Rights Agreement due to the
Exchange Offer. Holders of the shares of Original
Junior Preferred Stock who do not tender their
shares of Original Junior Preferred Stock will be
entitled to all the rights and limitations
applicable thereto under the certificate of
designations relating to the shares of Original
Junior Preferred Stock except for any rights which
by their terms terminate or cease to have further
effect as a result of the making of, and the
acceptance for exchange of all validly tendered
shares of Original Junior Preferred Stock pursuant
to, the Exchange Offer. All untendered shares of
Original Junior Preferred Stock will continue to be
subject to applicable restrictions on transfer
under the Securities Act. To the extent that shares
of Original Junior Preferred Stock are tendered and
accepted in the Exchange Offer, the trading market
for untendered shares of Original Junior Preferred
Stock could be adversely affected.
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is The Bank of New York (the "Exchange
Agent"). The address and telephone number of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
THE NEW JUNIOR PREFERRED STOCK
The Exchange Offer applies to the 20,000 shares of Original Junior
Preferred Stock outstanding as of the date hereof. The terms of the New Junior
Preferred Stock will be identical in all material respects to the terms of the
Original Junior Preferred Stock, except that the issuance and exchange of the
shares of New Junior Preferred Stock will have been registered under the
Securities Act and, therefore, such shares will not be subject to certain
restrictions on transfer and the certificates representing such shares will not
bear legends indicating restrictions on transfer.
Issuer..................... Paxson Communications Corporation.
Securities Offered......... 20,000 shares (the "Shares") of 13 1/4% Cumulative
Junior Exchangeable Preferred Stock, par value
$.001 per share, plus any additional shares of such
stock issued from time to time in lieu of cash
dividends (the "Junior Preferred Stock").
Liquidation Preference..... $10,000 per share, plus accumulated and unpaid
dividends.
Optional Redemption........ The Junior Preferred Stock is redeemable, at the
option of the Company, in whole or in part, at any
time on or after May 15, 2003 at the redemption
prices set forth herein, plus, without duplication,
accumulated and unpaid dividends to the date of
redemption. In addition, prior to May 15, 2001, the
Company may, at its option, use the net proceeds of
one or more Public Equity Offerings (as defined) or
Major Asset Sales (as defined) to redeem up to an
aggregate of 35% of the aggregate principal amount
of Junior Preferred Stock (whether initially issued
or
11
<PAGE> 22
issued in lieu of cash dividends) at the redemption
prices set forth herein, plus, without duplication,
accumulated and unpaid dividends to the date of
redemption; provided, however, that after any such
redemption there is at least (i) $75.0 million
aggregate liquidation preference of Junior
Preferred Stock or (ii) $130.0 million combined
aggregate liquidation preference of Junior
Preferred Stock and aggregate principal amount of
New Exchange Debentures outstanding, and that such
redemption occurs within 90 days following the
closing of such Public Equity Offering or Major
Asset Sale.
Mandatory Redemption....... The Company is required, subject to certain
conditions, to redeem all of the Junior Preferred
Stock outstanding on November 15, 2006 at a
redemption price equal to 100% of the liquidation
preference thereof, plus, without duplication,
accumulated and unpaid dividends to the date of
redemption.
Dividends.................. At a rate equal to 13 1/4% per annum of the
liquidation preference per share, payable
semi-annually beginning November 15, 1998 and
accumulating from the Issue Date. Dividends may be
paid, at the Company's option, on any dividend
payment date, either in cash or by the issuance of
additional shares of Junior Preferred Stock (and
payment of cash in lieu of fractional shares)
having an aggregate liquidation preference equal to
the amount of such dividends. In the event that
after May 15, 2003, dividends are paid in
additional shares of Junior Preferred Stock the
dividend rate will increase by 1% for such dividend
payment period.
Dividend Payment Dates..... May 15 and November 15, commencing November 15,
1998.
Voting..................... The Junior Preferred Stock will be non-voting,
except as otherwise required by law and except in
certain circumstances described herein, including
(i) amending certain rights of the holders of the
Junior Preferred Stock and (ii) the issuance of any
class of equity securities that ranks pari passu
with or senior to the Junior Preferred Stock (other
than certain additional shares of Public Preferred
Stock (as defined) or pari passu securities issued
to finance the redemption by the Company of the
Private Preferred Stock (as defined) and certain
additional shares of the Public Preferred Stock
issuable in lieu of cash dividends in accordance
with the current terms of the Public Preferred
Stock).
Exchange Provisions........ Exchangeable into the New Exchange Debentures, at
the Company's option, subject to certain conditions
in whole or in part, on a pro rata basis, on any
scheduled dividend payment date; provided that
immediately after giving effect to any such partial
exchange, there shall be outstanding shares of
Junior Preferred Stock (whether initially issued or
issued in lieu of cash dividends) with an aggregate
liquidation preference of not less than $75.0
million and not less than $75.0 million of
aggregate principal amount of New Exchange
Debentures. Subject to certain conditions, the
Company has agreed to exchange all outstanding
Junior Preferred Stock for New Exchange Debentures
when such an exchange is permitted under the terms
of certain of its Indebtedness and capital stock.
Ranking.................... The Junior Preferred Stock will, with respect to
dividend rights and rights on liquidation,
winding-up and dissolution of the Company, rank
senior to all classes of common stock and to the
Convertible Preferred
12
<PAGE> 23
Stock and junior to all other classes of preferred
stock of the Company outstanding upon consummation
of the Exchange Offer.
Change of Control.......... In the event of a Change of Control, the Company
will, subject to certain conditions, offer to
purchase all outstanding shares of Junior Preferred
Stock at a purchase price equal to 101% of the
liquidation preference thereof, plus, without
duplication, accumulated and unpaid dividends to
the date of purchase. There can be no assurance
that the Company will have sufficient funds to
purchase all of the Junior Preferred Stock in the
event of a Change of Control or that the Company
would be able to obtain financing for such purpose
on favorable terms, if at all.
Certain Restrictive
Provisions................. The Certificate of Designation will contain certain
restrictive provisions that, among other things,
limit the ability of the Company and its
subsidiaries to: (i) incur additional Indebtedness;
(ii) issue additional preferred stock ranking
senior to or pari passu with the Junior Preferred
Stock; (iii) pay dividends or make certain other
restricted payments; or (iv) merge or consolidate
with or sell all or substantially all of their
assets to any other person.
THE NEW EXCHANGE DEBENTURES
Issue...................... 13 1/4% Exchange Debentures due 2006 issuable in
exchange for the Junior Preferred Stock in an
aggregate principal amount equal to the liquidation
preference of the Junior Preferred Stock so
exchanged, plus, without duplication, accumulated
and unpaid dividends to the date fixed for the
exchange thereof (the "Exchange Date"), plus any
additional New Exchange Debentures issued from time
to time in lieu of cash interest.
Maturity Date.............. November 15, 2006.
Interest Rate and Payment
Dates...................... The New Exchange Debentures will bear interest at a
rate of 13 1/4% per annum. Interest will accrue
from the date of issuance or from the most recent
interest payment date to which interest has been
paid or provided for or, if no interest has been
paid or provided for, from the Exchange Date.
Interest will be payable semi-annually in cash (or,
at the option of the Company, on or prior to May
15, 2003, in additional New Exchange Debentures) in
arrears on each May 15 and November 15, commencing
with the first such date after the Exchange Date.
Optional Redemption........ The New Exchange Debentures are redeemable, at the
option of the Company, in whole or in part, at any
time on or after May 15, 2003 at the redemption
prices set forth herein, plus accrued and unpaid
interest to the date of redemption. In addition,
prior to May 15, 2001, the Company may, at its
option, use the net proceeds of one or more Public
Equity Offerings or Major Asset Sales to redeem up
to 35% of the aggregate principal amount of the New
Exchange Debentures (whether issued in exchange for
Junior Preferred Stock or in lieu of cash interest
payments), at the redemption prices set forth
herein, plus accrued and unpaid interest to the
date of redemption; provided, however, that after
any such redemption, there is at least (i) $75.0
million aggregate principal amount of New Exchange
Debentures or (ii) $130.0 million combined
aggregate liquidation preference of Junior
Preferred Stock and aggregate principal amount of
New Exchange Debentures outstanding
13
<PAGE> 24
and that such redemption occurs within 90 days
following the closing of such Public Equity
Offering or Major Asset Sale.
Ranking.................... The New Exchange Debentures will be subordinated to
all existing and future Senior Debt of the Company.
In addition, the New Exchange Debentures will be
effectively subordinated to all existing and future
Indebtedness of the Company's subsidiaries. The New
Exchange Debentures will rank pari passu with the
Company's 11 5/8% Senior Subordinated Notes (the
"Existing Notes") and will rank pari passu or
senior to any Indebtedness that expressly provides
that it ranks pari passu or subordinate to the New
Exchange Debentures, as the case may be.
Guarantees................. The New Exchange Debentures will be unconditionally
guaranteed, jointly and severally, on a
subordinated basis by each of the Guarantors (the
"Guarantees"). The New Exchange Debenture
Guarantees will be general unsecured obligations of
the Guarantors and will be subordinated in right of
payment to all existing and future Senior Debt of
the Guarantors. See "Description of the New
Exchange Debentures -- Guarantees."
Change of Control.......... In the event of a Change of Control, the Company
will, subject to certain conditions, be required to
offer to purchase all outstanding New Exchange
Debentures at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid
interest to the date of purchase. There can be no
assurance that the Company will have sufficient
funds to purchase all of the New Exchange
Debentures in the event of a Change of Control or
that the Company would be able to obtain financing
for such purpose on favorable terms, if at all. See
"Risk Factors -- Change of Control" and
"Description of Junior Preferred Stock and New
Exchange Debentures -- New Exchange
Debentures -- Change of Control."
Certain Covenants.......... The indenture governing the New Exchange Debentures
(the "New Exchange Indenture") will contain certain
covenants that, among other things, restrict the
ability of the Company and its subsidiaries to: (i)
incur additional Indebtedness; (ii) pay dividends
or make certain other restricted payments; (iii)
sell assets; (iv) enter into certain transactions
with affiliates; or (v) merge or consolidate with
or sell all or substantially all of their assets to
any other person.
For a more complete description of the Junior Preferred Stock and New
Exchange Debentures, including the definitions of certain capitalized terms used
above, see "Description of Junior Preferred Stock and New Exchange Debentures."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the Junior Preferred Stock.
14
<PAGE> 25
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following summary historical and pro forma financial data, insofar as
it relates to each of the five years in the period ended December 31, 1997, has
been derived from annual financial statements, including the consolidated
balance sheets at December 31, 1996 and 1997 and the related consolidated
statements of operations, of changes in common stockholders' equity and of cash
flows for each of the three years in the period ended December 31, 1997 and the
notes thereto appearing elsewhere herein. The data for the three months ended
March 31, 1997 and 1998 has been derived from unaudited financial statements
also appearing herein and which, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for the unaudited interim periods. The summary
historical financial data should be read in conjunction with the information
contained in the Company's consolidated financial statements and the notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Selected Historical and Pro Forma Financial Data"
included elsewhere herein.
The unaudited summary pro forma balance sheet data gives effect to the
consummation of the Transactions as if such transactions had taken place on
March 31, 1998. The unaudited pro forma dividends and accretion on preferred
stock give effect to the consummation of the Transactions as if the Transactions
had taken place at the beginning of each period presented. Certain management
assumptions and adjustments are described in the accompanying notes hereto. The
pro forma information should be read in conjunction with the Company's
consolidated financial statements and the notes thereto included elsewhere in
this Prospectus. See "Unaudited Pro Forma Balance Sheet Data" appearing
elsewhere in this Prospectus. This pro forma information is not necessarily
indicative of the Company's actual or future financial position or results of
operations.
15
<PAGE> 26
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.................................. $ 1,982 $ 4,227 $ 31,784 $ 62,333 $ 88,421 $ 18,937 $ 31,665
Operating expenses, excluding depreciation,
amortization, compensation associated with
Paxson Radio asset sales and option plan
compensation.................................. 4,932 7,221 26,081 46,364 75,241 14,593 27,678
Compensation associated with Paxson Radio asset
sales(a)...................................... -- -- -- -- 9,700 -- --
Option plan compensation(b)..................... -- -- 9,052 6,976 3,370 714 307
Depreciation and amortization................... 321 1,653 4,648 12,888 22,044 4,080 7,950
-------- -------- -------- -------- -------- -------- --------
Operating loss.................................. (3,271) (4,647) (7,997) (3,895) (21,934) (450) (4,270)
Interest expense................................ (170) (6,216) (17,151) (31,526) (37,728) (8,735) (10,505)
Interest income................................. 113 359 1,651 6,741 9,495 1,316 6,180
Other income (expense), net..................... 7 83 (488) (1,756) (5,722) 146 (246)
Gain on sale of television stations............. -- -- -- -- -- -- 14,330
Equity in loss of unconsolidated investment..... -- -- -- -- (2,493) -- (1,290)
-------- -------- -------- -------- -------- -------- --------
(Loss) income from continuing operations before
income tax (provision) benefit and
extraordinary item............................ (3,321) (10,421) (23,985) (30,436) (58,382) (7,723) 4,199
Income tax (provision) benefit.................. (2,960) 1,680 1,280 -- 21,879 -- (1,557)
Discontinued operations(c)...................... (4,671) 3,979 (142) 4,217 251,193 (736) --
Extraordinary item(d)........................... (457) -- (10,626) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net (loss) income............................... (11,409) (4,762) (33,473) (26,219) 214,690 (8,459) 2,642
Dividends and accretion on preferred stock and
common stock warrants(e)...................... (151) (3,386) (13,297) (21,908) (26,277) (6,272) (7,082)
-------- -------- -------- -------- -------- -------- --------
Net (loss) income attributable to common
stock......................................... $(11,560) $ (8,148) $(46,770) $(48,127) $188,413 $(14,731) $ (4,440)
======== ======== ======== ======== ======== ======== ========
Basic and diluted earnings per share(f)(g):
Loss from continuing operations................. $ (0.21) $ (0.36) $ (1.05) $ (1.20) $ (1.17) $ (0.28) $ (0.07)
Discontinued operations......................... (0.15) 0.12 -- 0.10 4.67 (0.02) --
Extraordinary item.............................. (0.01) -- (0.31) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net (loss) income............................... $ (0.37) $ (0.24) $ (1.36) $ (1.10) $ 3.50 $ (0.30) $ (0.07)
======== ======== ======== ======== ======== ======== ========
Weighted average common shares outstanding...... 31,582 33,430 34,430 43,837 53,808 48,778 59,589
Cash dividends declared......................... -- -- -- -- -- -- --
OTHER DATA:
EBITDA(h)....................................... $ (2,949) $ (2,556) $ 7,123 $ 19,487 $ 30,186 $ 5,356 $ 10,575
Capital expenditures(i)......................... -- 2,767 12,581 30,203 36,260 9,262 14,147
Pro forma dividends and accretion on preferred
stock(j)...................................... 62,951 15,963
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1998
-------------------------
ACTUAL PRO FORMA(K)
---------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(l)................................ $ 154,286 $ 69,331
Working capital............................................. 134,817 49,707
Total assets................................................ 1,074,597 1,374,149
Total debt.................................................. 350,713 350,713
Redeemable preferred stock.................................. 218,068 478,608
(see footnotes on the following page)
</TABLE>
16
<PAGE> 27
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Bonuses paid to certain members of the Company's management in connection
with their efforts in assimilating, operating, and arranging for the sale of
the Company's radio stations and related properties in 1997.
(b) Option plan compensation represents a non-cash charge associated with the
granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Continuing Operations" and
"Management -- Stock Incentive Plans."
(c) Includes in 1997 a gain on disposal of discontinued operations of $254.7
million, net of applicable income taxes.
(d) Extraordinary item reflects an extraordinary loss of $457,000 and $10.6
million in 1993 and 1995, respectively, associated with the write-off of
capitalized financing costs on debt retired.
(e) Dividends and accretion on preferred stock and common stock warrants for the
years ended December 31, 1993 to 1997 and the three months ended March 31,
1997 and 1998 represent non-cash dividends and accretion on the Company's
mandatorily redeemable securities. See "Description of Capital Stock."
(f) The Company computes per share data in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." Due to losses
from continuing operations, the effect of stock options and warrants is
antidilutive. Accordingly, the Company's presentation of diluted earnings
per share is the same as that of basic earnings per share.
(g) Loss per share data and weighted average shares outstanding for the years
ended December 31, 1993 and 1994 give retroactive effect to (i) the
Company's recapitalization related to the merger with The American Network
Group, Inc.; and (ii) a stock dividend on common shares outstanding on
January 1, 1995.
(h) EBITDA is defined as operating income (loss), excluding non-recurring items
(including 1997 compensation associated with Paxson Radio asset sales and
relocation costs), plus time brokerage fees, depreciation, amortization and
other non-cash charges, including amortization of programming rights and
option plan compensation, minus programming payments (including a ratable
portion of programming deposits). EBITDA, as so defined, may not be
comparable to similarly titled measures used by other companies.
(i) Includes all capital expenditures by the Company's inTV and corporate
segments including expenditures associated with the upgrade and conversion
of acquired and operated television stations to the inTV format.
(j) The pro forma dividends and accretion on preferred stock give effect to the
consummation of the Transactions as if the Transactions had taken place at
the beginning of each period presented.
(k) The pro forma balance sheet data as of March 31, 1998 gives effect to the
consummation of the Transactions as if the Transactions had occurred on
March 31, 1998.
(l) Includes cash, cash equivalents and restricted cash.
17
<PAGE> 28
RISK FACTORS
Prospective investors should consider carefully the following risk factors
in addition to the other information set forth in this Prospectus in evaluating
an investment in the Junior Preferred Stock.
HIGH LEVEL OF INDEBTEDNESS; ABILITY TO SERVICE INDEBTEDNESS AND SATISFY
PREFERRED STOCK DIVIDEND REQUIREMENTS
The Company is highly leveraged. At March 31, 1998, pro forma for the
Transactions, the Company would have had outstanding $350.7 million of
Indebtedness and redeemable preferred stock with an aggregate liquidation
preference of $503.0 million. In addition, subject to restrictions in the Credit
Facility and the indenture (the "Existing Indenture") governing the Existing
Notes, and in the terms of the Company's Junior Cumulative Compounding
Redeemable Preferred Stock (the "Private Preferred Stock") and redeemable
12 1/2% Cumulative Exchangeable Preferred Stock (the "Public Preferred Stock,"
and collectively with the Private Preferred Stock, the "Existing Preferred
Stock"), the Company may incur additional indebtedness and issue additional
shares of preferred stock from time to time to finance acquisitions or capital
expenditures or for other corporate purposes. Interest expense for the years
ended December 31, 1995, 1996 and 1997 was $17.1 million, $31.5 million and
$37.7 million, respectively.
The level of the Company's indebtedness could have important consequences
to investors in the Securities, including: (i) a significant portion of the
Company's cash flow from operations must be dedicated to debt service and will
not be available for other purposes; (ii) the Company's ability to obtain
additional financing in the future, if needed, may be limited; (iii) the
Company's leveraged position and covenants contained in the Credit Facility (or
any replacement thereof) and the Existing Indenture could limit its ability to
expand and make capital improvements and acquisitions; (iv) the Credit Facility
and the Existing Indenture and the Existing Preferred Stock contain certain
restrictive covenants, including covenants that restrict or prohibit the payment
of dividends or other distributions by the Company to its stockholders; and (v)
the Company's level of indebtedness could make it more vulnerable to economic
downturns, limit its ability to withstand competitive pressures and limit its
flexibility in reacting to changes in its industry and economic conditions
generally. Certain of the Company's competitors currently operate on a less
leveraged basis and may have significantly greater operating and financing
flexibility than the Company.
The Company also has substantial dividend and redemption obligations under
the Existing Preferred Stock. Until December 22, 1999, the Company has the
option to defer cash payment of accrued dividends on the Private Preferred
Stock, in which case all dividends which have accrued as of January 1 and July 1
of each year are added to the liquidation price thereof. Dividends accumulate on
the Private Preferred Stock at an annual rate of 12% of the liquidation price
thereof. To date, the Company has paid no cash dividends on the Private
Preferred Stock, and as of December 31, 1997, there was an aggregate of $13.9
million in accumulated and unpaid dividends thereon. The Company is obligated to
redeem on December 22, 2003, out of unrestricted funds legally available
therefor, all of the shares of the Private Preferred Stock then outstanding, at
a redemption price equal to the liquidation price for such shares, as of the
redemption date, plus the amount of all accumulated and unpaid dividends
thereon, payable in cash. Dividends accumulate on the Public Preferred Stock at
an annual rate of 12 1/2% of the liquidation price thereof. Until October 31,
2002, the Company has the option to pay dividends thereon either in cash or by
the issuance of additional shares of Public Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends. To date, the
Company has paid no cash dividends on the Public Preferred Stock, and as of
December 31, 1997, the Company has issued additional shares of Public Preferred
Stock in lieu of cash dividends with an aggregate liquidation preference equal
to $20.8 million and an additional $3.6 million of unpaid dividends have
accumulated thereon. The Company is required, subject to certain conditions, to
redeem all of the Public Preferred Stock outstanding on October 31, 2006.
Holders of shares of the Existing Preferred Stock are entitled to require the
Company to redeem their shares of Existing Preferred Stock upon the occurrence
of a bankruptcy or similar event relating to the Company, and holders of the
Private Preferred Stock are entitled to require the Company to redeem their
shares of Private Preferred Stock upon a default by the Company under the terms
of the Stockholders Agreement (as defined). The failure or inability of the
Company to pay amounts which become payable with
18
<PAGE> 29
respect to the Existing Preferred Stock could have adverse consequences to the
holders of the Junior Preferred Stock. See "Description of Capital
Stock -- Private Preferred Stock" and "-- Public Preferred Stock."
The Company's ability to pay cash dividends on, and satisfy its redemption
obligations in respect of, the Junior Preferred Stock and to satisfy its debt
obligations and its dividend and redemption obligations with respect to the
Existing Preferred Stock will depend upon its future operating performance,
which will be affected by prevailing economic conditions and financial, business
and other factors, many of which are beyond its control. If the Company is
unable to service its indebtedness or make required cash payments with respect
to its Preferred Stock (as defined), it will be forced to adopt an alternative
strategy that may include actions such as reducing or delaying capital
expenditures, selling assets, restructuring or refinancing its indebtedness or
seeking additional equity capital. There is no assurance that any of these
strategies could be effected on satisfactory terms, if at all, and the
implementation of any of these alternative strategies could have a negative
impact on the value of the Junior Preferred Stock. In the event of a liquidation
of the Company, the Junior Preferred Stock would be subordinate in right of
payment to the Company's indebtedness and its Existing Preferred Stock, as well
as to any preferred stock which the Company may issue ranking senior to the
Junior Preferred Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
HISTORY OF NET LOSSES; INSUFFICIENCY OF EARNINGS TO COVER FIXED CHARGES
Prior to 1998, the Company had incurred losses from continuing operations
in each of its fiscal years since inception. As a result of the foregoing, for
the years ended December 31, 1995, 1996 and 1997, the Company's earnings were
insufficient to cover combined fixed charges and preferred stock dividend
requirements by approximately $32.6 million, $49.7 million and $84.2 million,
respectively. The Company expects to continue to experience net losses in the
foreseeable future, principally as a result of PAX NET startup costs and non-
cash charges for depreciation and amortization expense related to fixed assets
and goodwill relating to acquisitions, including the Proposed Acquisitions,
which may be greater than the net losses experienced by the Company in the past.
LIMITATIONS ON ABILITY TO PAY DIVIDENDS
The Credit Facility prohibits the payment of cash dividends on the Junior
Preferred Stock through the maturity of the borrowings under the Credit Facility
in 2002. Dividends on the Junior Preferred Stock may be paid, at the Company's
option, on any dividend payment date either in cash or by the issuance of
additional shares of Junior Preferred Stock having an aggregate liquidation
preference equal to the amount of such dividends, provided that if any dividend
payable subsequent to May 15, 2003, is not paid in full in cash, the per annum
dividend rate will be increased by 1.0% for that dividend payment period.
The terms of the Private Preferred Stock provide that the Company may not
declare or pay any cash dividends or make any cash distributions in respect of
the Junior Preferred Stock until all accrued and unpaid dividends on the Private
Preferred Stock have been declared and paid and, in the event the Company is
required to redeem the Private Preferred Stock, monies sufficient for such
purpose have been set aside. The Existing Indenture and the terms of the Public
Preferred Stock also limit the ability of the Company to pay cash dividends to
holders of its capital stock, as will the terms of the Existing Exchange
Debentures if issued.
In addition to the foregoing limitations, under Delaware law the Company is
permitted to pay dividends on its capital stock, including the Junior Preferred
Stock, only out of its surplus or, in the event that it has no surplus, out of
its net profits for the year in which a dividend is declared or for the
immediately preceding fiscal year. Surplus is defined as the excess of a
Company's total assets over the sum of its total liabilities plus the par value
of its outstanding capital stock. In order to pay dividends in cash, the Company
must have surplus or net profits equal to the full amount of the cash dividend
at the time such dividend is declared. In determining the Company's ability to
pay dividends, Delaware law permits the Board of Directors to revalue the
Company's assets and liabilities from time to time to their fair market values
in order to create surplus. The Company cannot predict what the value of its
assets or the amount of its liabilities will be in the future and, accordingly,
there is no assurance that the Company will be able to pay cash dividends on the
Junior Preferred Stock.
19
<PAGE> 30
RISKS ASSOCIATED WITH THE LAUNCH OF PAX NET
The Company announced in November 1997 that it intends to launch PAX NET, a
new television programming service, on August 31, 1998. As the Company intends
to operate PAX NET differently from traditional television and cable networks
and independent stations, and believes its revenues and expenses will likewise
be different, the Company's strategies with respect to PAX NET cannot be tested
against traditional television and cable network and independent station data or
experiences. The success of the Company's stations will depend largely upon the
programming PAX NET offers and the Company's cost of obtaining such programming.
The Company seeks to acquire programming for PAX NET which will generate
sufficient ratings to enable the Company to capture advertising revenues
exceeding the Company's programming costs and other expenses. The Company has
made certain assumptions in formulating its strategies including, among others,
the Company's ability to achieve certain ratings, sell out its advertising time
at targeted rates, locate and hire a significant number of additional employees
which the Company expects will be necessary for the launch of PAX NET, operate
its stations at the anticipated staffing levels, achieve targeted cost savings
through the centralization of certain tasks for its multiple stations, sell time
utilizing limited outside sales representatives, attract affiliates and acquire
additional stations, and continue to sell time for long-form paid programming
during the day and on weekends, at anticipated rates. There can be no assurance
that the PAX NET programming obtained by the Company will generate sufficient
audience ratings for the profitable operation of PAX NET or that the Company's
programming costs will not prove excessive in relation to its advertising
revenues, nor can there be any assurance that any of the Company's assumptions
regarding the start-up and operation of PAX NET will prove correct.
RELIANCE ON TELEVISION PROGRAMMING
One of the Company's most significant operating cost components will be
television programming. There can be no assurance that the Company will not be
exposed in the future to increased programming costs which may materially
adversely affect the Company's operating results. Acquisitions of program rights
may be made several years in advance and may require multi-year commitments,
making it difficult to accurately predict how a program will perform. In some
instances, programs must be replaced before their costs have been fully
amortized, resulting in write-offs that increase station operating costs.
RANKING OF THE JUNIOR PREFERRED STOCK
The Junior Preferred Stock will rank junior in right of payment upon
liquidation to all existing and future indebtedness of the Company and to all
shares of preferred stock of the Company (including the Existing Preferred
Stock) other than preferred stock which by its terms ranks on a parity with or
junior to the Junior Preferred Stock. The Junior Preferred Stock will rank
senior in right of payment upon liquidation to the Convertible Preferred Stock
and the Common Stock. As of March 31, 1998, pro forma for the Transactions, the
Company would have had outstanding approximately $350.7 million of Indebtedness
and $228.0 million aggregate liquidation preference of preferred stock ranking
senior to the Junior Preferred Stock. See "Description of Junior Preferred Stock
and New Exchange Debentures."
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Credit Facility and the Existing Indenture contains certain covenants
that restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, make investments, pay dividends or make certain other
restricted payments, consummate certain asset sales, consolidate with any other
person or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company. In addition, the Credit Facility
requires the Company to comply with certain financial ratios and tests, under
which the Company is required to achieve certain financial and operating
results. The Company's ability to meet these financial ratios and tests may be
affected by events beyond its control, and there can be no assurance that they
will be met. In the event of a default under the Credit Facility, the lenders
may declare the indebtedness thereunder immediately due and payable, which would
result in a default under the Existing Notes. There can be no assurance that the
Company would have sufficient assets to pay indebtedness then
20
<PAGE> 31
outstanding under the Credit Facility and the Existing Notes. Any refinancing of
the Credit Facility is likely to contain similar restrictive covenants.
RESTRICTIONS IMPOSED BY TERMS OF EXISTING PREFERRED STOCK
The terms of the Private Preferred Stock provide that the Company may not
declare or pay any cash dividends or make any cash distributions in respect of
the Junior Preferred Stock until all accrued and unpaid dividends on the Private
Preferred Stock have been declared and paid and, in the event the Company is
required to redeem the Private Preferred Stock, monies sufficient for such
purpose have been set aside. So long as any shares of Existing Preferred Stock
remain outstanding, the Company may not directly or indirectly purchase, redeem,
exchange or otherwise acquire the Junior Preferred Stock. The dividend rate on
the Private Preferred Stock will increase to an annual rate of 30%: (i) upon the
occurrence of certain bankruptcy events; (ii) upon a change of control of the
Company, as defined in the Stockholders Agreement; (iii) upon the failure to
choose a successor to Mr. Paxson in the event of his death or incapacity as
provided in the Stockholders Agreement; (iv) if the Company incurs indebtedness
in excess of that permitted by certain financial leverage ratios; (v) upon the
failure to pay cash dividends thereon on or after December 22, 2000, equal to
the amount of dividends payable in any twelve month period; or (vi) if the
Private Preferred Stock remains outstanding after December 22, 2003. Such
increased dividend rate shall remain in effect for so long as any such event
continues and will increase by 5% on each anniversary of such event or, in the
case of a bankruptcy event, upon the failure of the Company to redeem the
Private Preferred Stock at the request of the holders thereof. See "Description
of Capital Stock -- Private Preferred Stock."
The terms of the Public Preferred Stock restrict the Company's ability to
declare or pay any cash dividends or make any cash distributions in respect of
the Junior Preferred Stock, unless the Company is permitted by the terms thereof
to make certain restricted payments. Similar restrictions limit the Company's
ability to, directly or indirectly, purchase, redeem, exchange or otherwise
acquire the Junior Preferred Stock. Further, the terms of the Public Preferred
Stock, among other things, limit the ability of the Company and its subsidiaries
to incur additional indebtedness, issue additional preferred stock ranking
senior or pari passu with the Junior Preferred Stock, or merge or consolidate
with or sell all or substantially all of their assets to any other person. The
Company's failure to comply with such covenants permit holders of a majority of
the outstanding shares of Junior Preferred Stock, voting as a class, to under
certain circumstances elect the lesser of two directors of the Company or that
number of directors of the Company that constitute at least 25% of the Company's
Board of Directors. See "Description of Capital Stock -- Public Preferred
Stock." Upon a "Change of Control" (as defined in the terms of the Public
Preferred Stock), the Company will be required to offer to purchase all of the
shares of Public Preferred Stock then outstanding at 101% of the then effective
liquidation preference plus, without duplication, accumulate and pay dividends
to the repurchase date.
DEPENDENCE ON KEY PERSONNEL
The Company's business depends upon its ability to attract and retain
skilled managers and other personnel, including its executive officers and other
key employees. The loss of the services of certain executive officers,
especially Lowell W. Paxson, could have a material adverse effect on the
Company's operating results. In addition, in the event of Mr. Paxson's death,
the Company may be required, in certain circumstances, to make an offer to
repurchase the Existing Notes and to redeem the Private Preferred Stock. See
"Certain Relationships and Related Transactions -- Stockholders Agreement."
There can be no assurance that if such an event were to occur, the Company would
have, or would have access to, sufficient funds to satisfy such repurchase or
redemption obligations. Mr. Paxson has an employment agreement that expires on
December 31, 1999, unless terminated sooner as permitted therein. See
"Management -- Employment Agreements."
"MUST CARRY" REGULATIONS
Management believes that the Company's growth and success of its television
operations has and will continue to depend materially upon its access to
households served by cable television systems. Pursuant to the 1992 Cable Act,
broadcasters are required to elect, every three years, to exercise either
certain "must carry" or
21
<PAGE> 32
retransmission consent rights in connection with the carriage of their signals
by cable systems in their local market. By electing the "must carry" rights, a
broadcaster can demand carriage on a specified channel on cable systems within
its DMA, provided the broadcaster's television signal can be delivered to the
cable system operator's cable head end at a specified strength. These "must
carry" rights are not absolute, and their exercise depends on variables such as
the number of activated channels on a cable system, the location and size of a
cable system, and the amount of duplicative programming on a broadcast station.
Therefore, under certain circumstances, a cable system can decline to carry a
given station. Alternatively, if a broadcaster chooses to exercise
retransmission consent rights, it can prohibit cable systems from carrying its
signal or grant the appropriate cable system the authority to retransmit the
broadcast signal for a fee or other consideration. The Company's television
stations have elected the "must carry" alternative. The Company's elections of
retransmission or "must carry" status will continue until the next required
election date of October 1, 1999. If the law were changed to eliminate or
materially alter "must carry" rights, the Company could suffer adverse effects.
GOVERNMENT REGULATION
Each of the Company's television stations operates pursuant to one or more
licenses issued by the Federal Communications Commission (the "FCC") that expire
at different times, some of which are currently up for renewal. The Company may
apply to renew those licenses, and third parties may challenge those
applications. The license term for broadcast television stations is eight years.
Although the Company has no reason to believe that its licenses will not be
renewed in the ordinary course, there can be no assurance that the licenses will
be renewed.
The television broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules and policies require FCC consent to
assignments of FCC licenses and transfers of control of corporations or other
entities holding broadcast licenses. Congress and the FCC currently have under
consideration and may in the future adopt new laws, regulations and policies
regarding a wide variety of matters which could, directly or indirectly,
adversely affect the ownership and operation of the Company's broadcast
properties, as well as the Company's business strategies. In addition,
relaxation of existing multiple ownership and cross-ownership rules and policies
by the FCC, as provided in the Telecommunications Act of 1996 (the "1996 Act"),
removes certain restrictions on larger media, entertainment and
telecommunications companies, some with greater access to capital and resources
than the Company, from competing with the Company for the acquisition of media
properties and the negotiation of programming arrangements. Changes in the FCC's
rules following passage of the 1996 Act, such as elimination of restrictions on
the offering of multiple network services by the existing major television
networks, the relaxation of restrictions on the participation by the regional
Bell holding companies in cable television and other direct-to-home video
technologies, the removal of nationwide restrictions and the relaxation of local
restrictions on radio broadcast ownership and the relaxation of restrictions on
nationwide broadcast television ownership could accelerate the existing trend
toward vertical integration in the telecommunications, media and home
entertainment industries and cause the Company to face more formidable
competition in the future. See "Business -- Federal Regulation of Broadcasting."
The Communications Act requires the prior approval of the FCC for the
transfer of control of an FCC licensee. Under certain circumstances, the
exercise by holders of the Junior Preferred Stock of their rights to elect
directors to the Board of Directors and the exercise by holders of other
Preferred Stock of similar rights may constitute a transfer of control of the
Company for FCC purposes and may therefore be subject to prior FCC approval or
other limitations.
MULTIPLE OWNERSHIP RULES; TIME BROKERAGE AGREEMENTS
Current FCC rules prohibit ownership interests in two or more television
stations with overlapping service areas. The FCC generally applies its ownership
limits to attributable interests held by an individual, corporation, partnership
or other entity. In the case of corporations holding broadcast licenses, the
interests of officers, directors and those who directly or indirectly have the
right to vote 5% or more of the corporation's voting stock (or 10% or more of
such stock in the case of insurance companies, certain regulated investment
22
<PAGE> 33
companies and bank trust departments) are generally deemed to be attributable,
as are the interests of officers and directors of a corporate parent of a
broadcast licensee. Changes in the rule for attributing the ownership of media
interests for purposes of the FCC's multiple ownership and cross-ownership rules
could require that the Company restructure or divest itself of some of its
existing broadcast interests.
The 1996 Act eliminated the existing restrictions on the number of
television stations that a single entity may own nationwide and increased the
nationwide ceiling for national television audience reach to 35% of the
television households, with UHF stations counting as only 50% of their
respective market television households. Congress also has directed the FCC to
institute a proceeding to review its present rules to determine whether to
retain, modify or eliminate its present restrictions on the number of television
stations in which a single entity may hold an attributable interest within a
single market.
Prior to passage of the 1996 Act, the FCC initiated rule making proceedings
to consider proposals to modify its television ownership restrictions, including
rule makings that may permit ownership, in some circumstances, of two television
stations with overlapping service areas, and these rule making procedures may be
incorporated in the proceedings required by the 1996 Act. The FCC also is
considering in these proceedings whether to adopt restrictions on television
time brokerage agreements. The television duopoly and one-to-a-market rules
currently prevent the Company from acquiring the FCC licenses of television
stations with which it has time brokerage agreements in those markets where the
Company owns a television station. In addition, if the FCC were to decide that
the provider of programming services under time brokerage agreements should be
treated as having an attributable ownership in the television station it
programs, and if it did not relax the corresponding duopoly rules, or if the FCC
were to adopt restrictions on time brokerage agreements without grandfathering
existing time brokerage agreements, the Company could be required to renegotiate
or terminate certain of its time brokerage agreements. The 1996 Act specifies,
however, that none of the provisions relating to broadcast ownership shall be
construed to prohibit the origination, continuation or renewal of any television
time brokerage agreement that is in compliance with the regulations of the FCC.
The Committee Report accompanying the 1996 Act notes that the Act grandfathers
time brokerage agreements in existence upon enactment of the Act and allows time
brokerage agreements in the future, consistent with the FCC's rules.
Nevertheless, if in individual cases the FCC were to find that the licensee of a
station with which the Company has a time brokerage agreement failed to maintain
control over its operations as required by FCC rules and policies, the licensee
of the time brokerage agreement and/or the Company could be fined or could be
set for hearing, the outcome of which could be a fine or, under certain
circumstances, loss of the applicable FCC license. The Company is unable to
predict the ultimate outcome of possible changes to these FCC rules and the
impact such FCC rules may have on its broadcasting operations. See
"Business -- Federal Regulation of Broadcasting."
CHANGE OF CONTROL
A "change of control" (as defined in the Credit Facility) constitutes an
event of default under the Credit Facility. In the event of a "change of
control" (as defined in the Existing Indenture), the Company will be required to
offer to purchase all of the outstanding Existing Notes at a price equal to 101%
of the principal amount thereof plus any accrued and unpaid interest thereon to
the date of repurchase. In the event of a "change of control" (as defined with
respect to the Junior Preferred Stock), the Company will be required to offer to
purchase all of the shares of the Junior Preferred Stock then outstanding at
101% of the then effective liquidation preference thereof plus, without
duplication, accumulated and unpaid dividends thereon to the repurchase date. A
"change of control" (as defined with respect to the Private Preferred Stock)
will require the Company to pay a significantly higher dividend on the Private
Preferred Stock, unless it is redeemed. A "change of control" (as defined with
respect to the Public Preferred Stock), will require the Company to offer to
purchase all of the shares of Public Preferred Stock then outstanding at 101% of
the then effective liquidation preference plus, without duplication, accumulated
and unpaid dividends to the repurchase date. The repurchase by the Company of
the Existing Notes or the Public Preferred Stock upon a change of control could
also cause a default under the Credit Facility. There can be no assurance that
in the event of any such changes of control, the Company will have, or will have
access to, sufficient funds or will be contractually permitted under the terms
of outstanding indebtedness to repay its indebtedness under the Credit Facility,
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repay the Existing Notes, or pay the required purchase price for the shares of
Junior Preferred Stock and Public Preferred Stock tendered by holders upon a
change of control. In such event, the Company could be required to seek
third-party financing to the extent it did not have sufficient available funds
to meet its purchase obligations, and there can be no assurance that the Company
would be able to obtain such financing on favorable terms, if at all. Further,
the Existing Indenture and the terms of the Existing Preferred Stock restrict
the Company's ability to repurchase shares of Junior Preferred Stock, including
upon a change of control. See "Description of Capital Stock" and "Description of
Indebtedness."
CERTAIN TAX CONSIDERATIONS
Distributions on the Junior Preferred Stock, whether paid in cash or in
additional shares of Junior Preferred Stock, will be taxable as ordinary
dividend income to the extent of the Company's current and accumulated earnings
and profits. A holder's initial tax basis in any additional shares of Junior
Preferred Stock distributed by the Company in lieu of cash dividend payments on
the Junior Preferred Stock ("Dividend Shares") will equal the fair market value
of such Dividend Shares on their date of distribution. In addition, depending
upon the fair market value of shares of Junior Preferred Stock on the date of
their issuance, holders may be required to include additional amounts of income
based on the difference between (x) the fair market value of such shares on the
date of their issuance and (y) the amount payable in redemption of such shares,
unless the difference is de minimis under the applicable standard (such
difference being referred to as "Preferred Stock Discount"). If shares of Junior
Preferred Stock (including Dividend Shares) bear Preferred Stock Discount, such
shares generally will have different tax characteristics from other shares of
Junior Preferred Stock and might trade separately, which might adversely affect
the liquidity of such shares.
The Company structured the disposition of its radio division in 1997 in a
manner that management currently believes will permit it to defer recognizing
for income tax purposes up to approximately $305 million of gain (before
deferred taxes). Such deferral could be contested by the Internal Revenue
Service ("IRS"). Based on the advice of counsel, management believes that, in
the event of a challenge by the IRS of these tax positions, it is more likely
than not that the Company would prevail. Should the IRS successfully challenge
the Company on these matters, the Company could be subject to a material current
tax liability.
DISCRETION OF MANAGEMENT CONCERNING USE OF PROCEEDS
A portion of the net proceeds of the Offerings is anticipated to be used to
fund the Proposed Acquisitions and related capital expenditures. It is
anticipated that pending such use, such proceeds will be invested in certain
short-term investments. Such funds, with the Company's existing working capital,
will constitute a significant amount of funds available to the Company, as to
the application of which management will have substantial discretion, including
funding additional broadcast and non-broadcast acquisition opportunities that
may arise that are not included in the Proposed Acquisitions. There can be no
assurance the Company will deploy such funds in a manner that will enhance the
financial condition of the Company. See "Use of Proceeds."
ABILITY TO MANAGE GROWTH
Since inception, the Company has experienced rapid growth, primarily
through acquisitions. Rapidly growing businesses frequently encounter unforeseen
expenses and delays in completing acquisitions, as well as difficulties and
complications in integrating acquired operations without disruption to overall
operations. In addition, such rapid growth may adversely affect the Company's
operating results because of many factors, including capital requirements,
transitional management and operating adjustments, and interest costs associated
with acquisition debt. There can be no assurance that the Company will
successfully integrate recently acquired and future acquired operations or
successfully manage the costs often associated with rapid growth. The Company
continuously evaluates the acquisition or operation of additional television
stations.
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TIME BROKERAGE AGREEMENTS -- RIGHTS OF PREEMPTION AND TERMINATION
The Company operates 14 television stations pursuant to time brokerage
agreements, which stations are not owned by the Company. All of the Company's
time brokerage agreements allow, in accordance with FCC rules, regulations and
policies, preemption of the Company's programming by the FCC licensee of each
station with which the Company has a time brokerage agreement. In addition, each
time brokerage agreement provides that under certain limited circumstances it
may be terminated by the FCC licensee. Accordingly, there can be no assurance
that the Company will be able to air all of the programming expected to be aired
on those stations with which it has a time brokerage agreement or that the
Company will receive the expected advertising revenue from the sale of
advertising in such programming. Although management believes that the terms and
conditions of each of the Company's time brokerage agreements should enable the
Company to air and utilize the programming and other non-broadcast license
assets of the respective stations, there can be no assurance that early
terminations of the time brokerage agreements or unexpected preemptions of all
or a significant part of the programming by the FCC licensee of such stations
will not occur. An early termination of the Company's time brokerage agreements
or repeated and material preemptions of programming could adversely affect the
Company's operations. In addition, the Company's time brokerage agreements
generally have expiration dates ranging from seven to ten years. The Company
expects its future time brokerage agreements to have terms of not more than ten
years. There can be no assurance that the Company will be able to negotiate
extensions of its time brokerage agreements on terms satisfactory to the
Company.
INDUSTRY AND ECONOMIC CONDITIONS; SEASONALITY
The profitability of the Company's television stations is subject to
various factors that influence the television broadcasting industry as a whole.
The Company's television stations may be affected by numerous factors, including
changes in audience tastes, priorities of advertisers, new laws and governmental
regulations and policies, changes in broadcast technical requirements,
technological changes, proposals to eliminate the tax deductibility of expenses
incurred by advertisers and changes in the willingness of financial institutions
and other lenders to finance television station acquisitions and operations. The
Company cannot predict which, if any, of these or other factors might have a
significant impact on the television broadcasting industry in the future, nor
can it predict what impact, if any, the occurrence of these or other events
might have on the Company's operations. Generally, advertising tends to decline
during economic recession or downturn. Consequently, the Company's broadcasting
revenue is likely to be adversely affected by a recession or downturn in the
United States economy or other events or circumstances that adversely affect
advertising activity. In addition, the Company's operating results in individual
geographic markets could be adversely affected by local regional economic
downturns. Seasonal revenue fluctuations are common in the television
broadcasting industry and result primarily from fluctuations in advertising
expenditures by local retailers. Because of the short operating history of inTV
and the start-up nature of PAX NET, the Company's ability to assess the effects
of seasonality on inTV or PAX NET is limited. It appears, however, that inTV
experiences its highest revenues during the first and fourth fiscal quarters.
COMPETITION
The Company's television stations are located in highly competitive
markets. The financial success of each of the Company's television stations
depends, to a significant degree, upon its audience ratings, its share of the
overall television sales within its geographic market, the economic health of
the market and the popularity of its programming. The audience ratings and
advertising of such individual stations are subject to change, and any adverse
change in a particular market could have a material adverse effect on the
revenue and operating cash flow of the Company. The Company's television
stations compete for audience share and advertising revenue directly with other
television stations and with other media within their respective markets. Each
of the Company's television stations is subject to competition from companies
that, in some instances, have or may, in the future, obtain greater resources
than the Company and its ability to compete successfully in its broadcasting
markets may be impeded.
In addition, increased competition for viewers in the cable industry may
result from technological advances, such as digital compression technology,
which allow cable systems to expand channel capacity; the
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further deployment of fiber optic cable, which has the capacity to carry a much
greater number of channels than coaxial cable; and "multiplexing," in which
programming services offer more than one feed of their programming. The number
of choices available to the Company's television stations' viewing audience as a
result of such technological advances may lead to a reduction in the Company's
market share. There can be no assurance that the Company will be able to obtain
or maintain significant audience ratings and advertising revenue.
The Company will compete for advertising revenue with other television
programming services described above, as well as with other national and
international television programming services, superstations, broadcast
television networks, local over-the-air television stations, radio and print
media, in addition to alternative delivery services that now exist or are
expected to develop in the future. More generally, the Company competes with
various other leisure-time activities such as home videos, movie theaters,
personal computers and other alternative sources of entertainment and
information. See "Business -- Competition."
TECHNOLOGY CHANGES
Television broadcasting is also subject to competition with new media
technologies that are being developed or have been introduced, such as direct
satellite-to-home video programming and so-called video dial tone in which
telephone or other companies provide broad-band wire links for the delivery of
video programming to homes by independent program suppliers. Further, the
Company may be subject to other changes in technology and the manner in which
businesses and individual households adopt such technologies and embrace new
communication and distribution channels available via the Internet, World Wide
Web, and other similar broadband networks. Prospective technology enhancements
may allow for increased economic, distribution and communication efficiencies
which may impact the Company. The Company cannot predict the effect, if any,
that these or other new technologies may have on the industries in which the
Company operates, or on the Company. See "Business -- Federal Regulation of
Broadcasting."
LACK OF PUBLIC MARKET FOR THE JUNIOR PREFERRED STOCK; RESTRICTIONS ON RESALE
There is no existing trading market for the Junior Preferred Stock, and
there can be no assurance regarding the future development of a market for the
Junior Preferred Stock, or the ability of holders of the Junior Preferred Stock
to sell their Junior Preferred Stock or the price at which such holders may be
able to sell their Junior Preferred Stock. If such a market were to develop, the
Junior Preferred Stock could trade at prices that may be lower than the initial
offering price depending upon many factors, including prevailing interest rates,
the Company's operating results and the market for similar securities. The
Initial Purchaser has advised the Company that it currently intends to make a
market in the Junior Preferred Stock. The Initial Purchaser is not obligated to
do so, however, and any market-making with respect to the Junior Preferred Stock
may be discontinued at any time without notice. Therefore, there can be no
assurance as to the liquidity of any trading market for the Junior Preferred
Stock, or that an active market for the Junior Preferred Stock will develop. The
Company does not intend to apply for listing or quotation of the Junior
Preferred Stock on any securities exchange or stock market; however, it is
expected that the Junior Preferred Stock will be eligible for trading in the
Private Offerings, Resale and Trading through Automated Linkages (PORTAL) Market
of the National Association of Securities Dealers, Inc.
LIMITATIONS OF APPRAISALS
Separate appraisals (collectively, the "Appraisals") of certain assets of
the Company were prepared by BIA Consulting, Inc. ("BIA") and Communications
Equity Associates, Inc. ("CEA") (collectively, the "Appraisers"). Each Appraisal
was prepared in accordance with certain procedures, and pursuant to certain
methodologies, as set forth therein. The Appraisals represent the analysis and
opinion of each of the Appraisers as of each of their respective dates, subject
to the assumptions and limitations set forth therein, have not been updated
since they were originally issued, and may not be indicative of the present or
future values of properties of the Company upon liquidation or resale. The
Appraisals are based upon a number of estimates and assumptions that, while
considered reasonable by the Appraiser issuing such Appraisal, are subject to
significant business, economic, competitive and regulatory uncertainties and
contingencies, many of
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which are beyond the control of the Company or the ability of the Appraisers to
accurately assess and estimate, and are based upon assumptions with respect to
future business decisions and conditions which are subject to change. The
opinions of value set forth in the Appraisals and the actual values of the
assets appraised therein will vary, and those variations may be material. The
inclusion in this Memorandum of the opinions of value set forth in the
Appraisals should not be regarded as a representation by the Company as to the
accuracy of such opinions nor can there be any assurance that the opinions of
value set forth in the Appraisals will be achieved upon the liquidation of the
Company or sale of the assets valued in the Appraisals. Neither the Company nor
the Initial Purchaser nor any of their respective agents or representatives
assumes responsibility for the accuracy or adequacy of the Appraisals.
Prospective purchasers of the Securities are cautioned not to place undue
reliance on the Appraisals. The Company does not intend to have the Appraisals
updated or otherwise revised to reflect events or circumstances of which it
becomes aware after the date thereof or to reflect the occurrence of
unanticipated events. See "Business -- Appraisals."
DEVELOPMENT OF PROPRIETARY SALES TRAFFIC SYSTEM
The Company is developing a new proprietary sales traffic system designed
to deliver to the Company's sales force accurate and timely data on its
available advertising inventory and the demand for its inventory. The Company
intends to implement its sales traffic system prior to the PAX NET launch in
order to meet the needs of PAX NET and better allocate its available advertising
airtime. When first put to use by the Company, the sales traffic system may
contain undetected difficulties or defects that, despite testing by the Company,
are uncovered only after it has been employed by the Company's sales force.
There can be no assurance that such difficulties will not be encountered,
causing significant operational difficulties or delays in the sale and
allocation of its available advertising airtime or requiring significant design
modifications, either of which could adversely affect the Company's ability to
sell advertising airtime to maximize revenues.
CONSEQUENCE OF FAILURE TO EXCHANGE
Holders of shares of Original Junior Preferred Stock who do not exchange
their shares for shares of New Junior Preferred Stock pursuant to the Exchange
Offer will continue to be subject to the restrictions on transfer of such shares
of Original Junior Preferred Stock which apply as a consequence of the offer and
sale of the Original Junior Preferred Stock pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, shares of Original Junior
Preferred Stock may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or applicable
state securities laws. The Company does not anticipate that it will register the
shares of Original Junior Preferred Stock under the Securities Act. To the
extent that shares of Original Junior Preferred Stock are tendered and accepted
in connection with the Exchange Offer, any trading market for remaining shares
of Original Junior Preferred Stock could be adversely affected.
Issuance of shares of New Junior Preferred Stock for shares of Original
Junior Preferred Stock pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates representing such shares of
Original Junior Preferred Stock, a properly completed and duly executed Letter
of Transmittal and all other required documents. Therefore, holders of shares of
Original Junior Preferred Stock desiring to tender such shares in exchange for
shares of New Junior Preferred Stock should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to tenders of shares of Original Junior Preferred
Stock for exchange. Shares of Original Junior Preferred Stock that are not
tendered or that are tendered but not accepted by the Company for exchange will,
following consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof under the Securities Act and, upon
consummation of the Exchange Offer, certain registration rights under the
Registration Rights Agreement will terminate.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The shares of Original Junior Preferred Stock were sold by the Company on
June 10, 1998 to the Initial Purchaser who resold them to certain qualified
institutional buyers in the Private Offering. In connection with the Private
Offering, the Company entered into a Preferred Stock Registration Rights
Agreement with the Initial Purchaser (the "Registration Rights Agreement"),
which requires that within 60 days following the issuance of the shares of
Original Junior Preferred Stock, the Company file with the Commission a
registration statement under the Securities Act with respect to an issue of
shares of New Junior Preferred Stock of the Company identical in all material
respects to the shares of Original Junior Preferred Stock, use its best efforts
to cause such registration statement to become effective under the Securities
Act with 150 days following the issuance of the shares of Original Junior
Preferred Stock, and upon the effectiveness of that registration statement,
offer to the Holders of the Original Junior Preferred Stock the opportunity to
exchange their shares of Original Junior Preferred Stock for a like number of
shares of New Junior Preferred Stock, which will be issued without a restrictive
legend. The purpose of the Exchange Offer is to fulfill the Company's
obligations under the Registration Rights Agreement. The shares of Original
Junior Preferred Stock were initially represented by a single global Certificate
in registered form, registered in the name of Cede & Co., a nominatee of The
Depository Trust Company, New York, New York ("DTC"), as depositary.
The Company is making the Exchange Offer in reliance on the position of the
staff of the Commission as set forth in Exxon Capital Holdings Corp., SEC
No-Action Letter (April 13, 1989), Morgan Stanley & Co. Inc., SEC No-Action
Letter (June 5, 1991) and Shearman & Sterling, SEC No-Action Letter (July 2,
1993). The Company has not, however, sought its own no-action letter, and there
can be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer as in such other circumstances.
Based upon these interpretations by the staff of the Commission, the Company
believes that the shares of New Junior Preferred Stock issued pursuant to the
Exchange Offer in exchange for shares of Original Junior Preferred Stock may be
offered for resale, resold and otherwise transferred by a Holder thereof other
than (i) a broker-dealer who purchased such shares of Original Junior Preferred
Stock directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (ii) a person that is an
"affiliate" (as defined in Rule 405 of the Securities Act) of the Company
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such shares of New Junior Preferred Stock are
acquired in the ordinary course of such Holder's business and that such Holder
is not participating, and has no arrangement or understanding with any person to
participate, in the distribution of such shares of New Junior Preferred Stock.
Holders of shares of Original Junior Preferred Stock accepting the Exchange
Offer will represent to the Company in the Letter of Transmittal that such
conditions have been met. Any Holder who participates in the Exchange Offer for
the purpose of participating in a distribution of the shares of New Junior
Preferred Stock may not rely on the position of the staff of the Commission as
set forth in these no-action letters and would have to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. This Prospectus may not be
used by such Holders for any secondary resale. A secondary resale transaction in
the United States by a Holder who is using the Exchange Offer to participate in
the distribution of shares of New Junior Preferred Stock must be covered by a
registration statement containing the selling securityholder information
required by Item 507 of Regulation S-K of the Securities Act.
Each broker-dealer that receives shares of New Junior Preferred Stock for
its own account pursuant to the Exchange Offer must acknowledge that it acquired
the shares of Original Junior Preferred Stock as a result of market-making
activities or other trading activities and will deliver a prospectus in
connection with any resale of such shares of New Junior Preferred Stock. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of shares of New Junior Preferred
Stock received in exchange for shares of Original Junior Preferred Stock where
such shares of Original Junior Preferred Stock were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Letter of Transmittal states that by acknowledging and
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities
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Act. The Company has agreed that for a period of 180 days after the Expiration
Date, it will make this Prospectus available to broker-dealers for use in
connection with any such resale. See "Plan of Distribution."
Except as aforesaid, this Prospectus may not be used for an offer to
resell, resale or other retransfer of shares of New Junior Preferred Stock.
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, Holders of shares of Original Junior Preferred Stock
in any jurisdiction in which the Exchange Offer or the acceptance thereof would
not be in compliance with the securities or blue sky laws of such jurisdiction.
As described above, the shares of Original Junior Preferred Stock were sold
to the Initial Purchaser and resold by the Initial Purchaser to certain
qualified institutional buyers on June 10, 1998, and there is currently a
limited trading market for them. To the extent shares of Original Junior
Preferred Stock are tendered and accepted in the Exchange Offer, the number of
outstanding shares of Original Junior Preferred Stock will decrease. Following
the consummation of the Exchange Offer, Holders of shares of Original Junior
Preferred Stock will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity for the market for the shares of Original Junior
Preferred Stock could be adversely affected. See "Risk Factors -- Consequence of
Failure to Exchange."
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal (which together constitute the "Exchange
Offer"), the Company will accept any and all shares of Original Junior Preferred
Stock validly tendered, and not theretofore withdrawn, prior to 5:00 p.m., New
York City time, on the Expiration Date. The Company will issue one share of New
Junior Preferred Stock ($10,000 liquidation preference) in exchange for each
outstanding share of Original Junior Preferred Stock accepted in the Exchange
Offer, as promptly as practicable after the Expiration Date. Holders may tender
some or all of their shares of Original Junior Preferred Stock pursuant to the
Exchange Offer. The Exchange Offer is not conditioned upon any minimum number of
shares of Original Junior Preferred Stock being tendered for exchange.
The form and terms of the shares of New Junior Preferred Stock are
identical in all material respects to the form and terms of the shares of
Original Junior Preferred Stock except that the shares of New Junior Preferred
Stock will have been registered under the Securities Act and, therefore, will
not bear legends restricting the transfer thereof. The New Junior Preferred
Stock will be issued pursuant to a Certificate of Designation relating thereto,
which will be identical in all material respects with the Certificate of
Designation relating to the Original Junior Preferred Stock, except for the
provisions thereof relating to the consequences of the Company's failure to
conduct the Exchange Offer. Upon issuance of shares of New Junior Preferred
Stock in exchange for shares of Original Junior Preferred Stock, the shares of
Original Junior Preferred Stock so exchanged shall be cancelled and restored to
the status of authorized but unissued shares of preferred stock of the Company,
undesignated as to class or series.
Holders of shares of Original Junior Preferred Stock do not have any
appraisal or dissenters' rights under the Delaware General Corporation Law in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange and exchanged shares of Original Junior Preferred Stock
validly tendered for exchange when, as and if the Company gives oral or written
notice to the Exchange Agent of acceptance of the tenders of such shares of
Original Junior Preferred Stock for exchange. Exchange of shares of Original
Junior Preferred Stock accepted for exchange pursuant to the Exchange Offer will
be made by deposit of tendered shares of Original Junior Preferred Stock with
the Exchange Agent, which will act as agent for the tendering Holders for the
purpose of receiving shares of New Junior Preferred Stock from the Company and
transmitting such shares of New Junior Preferred Stock to tendering Holders. In
all cases, any exchange of shares of New Junior Preferred Stock for shares of
Original Junior Preferred Stock accepted for exchange pursuant to the Exchange
Offer will
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be made only after timely receipt by the Exchange Agent of certificates for such
shares of Original Junior Preferred Stock (or of a confirmation of a book-entry
transfer of such shares of Original Junior Preferred Stock in the Exchange
Agent's account at the Book-Entry Transfer Facility (as defined in
"-- Procedures for Tendering" below)), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other required documents.
For a description of the procedures for tendering shares of Original Junior
Preferred Stock pursuant to the Exchange Offer, see "-- Procedures for
Tendering."
If any tendered shares of Original Junior Preferred Stock are not accepted
for exchange because of an invalid tender, or due to the occurrence of certain
other events set forth herein or otherwise, certificates for any such unaccepted
shares of Original Junior Preferred Stock will be returned without expense to
the tendering Holders thereof (or in the case of shares of Original Junior
Preferred Stock tendered by book-entry transfer, such shares of Original Junior
Preferred Stock will be credited to the account of such Holder maintained at the
Book-Entry Transfer Facility), as promptly as practicable after the expiration
or termination of the Exchange Offer.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of a Letter of Transmittal (or facsimile
thereof), waive any right to receive notice of acceptance of their shares of
Original Junior Preferred Stock for exchange.
Holders who tender shares of Original Junior Preferred Stock in the
Exchange Offer will not be required to pay brokerage commission or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of shares of Original Junior Preferred Stock pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes, in connection with the Exchange Offer. See "-- Fees
and Expenses."
This Prospectus, together with the Letter of Transmittal, is being sent to
registered Holders of shares of Original Junior Preferred Stock as of
, 1998.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Expiration Date shall be 5:00 p.m. New York City time on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the Expiration Date shall be the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral (promptly confirmed in writing) or written notice
and will make a public announcement thereof, each prior to 9:00 a.m. New York
City time, on the next business day after the previously scheduled expiration
date of the Exchange Offer.
The Company reserves the right, at any time and from time to time, in its
sole discretion (subject to its obligations under the Registration Rights
Agreement) (i) to delay accepting any shares of Original Junior Preferred Stock
or to delay the issuance and exchange of shares of New Junior Preferred Stock
for shares of Original Junior Preferred Stock, (ii) to extend the Exchange Offer
or, if any of the conditions set forth below under "-- Conditions to the
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, or (iii) to amend the terms of the Exchange Offer in any manner.
If the Company extends the period of time during which the Exchange Offer
is open, or if it is delayed in accepting for exchange of, or in issuing any
exchanging the shares of New Junior Preferred Stock for, any shares of Original
Junior Preferred Stock, or is unable to accept for exchange of, or issue shares
of New Junior Preferred Stock for, any shares of Original Junior Preferred Stock
pursuant to the Exchange Offer for any reason, then, without prejudice to the
Company's rights under the Exchange Offer, the Exchange Agent may, on behalf of
the Company, retain all shares of Original Junior Preferred Stock tendered, and
such shares of Original Junior Preferred Stock may not be withdrawn except as
otherwise provided below in "-- Withdrawal of Tenders." The adoption by the
Company of the right to delay acceptance for exchange of, or the issuance and
the exchange of the shares of New Junior Preferred Stock, for any shares of
Original Junior Preferred Stock is subject to applicable law, including Rule
14e-1(c) under the Exchange Act, which requires that the
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Company pay the consideration offered or return the shares of Original Junior
Preferred Stock deposited by or on behalf of the Holders thereof promptly after
the termination or withdrawal of the Exchange Offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by a public announcement thereof. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to ten business day period. The term "business day"
shall mean any day other than Saturday, Sunday or a federal holiday and shall
consist of the time period from 12:01 a.m. through 12:00 midnight, New York City
time.
Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, termination or amendment of the
Exchange Offer, the Company shall have no obligation to make public, advertise
or otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service. Any such announcement of an
extension of the Exchange Offer shall be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date of the Exchange Offer.
PROCEDURES FOR TENDERING
Only a Holder of shares of Original Junior Preferred Stock may tender such
shares of Original Junior Preferred Stock in the Exchange Offer. To tender in
the Exchange offer, the Holder must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver such Letter
of Transmittal, or such facsimile, together with any other required documents,
to the Exchange Agent so that delivery is received prior to 5:00 p.m., New York
City time, on the Expiration Date. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange Agent
at the address set forth below under "-- Exchange Agent" prior to 5:00 p.m., New
York City time, on the Expiration Date. In addition, either (i) the certificates
for the tendered shares of Original Junior Preferred Stock must be received by
the Exchange Agent along with the Letter of Transmittal, or such shares of
Original Junior Preferred Stock must be tendered pursuant to the procedures for
book-entry transfer described below and a confirmation of receipt of such
tendered shares of Original Junior Preferred Stock must be received by the
Exchange Agent, in each case, prior to 5:00 p.m., New York City time, on the
Expiration Date, or (ii) the tendering Holder must comply with the guaranteed
delivery procedures described below.
NO LETTERS OF TRANSMITTAL, CERTIFICATES REPRESENTING SHARES OF ORIGINAL
JUNIOR PREFERRED STOCK OR ANY OTHER REQUIRED DOCUMENTATION SHOULD BE SENT TO THE
COMPANY. SUCH DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT.
The tender by a Holder of shares of Original Junior Preferred Stock made
pursuant to any method of delivery set forth in the Letter of Transmittal will
constitute a binding agreement between such tendering Holder and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
The method of delivery of shares of Original Junior Preferred Stock and the
Letter of Transmittal and all other required documents to the Exchange Agent is
at the election and risk of the Holder. Instead of delivery by mail, it is
recommended that Holders use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure delivery to the Exchange
Agent before the Expiration Date. Holders may request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect the above
transaction for such Holders or for assistance concerning the Exchange Offer.
Any beneficial owner whose shares of Original Junior Preferred Stock are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered Holder
promptly and instruct such registered Holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivery such owner's shares of Original Junior Preferred Stock,
either
31
<PAGE> 42
make appropriate arrangements to register ownership of the shares of Original
Junior Preferred Stock in such owner's name or obtain a properly completed bond
power from the registered Holder. The transfer of registered ownership may take
considerable time.
If the Letter of Transmittal is signed by a person other than the
registered Holder of any shares of Original Junior Preferred Stock (which term
includes any participants in DTC whose name appears on a security position
listing as the owner of the shares of Original Junior Preferred Stock) or if
delivery of the shares of Original Junior Preferred Stock is to be made to a
person other than the registered Holder, such shares of Original Junior
Preferred Stock must be endorsed or accompanied by a properly completed bond
power, in either case signed by such registered Holder as such registered
Holder's name appears on such shares of Original Junior Preferred Stock with the
signature on the shares of Original Junior Preferred Stock or the bond power
guaranteed by an Eligible Institution (as defined herein).
If the Letter of Transmittal or any shares of Original Junior Preferred
Stock or bond powers are signed by trustees, executors, administrators,
guardians, attorney-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing and, unless waived by the Company, must submit with the Letter of
Transmittal evidence satisfactory to the Company of their authority to so act.
Signature on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution unless the shares of
Original Junior Preferred Stock tendered pursuant thereto are (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal,
(ii) for the account of an Eligible Institution, or (iii) for the account of
DTC. See Instruction 4 in the Letter of Transmittal. In the event that signature
on a Letter of Transmittal or a notice of withdrawal, as the case may be, is
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (any of which is referred to
herein as an "Eligible Institution").
The Exchange Agent will establish an account with respect to the shares of
Original Junior Preferred Stock at DTC (the "Book-Entry Transfer Facility") for
the purpose of the Exchange Offer promptly after the date of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make delivery of the shares of Original Junior Preferred
Stock by causing the Book-Entry Transfer Facility to transfer such shares of
Original Junior Preferred Stock into the Exchange Agent's Notes account in
accordance with the Book-Entry Transfer Facility's procedure for such transfer.
ALTHOUGH DELIVERY OF SHARES OF ORIGINAL JUNIOR PREFERRED STOCK MAY BE EFFECTED
THROUGH BOOK-ENTRY TRANSFER IN THE EXCHANGE AGENTS ACCOUNT AT THE BOOK-ENTRY
TRANSFER FACILITY, THE LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) WITH ALL
REQUIRED SIGNATURE GUARANTEES AND ANY OTHER REQUIRED DOCUMENTS MUST, IN ANY
CASE, BE TRANSMITTED TO AND RECEIVED AND CONFIRMED BY THE EXCHANGE AGENT AT ITS
ADDRESS SET FORTH BELOW PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE, EXCEPT AS OTHERWISE PROVIDED BELOW UNDER THE CAPTION
"-- GUARANTEED DELIVERY PROCEDURES." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
All questions as to the validity, form (including time of receipt),
acceptance and withdrawal of tendered shares of Original Junior Preferred Stock
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all shares of Original Junior Preferred Stock determined by the Company not
to be validly tendered or any shares of Original Junior Preferred Stock the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the absolute right to waive any defects,
irregularities or conditions of tender as to particular shares of Original
Junior Preferred Stock. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of Transmittal)
32
<PAGE> 43
will be final and binding on all parties. Unless waived by the Company in its
full discretion, any defects or irregularities in connection with tenders of
shares of Original Junior Preferred Stock will render such tenders invalid
unless such defects or irregularities are cured within such time as the Company
shall determine. Although the Company intends to notify Holders of defects or
irregularities with respect to tenders of shares of Original Junior Preferred
Stock, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Any shares of Original
Junior Preferred Stock received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived, as provided for herein, will be returned by the Exchange Agent to the
tendering Holders, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any shares of Original Junior Preferred Stock that
remain outstanding subsequent to the Expiration Date, or, as set forth herein,
to terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase shares of Original Junior Preferred Stock in the open market, privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their shares of Original Junior Preferred Stock
and (i) whose shares of Original Junior Preferred Stock are not immediately
available, or (ii) who cannot deliver their shares of Original Junior Preferred
Stock (or complete the procedures for book-entry transfer), the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may nevertheless effect a tender of shares of Original Junior
Preferred Stock if all of the following conditions are met:
(a) the tender is made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail, hand delivery or
overnight courier) setting forth the name and address of the Holder, any
certificate number(s) of such shares of Original Junior Preferred Stock and
the principal amount of shares of Original Junior Preferred Stock tendered,
stating that the tender is being made thereby and guaranteeing that, within
five New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the
certificate(s) representing the shares of Original Junior Preferred Stock
(or a confirmation of a book-entry transfer of such shares of Original
Junior Preferred Stock in the Exchange Agent's account at the Book-Entry
Transfer Facility) and any other documents required by the Letter of
Transmittal will be deposited Exchange Agent's account at the Book-Entry
Transfer Facility and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof) as well as the certificate(s) representing all tendered
shares of Original Junior Preferred Stock in proper form for transfer (or a
confirmation of book-entry transfer of such shares of Original Junior
Preferred Stock into the Exchange Agent's Notes account at the Book-Entry
Transfer Facility) and all other documents required by the Letter
Transmittal are received by the Exchange Agent with five New York Stock
Exchange trading days after the Expiration Date.
A Notice of Guaranteed Delivery is being sent to Holders along with the
Prospectus and the Letter of Transmittal.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of shares of Original Junior
Preferred Stock may be withdrawn at any time prior to 5:00 p.m. New York City
time, on the Expiration Date, as such term is defined above under the caption
" -- Expiration Date; Extensions; Amendments; Termination." If the Company
extends the period of time during which the Exchange Offer is open, or if it is
delayed in accepting for exchange of, or in issuing and exchanging the shares of
New Junior Preferred Stock for, any shares of Original Junior Preferred Stock or
is unable to accept for exchange of, or issue and exchange the shares of New
Junior Preferred Stock for, any shares of Original Junior Preferred Stock
pursuant to the Exchange Offer for any
33
<PAGE> 44
reason, then without prejudice to the Company's rights under the Exchange Offer,
the Exchange Agent may, on behalf of the Company, retain all shares of Original
Junior Preferred Stock tendered, and such shares of Original Junior Preferred
Stock may not be withdrawn except as otherwise provided herein, subject to Rule
14e-1(c) under the Exchange Act, which provides that the person making an issuer
tender offer shall either pay the consideration offered or return tendered
securities, promptly after the termination or withdrawal of the offer.
To withdraw a tender of shares of Original Junior Preferred Stock in the
Exchange Offer, a written or facsimile transmission notice of withdrawal must be
received by the Exchange Agent at its offices as set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. Any such notice of withdrawal
must (i) specify the name of the person having deposited the shares of Original
Junior Preferred Stock to be withdrawn (the "Depositor"), (ii) specify the
serial numbers on the particular certificates evidencing the shares of Original
Junior Preferred Stock to be withdrawn and the name of the registered Holder
thereof (if certificates have been delivered or otherwise identified to the
Exchange Agent) or the name and number of the account at DTC to be credited with
withdrawal of the shares of Original Junior Preferred Stock (if the shares of
Original Junior Preferred Stock have been tendered pursuant to the procedures
for book-entry transfer), (iii) be signed by the Holders in the same manner as
the original signature on the Letter of Transmittal by which shares of Original
Junior Preferred Stock were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
registrar (the "Registrar") with respect to the shares of Original Junior
Preferred Stock register the transfer of such shares of Original Junior
Preferred Stock into the name of the person withdrawing the tender and (iv)
specify the name in which any such shares of Original Junior Preferred Stock are
to be registered, if different from that of the Depositor. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company in its sole discretion, which determination
shall be final and binding on all parties. Any shares of Original Junior
Preferred Stock so withdrawn will be deemed not to have been validly tendered
for purposes of the Exchange Offer and no shares of New Junior Preferred Stock
will be issued with respect thereto unless the shares of Original Junior
Preferred Stock so withdrawn are validly tendered. Properly withdrawn shares of
Original Junior Preferred Stock may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer and without prejudice
to the Company's other rights under the Exchange Offer, the Company shall not be
required to accept for exchange, or exchange shares of New Junior Preferred
Stock for any shares of Original Junior Preferred Stock, and may amend or
terminate the Exchange Offer as provided herein before the acceptance of such
shares of Original Junior Preferred Stock, if, among other things:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer,
which might materially impair the ability of the Company to proceed with
the Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company, or any material adverse development has
occurred in any existing action or proceeding with respect to the Company
or any of its subsidiaries; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred, which might materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any law, statute, rule or regulation is proposed, adopted or
enacted, which might materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(d) the shares of New Junior Preferred Stock to be received by Holders
of shares of Original Junior Preferred Stock in the Exchange Offer, upon
receipt, will not be transferable by such Holders (other than as
"affiliates" of the Company) without restriction under the Securities Act
and Exchange Act and without material restriction under the blue sky laws
of substantially all of the states of the United States
34
<PAGE> 45
(subject, in the case of Restricted Holders, to any requirements that such
persons comply with the Prospectus Delivery Requirements).
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may, subject to its obligations under
the Registration Rights Agreement to use its best efforts to consummate the
Exchange Offer, (i) terminate the Exchange Offer and return all tendered shares
of Original Junior Preferred Stock to tendering Holders, (ii) extend the
Exchange Offer and, subject to withdrawal rights as set forth in "-- Withdrawal
of Tenders" above, retain all such shares of Original Junior Preferred Stock
until the expiration of the Exchange Offer as so extended, (iii) waive such
condition and, subject to any requirement to extend the period of time during
which the Exchange Offer is open, exchange all shares of Original Junior
Preferred Stock validly tendered for exchange by the Expiration Date and not
withdrawn, or (iv) delay acceptance or exchange of, or delay the issuance and
exchange of shares of New Junior Preferred Stock for, any shares of Original
Junior Preferred Stock until satisfaction or waiver of such conditions to the
Exchange Offer even though the Exchange Offer has expired. The Company's right
to delay acceptance for exchange of, or delay the issuance and exchange of
shares of New Junior Preferred Stock for, shares of Original Junior Preferred
Stock tendered for exchange pursuant to the Exchange Offer is subject to
provisions of applicable law, including, to the extent applicable, Rule 14e-1(c)
promulgated under the Exchange Act, which requires that the Company pay the
consideration offered or return the shares of Original Junior Preferred Stock
deposited by or on behalf of Holders of shares of Original Junior Preferred
Stock promptly after the termination or withdrawal of the Exchange Offer. For a
description of the Company's right to extend the period of time during which the
Exchange Offer is open and to amend, delay or terminate the Exchange Offer, see
"-- Expiration Date; Extensions; Amendments; Termination" above. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the waiver and the manner of disclosure to the registered Holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Reorganization Section, Floor 21W
By Overnight Courier or By Hand:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Reorganization Section, Floor 21W
By Facsimile:
(212) 571-3083
Confirm by Telephone:
(212) 815-6333
35
<PAGE> 46
FEES AND EXPENSES
The expense of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail, however, additional solicitation
may be made by telegraph, telephone or in person by officer and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager or other soliciting agent
in connection with the Exchange Offer and will not make any payments to brokers,
dealers or other soliciting acceptance of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$250,000. Such expenses include fees and expenses of the Exchange Agent,
Trustee, Paying Agent and Registrar, accounting and legal fees and printing
costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of shares of Original Junior Preferred Stock pursuant to the Exchange Offer. If,
however, certificates representing shares of New Junior Preferred Stock, or
shares of Original Junior Preferred Stock not tendered or acceptable for
exchange, are to be delivered to, or are to be issued in the name of, any person
other than the registered Holders of the shares of Original Junior Preferred
Stock tendered, or if tendered shares of Original Junior Preferred Stock are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of shares of Original Junior Preferred Stock pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or any other persons) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The shares of New Junior Preferred Stock will be recorded at the same
carrying value as the shares of Original Junior Preferred Stock as reflected in
the Company's accounting records on the date of the exchange. Accordingly, no
gain or loss for accounting purposes will be recognized. The expenses of the
Exchange Offer will be treated as part of the issuance costs of the Junior
Preferred Stock.
36
<PAGE> 47
THE TRANSACTIONS
THE PROPOSED ACQUISITIONS
The Company has entered into agreements (subject to various conditions
including the receipt of regulatory approvals) to acquire, invest in, purchase
the assets of, or finance the acquisition of assets of and enter into time
brokerage or affiliation agreements with respect to, the television stations
listed below, for total consideration of $414.8 million, of which $78.6 million
has been funded as of March 31, 1998 in the form of advances and escrow
deposits. The Company expects to spend an additional $88.4 million in capital
expenditures to complete the construction of certain new stations and to upgrade
certain of the Company's existing stations. The Company currently anticipates
completing the Proposed Acquisitions during 1998.
<TABLE>
<CAPTION>
PURCHASE
STATION MARKET(1) PRICE
- ------- --------- --------------
(IN THOUSANDS)
<S> <C> <C>
WCFC(2).................................. Chicago, IL $135,000
WFBI/WCCL(3)(4).......................... Memphis, TN/New Orleans, LA 55,000
CH40..................................... Pittsburgh, PA 35,000
KPXG*.................................... Portland, OR 30,000
WPXP*.................................... West Palm Beach, FL 19,468
KSPX(3).................................. Sacramento, CA 17,000
CH26(3).................................. San Antonio, TX 13,500
KPPX(3).................................. Phoenix, AZ 12,000
WPXU*.................................... Champaign, IL 9,250
WKRP(3).................................. Charleston, WV 8,070
WAOM..................................... Lexington, KY 8,000
WAUP(3).................................. Syracuse, NY 6,750
CH61..................................... Mobile, AL 6,750
WQPX(3).................................. Wilkes-Barre, PA 6,160
CH34..................................... Spokane, WA 5,677
KPXO(3).................................. Honolulu, HI 5,000
WPXK(3).................................. Knoxville, TN 5,000
CH14..................................... Albuquerque, NM 4,650
CH21..................................... Shreveport, LA 3,938
CH67..................................... Davenport, IA 3,900
CH39..................................... Des Moines, IA 3,750
CH23(3).................................. Portland, ME 3,550
WEPX(3).................................. Greenville, NC 3,550
WAQF..................................... Buffalo, NY 3,000
KYPX(3).................................. Little Rock, AR 2,850
CH51..................................... Jackson, MS 2,250
KWOK(2).................................. San Francisco, CA 2,215
WAZW(3).................................. Wausau-Rhinelander, WI 2,000
CH30(3).................................. Odessa, TX 1,306
CH15(3).................................. Christiansted, VI 200
--------
Total station acquisitions............... 414,784
Expected station capital expenditures.... 88,426
Less: advances and escrow deposits....... (78,630)
--------
Net Proposed Acquisitions................ $424,580
========
</TABLE>
- ---------------
* Acquisition closed subsequent to March 31, 1998.
(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) The Company has agreed to transfer its interest in KWOK, upon acquisition,
as additional non-cash consideration in connection with its acquisition of
WCFC.
37
<PAGE> 48
(3) Operated or to be operated by the Company pursuant to a time brokerage
agreement.
(4) $36.0 million of the purchase price is not due until December 1999; $15.0
million of the purchase price is attributable to the buyout of existing
affiliation agreements.
The Company regularly considers the acquisition of broadcasting and other
properties and businesses, and at any given time is in various stages of
considering such opportunities. Typically, the consummation of potential
acquisitions is subject to various contingencies, including regulatory
approvals. Consummation of potential acquisition opportunities other than the
Proposed Acquisitions may also be subject to, among other things, the Company
obtaining additional financing and waivers or consents from its lenders and
holders of the Existing Preferred Stock. There can be no assurance that the
Company could obtain any such needed consents or waivers or additional financing
on terms acceptable to it, nor can there be any assurance that the Company will
consummate all of the Proposed Acquisitions or other potential acquisition
opportunities that may arise.
Company investments in broadcast properties (including certain of the
Proposed Acquisitions as noted above) involve arrangements with third parties,
including time brokerage agreements, as well as the co-ownership of certain
television stations. Such investments in broadcast properties permit the Company
to have a presence in additional markets and to enjoy many, but not all, of the
benefits of ownership while at the same time remaining in compliance with FCC
regulations. For a description of the Company's relationships with such third
parties, see "Business -- Time Brokerage Agreements and Other Interests in
Broadcast Stations." The Company has structured its relationships with these
third parties in a manner designed to ensure strict compliance with the FCC's
rules and regulations governing television station ownership.
THE SALE TRANSACTIONS
The Company has entered into agreements to sell or monetize its investment
in four broadcast television stations, one radio station and a minor league
hockey franchise for aggregate net proceeds of $78.1 million. The Company
anticipates completing the Sale Transactions during 1998:
<TABLE>
<CAPTION>
TELEVISION
MARKET
ASSET RANK AMOUNT
----- ---------- --------------
(IN THOUSANDS)
<S> <C> <C>
WNGM -- Atlanta, GA*........................................ 10 $ 50,000
WBPX -- Boston, MA.......................................... 6 15,500
WHPX -- Hartford, CT........................................ 27 15,000
WPXE -- Milwaukee, WI*...................................... 32 6,000
Radio Station............................................... -- 1,000
Hockey Team, net*........................................... -- 1,334
--------
88,834
Less: WNGM Option Exercise.................................. (10,709)
--------
Net Proceeds from the Sale Transactions........... $ 78,125
========
</TABLE>
- ---------------
* Sale closed subsequent to March 31, 1998.
38
<PAGE> 49
USE OF PROCEEDS
The Company will not receive any cash proceeds from the Exchange Offer. The
net proceeds to the Company of the Offerings were approximately $261.5 million
and, together with net proceeds from the Sale Transactions and cash on hand,
shall be used to fund the Proposed Acquisitions and fund the launch of PAX NET.
The following table illustrates the estimated sources and uses of funds on
a pro forma basis as if the Transactions were consummated on March 31, 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
SOURCES:
Original Junior Preferred Stock............................. $200,000
Convertible Preferred Stock................................. 75,000
Net proceeds from asset sales............................... 78,125
Cash on hand................................................ 84,955
--------
Total sources..................................... $438,080
========
USES:
Fund the Proposed Acquisitions, net of advances and escrow
deposits (excluding expected station capital
expenditures)............................................. $336,154
Fund expected station capital expenditures.................. 88,426
Transaction fees and expenses............................... 13,500
--------
Total uses........................................ $438,080
========
</TABLE>
39
<PAGE> 50
CAPITALIZATION
The following table sets forth the actual and pro forma cash and
capitalization of the Company as of March 31, 1998. Pro forma capitalization
gives effect to the Transactions as if the Transactions had taken place on March
31, 1998. This table should be read in conjunction with the information
contained in "Unaudited Pro Forma Balance Sheet Data" and the Company's
consolidated financial statements and notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
AT MARCH 31, 1998
-----------------------
ACTUAL PRO FORMA(A)
-------- ------------
(IN THOUSANDS)
<S> <C> <C>
Cash(b)..................................................... $154,286 $ 69,331
======== ==========
Long-term debt (including current maturities)
Senior credit facility(c)................................. $120,000 $ 120,000
11 5/8% senior subordinated notes......................... 228,042 228,042
Other long-term debt...................................... 2,671 2,671
-------- ----------
Total debt........................................ 350,713 350,713
Private preferred stock(d).................................. 44,189 44,189
Public preferred stock(d)................................... 173,879 173,879
Junior preferred stock(e)................................... -- 190,000
Convertible preferred stock(f).............................. -- 70,540
Other equity(g)............................................. 369,180 408,092
-------- ----------
Total capitalization.............................. $937,961 $1,237,413
======== ==========
</TABLE>
- ---------------
(a) Gives effect to the Transactions as if the Transactions had taken place on
March 31, 1998.
(b) Consists of cash, cash equivalents and restricted cash. Restricted cash of
$17.0 million will be used solely to pay interest on the Credit Facility.
(c) In May 1998, the Company refinanced its outstanding debt under its existing
revolving credit facility with the Credit Facility. See "Description of
Indebtedness -- Credit Facility."
(d) See "Description of Capital Stock".
(e) The $200.0 million initial liquidation preference of the Junior Preferred
Stock has been reduced to its carrying value by approximately $10.0 million
of estimated fees and expenses related to the Junior Preferred Stock.
(f) Reflects the issuance by the Company of $75.0 million of Convertible
Preferred Stock, net of issuance costs of approximately $3.5 million and the
allocation of $960,000 of proceeds to the Warrants issued in connection with
the Convertible Preferred Offering. See "Unaudited Pro Forma Balance Sheet
Data."
(g) Other equity is comprised of Common Stock, class A and B common stock
warrants, stock subscription notes receivable, additional paid-in capital
deferred option plan compensation and retained earnings.
40
<PAGE> 51
UNAUDITED PRO FORMA BALANCE SHEET DATA
The unaudited pro forma balance sheet data as of March 31, 1998 gives
effect to the consummation of the Transactions as if the Transactions had taken
place on March 31, 1998. See "The Transactions" for a description of the
Proposed Acquisitions and Sale Transactions. The unaudited pro forma balance
sheet data is based upon available information and upon certain assumptions that
the Company believes are reasonable under the circumstances. The unaudited pro
forma balance sheet data should be read in conjunction with the Company's
consolidated financial statements and notes thereto appearing elsewhere herein.
The unaudited pro forma balance sheet data is not necessarily indicative of the
Company's actual or future financial position.
41
<PAGE> 52
UNAUDITED PRO FORMA BALANCE SHEET DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT MARCH 31, 1998
----------------------------------------
TRANSACTION
COMPANY ADJUSTMENTS PRO FORMA
---------- ------------ ----------
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents................................. $ 137,286 $190,000(a) $ 52,331
78,125(b)
71,500(c)
(424,580)(d)
Restricted cash........................................... 17,000 17,000
Accounts receivable, net.................................. 4,925 4,925
Prepaid expenses and other current assets................. 3,342 (55)(b) 3,287
---------- -------- ----------
Total current assets............................... 162,553 (85,010) 77,543
Property and equipment, net................................. 141,144 115,426(d) 251,392
(5,178)(b)
Intangible assets, net...................................... 536,789 387,784(d) 922,016
(2,557)(b)
Investment in broadcast properties.......................... 106,848 (61,503)(d) 14,326
(31,019)(b)
Investment in cable network................................. 55,551 55,551
Other assets, net........................................... 71,712 (17,127)(d) 53,321
(1,264)(b)
---------- -------- ----------
Total assets....................................... $1,074,597 $299,552 $1,374,149
========== ======== ==========
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued liabilities.................. $ 13,359 $ 100(b) $ 13,459
Accrued interest.......................................... 13,873 13,873
Current portion of long-term debt......................... 504 504
---------- -------- ----------
Total current liabilities.......................... 27,736 100 27,836
Deferred gain............................................... 12,100 12,100
Deferred income taxes....................................... 97,304 97,304
Long-term debt.............................................. 122,167 122,167
Senior subordinated notes, net 11 5/8%...................... 228,042 228,042
Redeemable junior preferred stock 12%....................... 44,189 44,189
Exchangeable preferred, net 12 1/2%......................... 173,879 173,879
Redeemable junior preferred stock........................... -- 200,000(a) 190,000
(10,000)(a)
Convertible preferred, net.................................. -- 75,000(c) 70,540
(3,500)(c)
(960)(c)
Class A common stock........................................ 52 52
Class B common stock........................................ 8 8
Class A and B common stock warrants......................... 1,154 960(c) 2,114
Stock subscription notes receivable......................... (2,813) (2,813)
Additional paid-in-capital.................................. 292,527 292,527
Deferred option plan compensation........................... (1,899) (1,899)
Retained earnings........................................... 80,151 37,952(b) 118,103
---------- -------- ----------
Total liabilities, redeemable securities and common
stockholders' equity............................. $1,074,597 $299,552 $1,374,149
========== ======== ==========
</TABLE>
(See footnotes on the following page)
42
<PAGE> 53
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET DATA
(a) To reflect the issuance by the Company of $200.0 million of Junior
Preferred Stock, net of issuance costs of approximately $10.0 million, as
if such issuance had taken place on March 31, 1998.
(b) To reflect the Sale Transactions as if such transactions had occurred on
March 31, 1998, as follows (in thousands):
<TABLE>
<S> <C>
Sale of television broadcast stations, net of approximately
$10,700 used to exercise the Company's options to acquire
interests in such stations................................ $45,291
Collection of amounts due under financing arrangements
related to investments in broadcast properties............ 30,500
Sale of radio station....................................... 1,000
Sale of hockey franchise, net of prior deposits received of
approximately $666........................................ 1,334
-------
$78,125
=======
</TABLE>
(c) To reflect the issuance by the Company of $75.0 million of Convertible
Preferred Stock, net of issuance costs of approximately $3.5 million, as if
such issuance had taken place on March 31, 1998. The Convertible Preferred
Stock was issued with warrants to acquire 240,000 shares of the Company's
Class A Common Stock for $16.00 per share. The aggregate fair value of the
Warrants has been estimated at approximately $960,000 which has been
allocated to the Warrants in the pro forma balance sheet.
(d) To reflect the Proposed Acquisitions as if they had taken place on March
31, 1998.
43
<PAGE> 54
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following selected historical and pro forma financial data, insofar as
it relates to each of the five years in the period ended December 31, 1997, has
been derived from annual financial statements including the consolidated balance
sheets at December 31, 1996 and 1997 and the related consolidated statements of
operations, of changes in common stockholders' equity and of cash flows for each
of the three years in the period ended December 31, 1997 and the notes thereto
appearing elsewhere herein. The data for the three months ended March 31, 1997
and 1998 has been derived from unaudited financial statements also appearing
herein and which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the results for the unaudited interim periods. The selected historical
financial data should be read in conjunction with the information contained in
the Company's consolidated financial statements and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The unaudited summary pro forma balance sheet data gives effect to the
consummation of the Transactions as if the Transactions had taken place on March
31, 1998. The unaudited pro forma dividends and accretion on preferred stock
data give effect to the consummation of the Transactions as if the Transactions
had taken place at the beginning of each period presented. Certain management
assumptions and adjustments are described in the accompanying notes hereto. The
pro forma information should be read in conjunction with the Company's
consolidated financial statements and the notes thereto included elsewhere in
this Prospectus. See "Unaudited Pro Forma Balance Sheet Data" appearing
elsewhere in this Prospectus. This pro forma information is not necessarily
indicative of the Company's actual or future financial position or results of
operations.
44
<PAGE> 55
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.................................. $ 1,982 $ 4,227 $ 31,784 $ 62,333 $ 88,421 $ 18,937 $ 31,665
Operating expenses, excluding depreciation,
amortization, compensation associated with
Paxson Radio asset sales and option plan
compensation.................................. 4,932 7,221 26,081 46,364 75,241 14,593 27,678
Compensation associated with Paxson Radio asset
sales(a)...................................... -- -- -- -- 9,700 -- --
Option plan compensation(b)..................... -- -- 9,052 6,976 3,370 714 307
Depreciation and amortization................... 321 1,653 4,648 12,888 22,044 4,080 7,950
-------- -------- -------- -------- -------- -------- --------
Operating loss.................................. (3,271) (4,647) (7,997) (3,895) (21,934) (450) (4,270)
Interest expense................................ (170) (6,216) (17,151) (31,526) (37,728) (8,735) (10,505)
Interest income................................. 113 359 1,651 6,741 9,495 1,316 6,180
Other income (expense), net..................... 7 83 (488) (1,756) (5,722) 146 (246)
Gain on sale of television stations............. -- -- -- -- -- -- 14,330
Equity in loss of unconsolidated investment..... -- -- -- -- (2,493) -- (1,290)
-------- -------- -------- -------- -------- -------- --------
(Loss) income from continuing operations before
income tax (provision) benefit and
extraordinary item............................ (3,321) (10,421) (23,985) (30,436) (58,382) (7,723) 4,199
Income tax (provision) benefit.................. (2,960) 1,680 1,280 -- 21,879 -- (1,557)
Discontinued operations(c)...................... (4,671) 3,979 (142) 4,217 251,193 (736) --
Extraordinary item(d)........................... (457) -- (10,626) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net (loss) income............................... (11,409) (4,762) (33,473) (26,219) 214,690 (8,459) 2,642
Dividends and accretion on preferred stock and
common stock warrants(e)...................... (151) (3,386) (13,297) (21,908) (26,277) (6,272) (7,082)
-------- -------- -------- -------- -------- -------- --------
Net (loss) income attributable to common
stock......................................... $(11,560) $ (8,148) $(46,770) $(48,127) $188,413 $(14,731) $ (4,440)
======== ======== ======== ======== ======== ======== ========
Basic and diluted earnings per share(f)(g):
Loss from continuing operations................. $ (0.21) $ (0.36) $ (1.05) $ (1.20) $ (1.17) $ (0.28) $ (0.07)
Discontinued operations......................... (0.15) 0.12 -- 0.10 4.67 (0.02) --
Extraordinary item.............................. (0.01) -- (0.31) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net (loss) income............................... $ (0.37) $ (0.24) $ (1.36) $ (1.10) $ 3.50 $ (0.30) $ (0.07)
======== ======== ======== ======== ======== ======== ========
Weighted average common shares outstanding...... 31,582 33,430 34,430 43,837 53,808 48,778 59,589
Cash dividends declared......................... -- -- -- -- -- -- --
OTHER DATA:
EBITDA(h)....................................... $ (2,949) $ (2,556) $ 7,123 $ 19,487 $ 30,186 $ 5,356 $ 10,575
Capital expenditures(i)......................... -- 2,767 12,581 30,203 36,260 9,262 14,147
Pro forma dividends and accretion on preferred
stock(j)...................................... 62,951 15,963
Ratio of earnings to combined fixed charges and
preferred stock dividends(k).................. -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1998
--------------------------
ACTUAL PRO FORMA(L)
---------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(m)................................ $ 154,286 $ 69,331
Working capital............................................. 134,817 49,707
Total assets................................................ 1,074,597 1,374,149
Total debt.................................................. 350,713 350,713
Redeemable preferred stock.................................. 218,068 478,608
(See footnotes on the following page)
</TABLE>
45
<PAGE> 56
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Bonuses paid to certain members of the Company's management in connection
with their efforts in assimilating, operating, and arranging for the sale of
the Company's radio stations and related properties in 1997.
(b) Option plan compensation represents a non-cash charge associated with the
granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Continuing Operations" and
"Management -- Stock Incentive Plans."
(c) Includes in 1997 a gain on disposal of discontinued operations of $254.7
million, net of applicable income taxes.
(d) Extraordinary item reflects an extraordinary loss of $457,000 and $10.6
million in 1993 and 1995, respectively, associated with the write-off of
capitalized financing costs on debt retired.
(e) Dividends and accretion on preferred stock and common stock warrants for the
years ended December 31, 1993 to 1997 and the three months ended March 31,
1997 and 1998 represent non-cash dividends and accretion on the Company's
mandatorily redeemable securities. See "Description of Capital Stock."
(f) The Company computes per share data in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." Due to losses
from continuing operations, the effect of stock options and warrants is
antidilutive. Accordingly, the Company's presentation of diluted earnings
per share is the same as that of basic earnings per share.
(g) Loss per share data and weighted average shares outstanding for the years
ended December 31, 1993 and 1994 give retroactive effect to: (i) the
Company's recapitalization related to the merger with The American Network
Group, Inc.; and (ii) a stock dividend on common shares outstanding on
January 1, 1995.
(h) EBITDA is defined as operating income (loss), excluding non-recurring items,
(including 1997 compensation associated with Paxson Radio asset sales and
relocation costs), plus time brokerage fees, depreciation, amortization and
other non-cash charges, including amortization of programming rights and
option plan compensation, minus programming payments (including a ratable
portion of programming deposits). EBITDA, as so defined, may not be
comparable to similarly titled measures used by other companies.
(i) Includes all capital expenditures by the Company's inTV and corporate
segments including expenditures associated with the upgrade and conversion
of acquired and operated television stations to the inTV format.
(j) The pro forma dividends and accretion on preferred stock give effect to the
consummation of the Transactions as if the Transactions had taken place at
the beginning of each period presented.
(k) For purposes of this calculation, earnings are defined as net income (loss)
from continuing operations before income taxes, extraordinary items and
fixed charges. Fixed charges consist of interest expense, amortization of
deferred financing costs and the component of operating lease expense which
management believes represents an appropriate interest factor. Earnings were
inadequate to cover combined fixed charges and preferred stock dividends by
$3.4 million, $13.0 million, $32.6 million, $49.7 million, $84.2 million,
$14.0 million and $5.8 million, for the years ended December 31, 1993, 1994,
1995, 1996 and 1997 and for the three-month periods ended March 31, 1997 and
1998, respectively.
(l) The pro forma balance sheet data as of March 31, 1998 gives effect to the
consummation of the Transactions as if the Transactions had occurred on
March 31, 1998.
(m) Includes cash, cash equivalents and restricted cash.
46
<PAGE> 57
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Since its inception in 1991, the Company has grown primarily through the
acquisition or management of radio and television broadcast stations and radio
networks, as well as subsequent improvement in the operation of these
properties. Two of the Company's former business segments, Paxson Radio and
Paxson Network-Affiliated Television, have been classified as discontinued
operations in the consolidated financial statements for all periods presented as
a result of the Company's sale of these operations during 1997.
The Company currently operates a nationwide group of owned, operated or
affiliated television stations carrying its proprietary programming service,
which broadcasts long-form paid programming consisting primarily of
infomercials. Certain of the Company's television stations were and continue to
be operated under time brokerage and affiliation agreements for various periods.
Pursuant to the time brokerage agreements, the stations' operating revenues and
expenses are controlled by the Company and are included in its consolidated
statements of operations. Pursuant to the affiliation agreements, the Company
includes advertising revenue, related sales costs and affiliation fees in its
consolidated statements of operations. The Company intends to launch its PAX NET
programming service on August 31, 1998. PAX NET is the brand name for the
programming that the Company expects to provide to its television stations,
cable systems and satellite television providers. PAX NET programming will
generally consist of family-friendly traditional entertainment television
programs that have had or are having successful first runs on television. The
Company also owns a 30% interest in The Travel Channel, L.L.C., a cable
television network joint venture with Discovery Communications, Inc. ("DCI").
The Company's interest in the operating results of The Travel Channel, L.L.C.
have been included in the consolidated financial statements using the equity
method of accounting.
The Company's operating data throughout the periods discussed have been
impacted significantly by the timing and mix of television acquisitions
throughout such periods. Operating revenues are derived from the sale of
advertising to local and national advertisers. The Company's primary operating
expenses include commissions on revenues, employee salaries and administrative
expenses. Upon the launch of PAX NET, the Company will also incur significant
expenses for syndicated program rights fees, ratings services and promotion. The
costs of operating the Company's television stations do not vary significantly
with revenue, with the exception of costs associated with sales commissions and
agency fees. As such, upon obtaining a certain level of revenue sufficient to
cover fixed costs, additional revenue levels have a significant impact on the
operating results of an individual television station. The Company currently
expects to continue acquiring additional stations which may have similar effects
on the comparability of revenues, operating expenses, interest expense and
operating cash flow as those described above.
The Company's business is subject to various risks and uncertainties which
may significantly reduce revenues and increase operating expenses. For example,
a reduction in expenditures by television advertisers in the Company's markets
may result in lower revenues. The Company may be unable to reduce expenses,
including syndicated program rights fees and certain variable expenses, in an
amount sufficient in the short term to offset lost revenues caused by poor
market conditions. The broadcasting industry continues to undergo rapid
technological change which may increase competition within the Company's markets
as new delivery systems, such as direct broadcast satellite and computer
networks, attract customers. The changing nature of audience tastes and viewing
habits may affect the continued attractiveness of the Company's broadcasting
stations to advertisers, upon whom the Company is dependent for its revenue.
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount (contingent or otherwise) of assets and liabilities
at the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. The fair values of the Company's
investments in broadcast properties are estimated based on recent market sale
prices for comparable stations and markets and approximates their carrying value
as of March 31, 1998. The fair values of the Company's long-term debt and the
Existing Notes were estimated based on market rates of instruments with similar
risks and maturities, and approximates the
47
<PAGE> 58
carrying value as of March 31, 1998. As a result of the foregoing, the estimates
presented in the Company's financial statements are not necessarily indicative
of the amounts that the Company could realize in a current market exchange and
have not been comprehensively revalued for purposes of the Company's financial
statements.
Management believes that the Company's television stations comprise a
valuable national television broadcasting distribution infrastructure. Upon the
completion of the Transactions, the Company will have 88 owned, operated or
affiliated stations (including six low-power stations) in 85 U.S. markets
containing over 74 million broadcast television households, or approximately 74%
of total U.S. television households (including Puerto Rico and the Virgin
Islands), and will be the only television broadcaster with full-power stations
in all of the top 20 U.S. markets and in 43 of the top 50 U.S. markets. In
connection with the launch of its PAX NET programming service, the Company has
entered into programming contracts to air syndicated television shows, as well
as theatrical and made-for-television movies, from 1998 to 2005. As of March 31,
1998, such programming contracts require collective payments by the Company of
approximately $328.2 million over such periods as follows (dollars in
thousands):
<TABLE>
<S> <C>
1998........................................................ $ 41,291
1999........................................................ 78,590
2000........................................................ 73,480
2001........................................................ 63,108
2002........................................................ 32,353
Thereafter.................................................. 39,419
--------
$328,241
========
</TABLE>
The Company had $43.7 million of broadcast rights deposits recorded in
other assets as of March 31, 1998. The Company continues to evaluate additional
programming purchases. The Company expects that under PAX NET, selling expenses
will remain proportionate to revenues and that revenues as well as promotional
and programming expenses will increase significantly.
See "-- Forward-Looking Statements and Associated Considerations" for a
discussion of certain factors which could influence the Company's future
performance and prospects.
DISCONTINUED OPERATIONS
During 1997, the Company sold its interest in its Paxson Network-Affiliated
Television and Paxson Radio segments. Losses from these segments in the three
months ended March 31, 1997, net of tax, were $736,000. Paxson
Network-Affiliated Television generated net income of approximately $10,000 and
Paxson Radio incurred losses of approximately $746,000 in the three months ended
March 31, 1997. Paxson Network-Affiliated Television and Paxson Radio generally
experienced their lowest revenue in the first quarter of the year.
Loss from operations of these segments in the three months ended March 31,
1997 was approximately $811,000. Paxson Network-Affiliated Television generated
income from operations of approximately $10,000 and Paxson Radio incurred losses
from operations of $821,000 in the three months ended March 31, 1997,
respectively.
Loss from operations of these segments in 1997, net of tax, was $3.6
million compared to income of $4.2 million in 1996. The losses in 1997 primarily
reflect the sale of Paxson Network-Affiliated Television on July 31, 1997 and
Paxson Radio on October 1, 1997 compared to full year results of operations for
1996. Paxson Network-Affiliated Television net losses were $937,000 in 1997
compared to net income of $354,000 in 1996. Paxson Radio net losses were $2.7
million in 1997 compared to net income of $3.9 million in 1996.
Income from operations of these segments in 1996, net of tax, was $4.2
million compared to a loss of $142,000 in 1995. The improved results in 1996
were primarily related to Paxson Radio, which had income of $3.9 million in 1996
compared to a loss of $1.4 million in 1995. The increase in income in 1996 for
Paxson Radio primarily reflects revenue increases from radio station and
billboard faces due to acquisitions as well as
48
<PAGE> 59
revenue increases from existing stations. In 1996, Paxson Network-Affiliated
Television had income of $354,000 compared to income of $1.3 million in 1995.
The decline in income in 1996 for Paxson Network-Affiliated Television primarily
reflects increased time brokerage fees paid to operate WTVX-TV, which became a
Company operated station pursuant to a time brokerage agreement in August 1995.
In connection with the disposal of its Network-Affiliated Television and
Radio segments in 1997, the Company recorded gains of $68.7 million and $186.1
million, respectively, net of applicable income taxes. Net proceeds from the
sale of these segments were approximately $722 million.
RESULTS OF CONTINUING OPERATIONS
For purposes of this Prospectus, "operating cash flow" is defined as net
income excluding non-cash items, nonrecurring items including 1997 compensation
associated with Paxson Radio asset sales, discontinued operations and relocation
costs, interest, other income, income taxes and time brokerage and affiliation
agreement fees, less scheduled program rights payments (including a ratable
portion of programming deposits). The Company has included operating cash flow
data because the financial performance of broadcast companies is frequently
evaluated based on some measure of cash flow from operations. Operating cash
flow is not, and should not be used as, an indicator of or alternative to
operating income, net income or cash flow as included elsewhere herein as it is
not a measure of financial performance under generally accepted accounting
principles.
Three Months Ended March 31, 1998 and 1997
Consolidated revenues for the three months ended March 31, 1998 increased
67% (or $12.8 million) to $31.7 million. This increase was primarily due to
television station acquisitions and new time brokerage operations, with WPXN-TV
in New York, which has been operated by the Company since June 30, 1997,
accounting for $6.9 million of the increase. Same station television revenues
increased $1.7 million.
Operating expenses for the three months ended March 31, 1998 increased 85%
(or $16.5 million) to $35.9 million. The increase was primarily due to higher
direct expenses such as commissions which rise in proportion to revenues ($1.8
million), other non-direct costs, which were primarily due to operating new
television stations and to startup costs for the launch of PAX NET ($5.7
million), higher depreciation and amortization, primarily related to assets
acquired ($3.9 million), and increased time brokerage and affiliation agreement
fees, primarily related to new time brokerage operations ($5.6 million), of
which $3.6 million was attributable to WPXN-TV.
Operating cash flow for the three months ended March 31, 1998 increased 97%
(or $5.2 million) to $10.6 million. The increase in operating cash flow was
primarily a result of television station acquisitions and new time brokerage
operations, with WPXN-TV accounting for $5.4 million of the increase.
Interest expense for the three months ended March 31, 1998 increased 20% to
$10.5 million, primarily due to a greater level of senior debt throughout the
period and higher interest rates. At March 31, 1998, total long-term debt and
senior subordinated notes were $350.7 million, compared with the balance of
$311.6 million outstanding one year prior.
Interest income for the three months ended March 31, 1998 increased to $6.2
million, primarily due to higher levels of cash and cash equivalents and cash
held by qualified intermediary resulting from segment asset sales, invested
throughout the period.
Cash (used in) provided by operations of approximately $(380,000) and $8.3
million for the three months ended March 31, 1998 and 1997, respectively,
reflects the operating results of existing properties, acquisitions and time
brokerage properties net of the deferred income tax provision, the equity in
loss of unconsolidated investment and the increase in programming deposits. Cash
provided by investing activities primarily reflects the use of the cash held by
qualified intermediary and proceeds from sales of broadcast properties and the
use of cash in investing activities for the acquisitions and investments
discussed above, and purchases of equipment for these and existing properties.
Cash provided by financing activities primarily reflects the proceeds from
exercise of common stock options net of debt repayments. Non-cash activity
relates
49
<PAGE> 60
to option plan compensation, stock issued for the acquisition of KPXR-TV,
reciprocal trade and barter advertising revenue and expense and accretion of
discount on senior subordinated notes, as well as dividends and accretion on the
redeemable preferred stock.
Years Ended December 31, 1997 and 1996
Consolidated revenues for 1997 increased 42% (or $26.1 million) to $88.4
million from $62.3 million for 1996. This increase was primarily due to
television station acquisitions and new time brokerage operations, with WPXN-TV
in New York, which has been operated by the Company since June 30, 1997,
accounting for $13.3 million of the increase.
Operating expenses for 1997 increased 67% (or $44.2 million) to $110.4
million from $66.2 million for 1996. The increase was due to higher direct
expenses such as commissions which rise in proportion to revenues ($4.0
million), one-time bonus compensation associated with Paxson Radio asset sales
($9.7 million), other non-direct costs, which were primarily due to operating
new television stations ($11.3 million), higher depreciation and amortization
primarily related to assets acquired ($9.2 million), and increased time
brokerage agreement fees, primarily related to new time brokerage operations
($13.4 million, of which $10.3 million was attributable to WPXN-TV), all of
which were partially offset by lower option plan compensation costs ($3.6
million).
Operating cash flow for 1997 increased 55% (or $10.7 million) to $30.2
million, from $19.5 million for 1996. The increase in operating cash flow was
primarily a result of television station acquisitions and new time brokerage
operations, with WPXN-TV accounting for $10.5 million of the increase.
The Company has issued options to purchase shares of Class A Common Stock
to certain members of management and employees during 1997, 1996 and 1995 under
its stock compensation plans. As of December 31, 1997, there were 3,605,461
options outstanding under these plans. Further, the Company recognized total
option plan compensation expense, including amounts recorded in Income (loss)
from discontinued operations, of approximately $6.5 million, $7.9 million and
$10.8 million in 1997, 1996 and 1995, respectively, and expects that
approximately $2.2 million of compensation expense will be recognized over the
remaining vesting period of the outstanding options.
Interest expense for 1997 increased to $37.7 million from $31.5 million for
1996, an increase of 20%, primarily due to a greater level of senior debt
throughout the period. As a result of acquisitions, at December 31, 1997, total
long-term debt and Existing Notes were $350.8 million, compared with the balance
of $231.7 million outstanding one year prior.
Interest income for 1997 increased to $9.5 million from $6.7 million,
primarily due to greater levels of cash and cash equivalents and cash held by
qualified intermediary invested during the second half of the period, primarily
as a result of the receipt of the proceeds from the Network-Affiliated
Television and Radio segments sales during 1997.
At December 31, 1996 the Company had accumulated approximately $70 million
of net operating losses available to offset future taxable income, $7.9 million
of which were limited as to use. The gain realized upon the sale of Paxson Radio
was substantially deferred for tax purposes. The remaining gain on the sale of
the Paxson Radio and Paxson Network-Affiliated Television segments was offset
through the use of net operating losses available at December 31, 1996 as well
as losses generated from operations during 1997.
The deferral of approximately $119 million of taxes on the approximately
$305 million gain upon the sale of Paxson Radio could be contested by the IRS.
Based on the advice of counsel, management believes that, in the event of a
challenge by the IRS of the Company's tax positions, it is more likely than not
that the Company would prevail. Should the IRS successfully challenge the
Company on these matters, the Company could be subject to a material current tax
liability.
Cash (used in) provided by operating activities was $(38.6 million), $(1.1
million) and $11.0 million for 1997, 1996 and 1995, respectively. The increase
in cash used primarily reflects the decrease in accounts payable as well as the
payment of compensation associated with Paxson Radio asset sales. Cash used for
50
<PAGE> 61
investing activities of $58.5 million, $258.5 million and $105.6 million for
1997, 1996 and 1995, respectively, primarily reflects acquisitions of and
investments in broadcast properties and purchases of equipment for acquired and
existing properties net of the proceeds from the above segment sales and asset
sales. Cash provided by financing activities of $117.9 million, $253.3 million
and $141.1 million in 1997, 1996 and 1995, respectively, primarily reflects the
proceeds from borrowings and proceeds of the Company's Class A Common Stock
offering in April 1996 and Public Preferred Stock offering in October 1996, net
of repayments and loan origination costs incurred. Non-cash activity relates to
option plan compensation, stock issued for the Travel Channel, WPXW-TV and
WFSJ-FM acquisitions, a note payable incurred with the WYPX-TV acquisition,
reciprocal trade and barter advertising revenue and expense and accretion of
discount on the Existing Notes, as well as dividends on the Company's Existing
Preferred Stock and common stock warrants.
Years Ended December 31, 1996 and 1995
Consolidated revenues for 1996 increased 96% (or $30.5 million) to $62.3
million from $31.8 million for 1995. This increase was primarily due to
television station acquisitions and new time brokerage operations.
Operating expenses for 1996 increased 66% (or $26.4 million) to $66.2
million from $39.8 million for 1995. The increase was primarily due to higher
direct expenses such as commissions which rise in proportion to revenues ($3.8
million), other non-direct costs, which are primarily due to operating new
television stations ($13.8 million), higher depreciation and amortization,
primarily related to assets acquired ($8.2 million), and increased time
brokerage agreement fees, primarily related to new time brokerage operations
($2.7 million), all of which were partially offset by lower option plan
compensation costs ($2.1 million).
Operating cash flow for 1996 increased 174% (or $12.4 million) to $19.5
million, from $7.1 million for 1995. The increase in operating cash flow was
primarily a result of television station acquisitions and new time brokerage
operations.
Interest expense for 1996 increased to $31.5 million from $17.2 million for
1995, an increase of 83%, primarily due to a higher level of debt outstanding
throughout the period and higher borrowing rates. At December 31, 1996, total
long-term debt and Existing Notes were $231.7 million, compared with the balance
of $240.3 million outstanding one year prior. The balance sheets reflect the
private sale of $230 million of Existing Notes at a discount netting $227.3
million before transaction costs on September 28, 1995.
Interest income for 1996 increased to $6.7 million from $1.7 million,
primarily due to greater levels of cash and cash equivalents invested throughout
the period, primarily as a result of the receipt of the proceeds of the April
1996 Common Stock sale and the October 1996 sale of the Public Preferred Stock.
LIQUIDITY AND CAPITAL RESOURCES
During 1997, the Company sold its network-affiliated television operations
for gross proceeds of approximately $119 million and its radio operations
(including billboards) for cash proceeds of approximately $602 million.
Management anticipates that the proceeds from the above segment sales will be
utilized primarily to fund the Proposed Acquisitions, related capital
expenditures and programming payments discussed elsewhere herein and for general
corporate purposes. The completion of each of the acquisitions discussed
elsewhere herein is subject to a variety of factors and to the satisfaction of
various conditions, including FCC approval, and there can be no assurance that
any such acquisitions will be completed.
The Company's working capital at March 31, 1998 and December 31, 1997 was
$134.8 million and $86.9 million, respectively, and the ratio of current assets
to current liabilities was 5.86:1 and 5.29:1 on such dates, respectively.
Working capital increased primarily due to the return of approximately $66
million of cash held by qualified intermediary and not reinvested in like kind
broadcasting properties during the first quarter of 1998. The Company does not
anticipate paying current taxes on the non-deferred gain as it has sufficient
net operating loss carryforwards to offset such gain.
The Company's primary capital requirements are for the acquisition of
broadcasting properties and related capital expenditures, syndicated programming
payments, interest and principal payments on indebtedness and payments
anticipated to be made under agreements whereby the Company obtains access to
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television households in markets not currently served by its broadcast
television station group. The Existing Notes require semi-annual interest
payments at a fixed rate and mature on October 1, 2002. The Company has $122
million in borrowings outstanding under the Credit Facility, which bear interest
at floating rates and require interest payments on varying dates depending on
the interest rate option selected by the Company. The Company is required to
make quarterly principal payments under the Credit Facility commencing December
31, 2000. The Credit Facility matures on June 30, 2002.
The Company's success will depend largely upon the programming that PAX NET
offers and the Company's cost of obtaining such programming. The Company seeks
to acquire programming for PAX NET which will generate sufficient ratings to
enable the Company to capture advertising revenues exceeding the Company's
programming costs and other expenses. The Company has made certain assumptions
in formulating its strategies including, among others, the Company's ability to
achieve certain ratings, sell advertising at certain rates, sell a majority of
its time on a local basis at higher rates, sell out its time at targeted rates,
locate and hire a significant number of additional employees which the Company
expects will be necessary for the launch of PAX NET, operate its stations at the
anticipated staffing levels, achieve targeted cost savings through the
centralization of certain tasks for multiple stations, sell time utilizing
limited outside sales representatives, attract affiliates and acquire additional
stations, and continue to sell time for long-form paid programming during the
day and on weekends, at anticipated rates. Should any one or more of these
assumptions prove materially inaccurate, the Company's capital requirements for
the launch and operation of PAX NET could be greater than currently anticipated.
The Company believes that the proceeds of the Offerings, cash flow from
operations, existing cash balances and additional capital expected to be made
available to the Company through permitted purchase money borrowings of up to 5%
of the Company's total fixed assets will provide sufficient financial resources
to fund completion of the Proposed Acquisitions, capital expenditures on
existing and acquired properties, syndicated program rights fees, debt service
obligations and the Company's working capital requirements for the next twelve
months. To the extent that the Company pursues future acquisitions or requires
additional working capital, the Company may be required to obtain additional
financing. There can be no assurance that the Company will be able to obtain
such financing on terms acceptable to it. The failure to generate significant
cash flow from operations or to raise funds necessary to finance the Company's
future cash requirements could adversely affect the Company's ability to pursue
its business strategy. In addition, should the Company suffer a significant
impairment to its cash flow from operations due to the occurrence of one or more
adverse events, including those set forth under "Risk Factors," its liquidity
could become insufficient on a short term basis, and it could have insufficient
resources to repay indebtedness under the Credit Facility, the Existing Notes or
other credit instruments when due or to make required payments on the Preferred
Stock.
YEAR 2000 CONSIDERATIONS
In the next two years, many companies will face potentially serious issues
associated with the inability of existing data processing hardware and software
to appropriately recognize calendar dates beginning in the year 2000. Many
computer programs that can only distinguish the final two digits of the year
entered may read entries for the year 2000 as the year 1900 and compute payment,
interest or delinquency based on the wrong date, or are expected to be unable to
compute payment, interest or delinquency. The Company is in the process of
identifying the software applications and hardware devices expected to be
impacted by this issue. The Company is currently developing a new billing and
inventory system to be implemented prior to the launch of PAX NET in order to
meet the needs of PAX NET. This new billing and inventory system will address
the year 2000 compliance issues. The Company's general ledger system is not year
2000 compliant. As a result, and in order to accommodate the Company's future
growth, the Company's management is in the process of evaluating third-party
systems which are year 2000 compliant. While the Company expects that efforts on
the part of current employees of the Company will be required to continue to
monitor year 2000 activities, the Company does not expect the cost of addressing
any year 2000 issue will be a material event or uncertainty that would have a
material adverse effect on future operating results or financial condition.
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BUSINESS
GENERAL
Paxson Communications Corporation owns and operates the largest group of
broadcast television stations in the United States. The Company commenced its
television operations in early 1994 in anticipation of the deregulation of the
broadcast industry and has expanded in response to federal regulatory changes
that increased the number of broadcast television stations permitted under
common ownership. Upon the completion of the Transactions, the Company will have
88 owned, operated or affiliated stations (including six low-power stations) in
85 U.S. markets containing over 74 million broadcast television households, or
approximately 74% of all U.S. television households (including Puerto Rico and
the Virgin Islands), and will be the only television broadcaster with full-power
stations in all of the top 20 U.S. markets and in 43 of the top 50 U.S. markets.
Management believes that the Company has created a valuable national television
broadcast distribution infrastructure that would be both expensive and difficult
to replicate. The Company has obtained two appraisals which have valued its pro
forma owned and operated stations in a range between $1.5 billion and $1.9
billion (see "-- Appraisals"). As of March 31, 1998, the pro forma book value of
the Company's assets was approximately $1.4 billion.
The Company was founded in 1991 by Lowell W. "Bud" Paxson who personally
financed the Company's early growth and continues to lead the Company as
majority stockholder and chairman of the Board of Directors. Mr. Paxson has been
at the forefront of several innovative broadcasting concepts over the last
fifteen years, including his leadership role in the early growth of electronic
retailing as the creator and co-founder of Home Shopping Network, Inc. and
Silver King Communications, Inc. Mr. Paxson was one of the first radio operators
to take advantage of changes in the law applicable to multiple radio station
ownership and the overall number of stations permitted under common ownership as
he built Florida's largest radio group. In 1997, the Company sold two business
segments, Paxson Radio and Paxson Network-Affiliated Television. Paxson Radio's
assets, which included the Company's radio and billboard operations and an
agreement to purchase three additional radio stations, were sold for aggregate
consideration of approximately $629 million, consisting of approximately $602
million of cash and the assumption of the purchase commitment for the three
stations, resulting in a pre-tax gain of approximately $305 million. Paxson
Network-Affiliated Television's assets, which consisted of two traditional
network affiliated stations, were sold for aggregate consideration of
approximately $119 million, resulting in a gain of approximately $69 million.
Since commencing its television operations in early 1994, the Company has
established the largest owned and operated broadcast television station group in
the United States. The Company's stations currently broadcast long-form paid
programming, consisting primarily of infomercials, under its inTV format. Upon
the launch of PAX NET, the Company's stations will air traditional entertainment
programming and a reduced amount of long-form paid programming. See "-- Business
Strategy."
LAUNCH OF PAX NET
The Company intends to launch its PAX NET programming service on August 31,
1998. PAX NET is the brand name for the programming that the Company expects to
provide, 24 hours per day and seven days per week, to its owned, operated or
affiliated television stations and to certain cable systems and satellite
television providers. PAX NET programming will generally consist of
family-friendly, traditional entertainment programs that have had, or are
having, successful first runs on television in terms of audience ratings.
Management believes that the value of the Company's extensive broadcast
properties will be enhanced by converting to PAX NET programming from the
current long-form paid programming inTV format. The Company intends to sell
airtime for "spot" advertisements during PAX NET programming to commercial
advertisers, enabling the Company to participate in the approximately $37
billion local, national and network television spot advertising market rather
than the management-estimated $2 billion long-form paid programming market into
which the Company currently sells nearly all of its available airtime.
Management believes that the launch of PAX NET will enable the Company to
combine many of the favorable attributes of traditional television networks and
network-affiliated television stations under one operation.
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In general, broadcast television networks provide spot advertisers with
significant "reach," or access to viewers, through their extensive nationwide
distribution systems. Although most networks own stations in some of the top 20
U.S. markets, they are able to provide nationwide reach only through affiliation
agreements with non-owned stations which agree to broadcast network-provided
programming during certain times of the day, including prime time. Most
broadcast television networks invest considerable financial resources to either
develop or obtain new first-run programming, the success of which is dependent
upon attaining sufficient audience ratings and advertising support.
Substantially all of a network's revenues are derived from the sale of
advertising airtime during network programs.
Network-affiliated stations are typically independently-owned rather than
network-owned. A network affiliate broadcasts network-provided programming at
times stipulated by the network. At all other times, the network affiliate may
broadcast other programming, such as syndicated shows and other non-network
programming, which it generally purchases or produces. As part of its agreement
with the network, an affiliate relinquishes to the network substantially all of
the commercial airtime available during network programming hours, including the
desirable prime time periods. The network affiliate retains control of nearly
all of the commercial airtime available during non-network programming hours,
which it is able to sell to local and national spot advertisers who typically
pay rates that are more than 50% higher per viewer than network advertisers.
Network-affiliated stations must incur significant costs for programming and
promotion during non-network programming hours to generate revenue.
Management believes that the launch of PAX NET will enable the Company to
combine under one operation many of the favorable characteristics of traditional
television networks and network-affiliated television stations described above.
Similar to traditional television networks, the Company will provide advertisers
with nationwide reach through its extensive television distribution system.
Since the Company owns and operates almost all of its television distribution
system, it will receive advertising revenue from the entire broadcast day,
unlike a traditional network, which receives advertising revenue only from
commercials aired during limited network programming hours. To maximize the
revenues, the Company intends to allocate its advertising inventory among local,
national and network advertisers purely according to demand, rather than
allocating airtime to network advertisers as mandated by a network affiliation
agreement. Further, the Company expects that its station group will enjoy
various economies of scale due to its size and centralized operations, resulting
in programming, promotional, research, engineering, accounting and
administrative expenses that are substantially lower per station than those of a
typical network-affiliated station.
BUSINESS STRATEGY
The Company will seek to maximize its cash flow by maintaining an efficient
operating structure and centralizing many functions that traditionally are
managed at the local station level, optimizing the mix of advertising sales to
achieve the highest possible rates and providing viewers with a schedule of
high-quality destination programming. The principal components of the Company's
business strategy are as follows:
- Maintain a Centralized, Low-Cost Operating Structure. The Company
intends to maintain a low-cost operating structure by centralizing many
station functions, including programming, promotions, advertising,
research, engineering, accounting and sales traffic control. Under its
current inTV format, the Company averages twelve employees per station.
In anticipation of the launch of PAX NET, each of the Company's stations
will be adding an average of six local sales and sales-related employees
whose compensation will be largely dependent upon the amount of local
advertising sold. Accordingly, the Company estimates that each of its
stations will average only 18 employees, compared to an average of 100
employees at network-affiliated stations, and an average of 60 employees
at independent stations in markets of similar size to the Company's.
Unlike other stations, the Company's stations will not be required to
purchase programming individually since they will broadcast PAX NET
programming 24 hours per day. In addition, the Company's stations will
not produce local news programs, thereby avoiding the significant costs
often associated with such production.
As part of its low-cost operating strategy, the Company intends to
promote the PAX NET brand and each of its local television stations by
utilizing a centralized advertising and promotional program. All
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print and radio promotional advertisements will be produced at the
Company's headquarters, which will avoid duplicating such operations at
the local stations and the associated local promotional personnel
expenses. All advertisements and other promotional material will share
the same basic content but will be customized to identify and highlight
each local market. Management believes that the Company will have
substantial leverage to negotiate volume discounts on the procurement of
print materials and media time used to promote PAX NET programming and
the Company's television stations.
- Achieve Programming Economies of Scale. The Company seeks to achieve
economies of scale as it purchases PAX NET programming for all of its
stations. The Company has purchased programming centrally and will be
able to deliver its programming by satellite to its stations 24 hours per
day and seven days per week. Each station will offer substantially the
same programming schedule. Generally, the Company has negotiated license
agreements entitling it to exclusive nationwide distribution rights
(regardless of delivery medium) for a fixed cost, independent of the
number of households which will receive such programming. By utilizing a
centralized programming acquisition strategy, the Company expects to
incur programming costs per station significantly lower than those of
comparable television stations in similar markets.
- Maximize Advertising Sell-Through and Revenue. Following the launch of
PAX NET, the Company will have access to multiple sources of advertising
revenue: network spot, national spot, local spot and long-form paid
programming. Industry data has shown that an advertiser seeking to target
viewers within specific markets typically purchases airtime at rates 50%
to 100% higher per viewer than those for a single commercial aired across
an entire network. Since networks and station affiliates are usually
owned by different entities, the allocation of spots between local,
national and network advertisers is relatively fixed by an affiliation
agreement. The Company, however, will retain the flexibility to allocate
airtime among various categories of advertisers and will seek to maximize
revenue by optimizing the mix of advertising time it sells among local,
national and network advertisers as well as its current base of long-form
paid programming advertisers. To better allocate its available
advertising airtime, the Company is implementing a new proprietary sales
traffic system designed to deliver to the Company's sales force accurate
and timely data on its available advertising inventory and the demand for
its inventory.
- Provide Proven Family-Friendly Programming. The Company intends to build
the brand recognition of and attract viewers to PAX NET by offering
syndicated family-oriented programming which achieved successful audience
ratings during its original network run. Certain of the programs
purchased by the Company (Touched By An Angel, Promised Land and
Diagnosis Murder) are still in production, and their new episodes
continue to attract significant viewership. The Company has generally
sought to purchase one-hour dramas since management believes that such
programming is more cost efficient than programs of shorter duration.
Consistent with its family-friendly programming strategy, the Company has
agreed to air original children's programming produced by a subsidiary of
The Walt Disney Company. As the brand recognition of PAX NET becomes
established, management believes that PAX NET will become a "destination
channel" to which viewers will turn regularly for family-friendly
programming, and that PAX NET will attract advertisers who want to reach
the broad and desirable viewer demographics attracted by such
programming.
- Continue Airing Profitable Long-Form Paid Programming. The Company
intends to carry a reduced but still significant schedule of long-form
paid programming, including infomercials, primarily during the day on
weekends and during certain hours of weekday mornings. Under its current
inTV programming format, the Company has generated in excess of 30% of
its revenue from weekend daytime programming. Management believes that
network-affiliated stations charge rates for long-form paid programming
which are several times the Company's current rates for similar time
periods and that as PAX NET becomes established as a "destination
channel," the Company can increase its long-form paid programming rates
to such levels. In addition, since the Company will reduce its inventory
of airtime available to long-form paid programmers upon the launch of PAX
NET, management believes that the Company will be able to sell such
airtime to those long-form paid programmers willing to pay
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a premium for such airtime. As a result, management believes that
long-form paid programming will provide a significant and stable base of
revenue for the Company as it implements the entertainment component of
its PAX NET strategy.
- Expand PAX NET Distribution. Pro forma for the Transactions, the
Company's station group will serve markets comprising approximately 74%
of all U.S. television households (including Puerto Rico and the Virgin
Islands). The Company intends to continue expanding the distribution of
its PAX NET programming service through the addition of broadcast
television station affiliates as well as certain cable systems and
satellite television providers. The Company intends to expand its
distribution to reach as many U.S. television households as possible in
an economically beneficial manner. The Company has entered into an
agreement with a subsidiary of Tele-Communications, Inc. ("TCI"), whereby
the Company will receive cable carriage of its PAX NET programming on TCI
cable systems in certain markets not currently served by the Company's
broadcast television station group. The Company continues to seek to
enter into distribution agreements to reach other markets not currently
served by its television group, with the goal of generating incremental
revenue from additional distribution outlets and leveraging its
relatively fixed cost operating structure to increase cash flow.
PAX NET PROGRAMMING
The Company has purchased programming for broadcast on PAX NET including:
<TABLE>
<S> <C>
Touched By An Angel Promised Land
Dr. Quinn, Medicine Woman Diagnosis Murder
Highway to Heaven Life Goes On
I'll Fly Away Dave's World
Christy The Father Dowling Mystery
Neon Rider Series
The New Flipper Love Boat
Seventh Heaven
</TABLE>
In addition, the Company has purchased theatrical and made-for-television
movies and agreed to air original children's programming of a subsidiary of The
Walt Disney Company.
ADVERTISING
Television stations derive their revenues primarily from the sale of
national, regional and local advertising. All network-affiliated stations are
required to carry advertising sold by its networks, reducing the amount of
advertising available for sale directly by the station affiliates. Network
affiliated stations are generally compensated for the broadcast of the network
advertising by the network. The compensation paid is negotiated,
station-by-station, based on a fixed formula, subject to certain adjustments.
The station affiliates sell directly any remaining advertising time made
available during network programming and all of the advertising during
non-network programming, retaining all of the revenues received from the sales
of such advertising, net of any commissions paid. The Company has entered into
certain barter and cash-plus-barter arrangements whereby a national syndicated
program distributor retains a portion of the available advertising time for the
programming it supplies in exchange for no or reduced fees to the station for
such programming.
Spot advertising rates are based upon factors which include the size of the
market in which the station operates, the audience ratings generated by the
programming, the number of advertisers competing for available time, demographic
characteristics of the market serviced by the station, the availability of
alternative advertising media in the market, aggressive and knowledgeable sales
forces and the development of projects, features and marketing programs that tie
advertiser messages to programming. Long-form paid programming rates are
primarily based on the number of television households reached, the
effectiveness of the advertisement, the nature of the advertiser, the nature of
the advertisement and ultimately the demand for available airtime by long-form
paid programming advertisers. The Company attempts to maximize long-form paid
programming revenue by increasing the number of television households reached,
thereby providing advertisers with increased viewership.
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Following the launch of PAX NET, the Company will have access to multiple
sources of advertising revenue: network spot, national spot, local spot and
long-form paid programming. Industry data has shown that an advertiser seeking
to target viewers within specific markets typically purchases airtime at a rate
50% to 100% higher per viewer than that for a single commercial aired across an
entire network. Since networks and station affiliates are usually owned by
different entities, the allocation of spots between local, national and network
advertisers is relatively fixed by an affiliation agreement. The Company,
however, will retain the flexibility to allocate airtime among various
categories of advertisers and will seek to maximize revenue by optimizing the
mix of advertising time it sells among local, national and network advertisers
as well as its current base of long-form paid programming advertisers. To better
allocate its available advertising airtime, the Company is implementing a new
proprietary sales traffic system designed to deliver to the Company's sales
force accurate and timely data on its available advertising inventory and the
demand for its inventory.
Local advertising time is sold by the Company's local sales force and is
offered to merchants and businesses operating within a station's local market
and local advertisers seeking to target viewers in specific markets, including
retailers, insurance companies, automobile dealers, financial service providers
and general merchandisers. National and network programming and time is sold by
national advertising placement agencies and the Company's own in-house national
and network sale force. National and network advertising appeals to advertisers
who desire to reach viewers in targeted television markets and all television
markets served by the Company's television distribution system, respectively.
The Company maintains network and national sales offices in New York, Los
Angeles, Chicago, Atlanta, Dallas, Detroit, San Francisco, Philadelphia and at
the Company's headquarters in West Palm Beach.
DISTRIBUTION
The television stations included in the Company's broadcast distribution
group are either: (i) owned, in whole or in part, by the Company; (ii) operated
by the Company pursuant to time brokerage agreements entered into with FCC
licensees; or (iii) owned by independent television station operators that enter
into affiliation agreements with the Company. Since January 1998, the Company
has adopted new call letters for more than 40 of its television stations in an
effort to more closely align each station's call letters with the letters in the
words PAX NET.
The Company has typically acquired non-network affiliated stations with
marginal operating results that have been acquired at a relatively low cost
compared to network affiliated stations. Certain of these stations are licensed
by communities outside the center of major television markets, but within such
markets' DMAs. By virtue of the "must carry" rules of the FCC, these stations
are generally entitled to carriage on cable systems throughout the DMA. Through
the exercise of "must carry" rights and the improvement of its stations' over-
the-air signals, the Company has increased both its broadcast television and
cable household coverage within its markets.
The Company also seeks to continue expanding its distribution capacity by
entering into agreements with cable system operators and satellite television
providers pursuant to which it obtains access to television households and
markets not currently served by its broadcast television station group. These
agreements typically are expected to provide for the Company to pay fees or
purchase advertising time at rates based upon the number of television
households made available, and to provide a certain amount of advertising
airtime.
COMPETITION
The Company's television stations compete with the other television
broadcasting stations in their respective market areas, as well as with other
advertising media, including newspapers, radio, magazines, outdoor advertising,
transit advertising, direct mail marketing and cable television networks.
Competition within the television broadcasting industry occurs primarily in
individual market areas, so a station in one market does not generally compete
with stations in other market areas. In each of its markets, the Company's
television stations face competition from other stations with substantial
financial resources, including, in certain instances, stations whose programming
is directed to the same demographic groups. In addition to management
experience, factors that are material to competitive positions include a
station's rank in its
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market, authorized power, assigned frequency, audience characteristics, local
program acceptance and the programming characteristics of other stations in the
market area.
Although the television broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a television broadcasting station
requires a license from the FCC, and the number of television stations that can
operate in a given market is limited by the availability of stations that the
FCC will license in that market. The television broadcasting industry
historically has grown in terms of total revenue, despite the introduction of
new technologies for the delivery of entertainment and information, such as
cable, and direct satellite. There is no assurance that market fragmentation
resulting from the application of new media technologies will not have an
adverse effect on the television broadcasting industry.
The Company's successful development of PAX NET is subject to obtaining
sufficient audience ratings for its programming and converting such ratings into
advertising revenue sufficiently greater than the related programming and other
operating costs. PAX NET's family-friendly programming is subject to competition
from several sources including certain programming of major broadcasting and
cable networks targeted to family viewers.
TIME BROKERAGE AGREEMENTS AND OTHER INTERESTS IN BROADCAST STATIONS
Time Brokerage Agreements. The Company has entered into time brokerage
agreements with third parties pursuant to which the Company enjoys many, but not
all, of the benefits of operating a television station while not owning the FCC
license. The Company is currently operating, or will operate upon consummation
of pending acquisitions or construction, pursuant to time brokerage agreements
stations KAJW-TV, Phoenix, Arizona, KSPX-TV, Sacramento, California, Channel 26,
San Antonio, Texas, WPXL-TV, New Orleans, Louisiana, WFBI-TV, Memphis,
Tennessee, WPXP-TV, West Palm Beach, Florida, WQPX-TV, Wilkes-Barre,
Pennsylvania, KYPX-TV, Little Rock, Arkansas, WKRP-TV, Charleston, West
Virginia, WPXK-TV, Knoxville, Tennessee, KPXO-TV Honolulu, Hawaii and WAUP-TV,
Syracuse, New York. The Company may in the future enter into other time
brokerage agreements to operate stations prior to their acquisition or to enable
the Company to operate additional television stations that it might not be able
to own itself under current FCC multiple station ownership restrictions.
The Company also operates or intends to operate pursuant to time brokerage
agreements certain stations that the Company is not in the process of acquiring.
The Company currently operates WHPX-TV, Hartford, Connecticut, and WBPX-TV,
Boston, Massachusetts, under time brokerage agreements. The Company operates
WHPX-TV pursuant to a time brokerage agreement with an entity owned and
controlled by Steven Roberts and Michael Roberts jointly ("Roberts
Broadcasting"), and operates WBPX-TV pursuant to a time brokerage agreement with
The Christian Network, Inc.
With limited exceptions, the time brokerage agreements that the Company
enters into, other than in anticipation of an acquisition, involve a basic
transaction structure. The Company (i) finances the acquisition by a third party
of some or all of the assets of the brokered stations and secures such financing
by encumbering such assets including, to the extent permitted under FCC rules
and regulations, the FCC license and all of the capital stock of the acquiring
company; and (ii) enters into a time brokerage agreement with the third party
that allows the Company to operate the brokered station in accordance with FCC
guidelines. In general, payments made to the FCC licensee under a time brokerage
agreement are established based upon increases in expenses. Under FCC
regulations, the FCC licensee remains primarily liable for those expenses, which
include the indebtedness owed by such FCC licensee to the Company or to third
parties. In certain circumstances, the Company may acquire certain tangible
assets useful in the construction or operation of the brokered station and lease
such assets to the brokered station. In addition, unless prohibited by FCC rules
and regulations, the FCC licensee also grants the Company an option to purchase
the station for an amount payable in cash together with the forgiveness of all
indebtedness. The Company has no ownership interest in the parties with which it
has entered into time brokerage agreements.
Affiliation Agreements and Other Investments in Television Properties. The
Company has several affiliation agreements with third parties, including DP
Media, Inc. (an entity owned and controlled by members of Mr. Paxson's family).
The affiliation agreements with DP Media, Inc. include the following
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television stations: WPXE(TV), Kenosha, Wisconsin; WWPX(TV) Martinsburg, West
Virginia; WPXS(TV) Mt. Vernon, Illinois; WRPX(TV) Rocky Mount, North Carolina;
and WZPX(TV) Battle Creek, Michigan. Upon DP Media's acquisition of WBPX-TV,
Boston, Massachusetts, from CNI and WHPX-TV, Hartford, Connecticut, from Roberts
Broadcasting, the Company will provide programming for such stations under an
affiliation agreement. In connection with the Company's acquisition of WCFC-TV,
Chicago, Illinois, the FCC required the Company to sell WPXE-TV, Kenosha,
Wisconsin in order to comply with FCC multiple ownership rules. Accordingly, the
Company sold WPXE-TV to DP Media and, in connection therewith, entered into an
affiliation agreement pursuant to which WPXE-TV airs the Company's programming.
The Company has options to acquire WWPX(TV) and WRPX(TV) and has or will have a
right of first refusal upon any proposed sale of WPXS(TV), WZPX(TV) WHPX-TV and
WBPX-TV.
The Company advanced funds to finance the construction of KWOK-TV, San
Francisco, California, and subsequently acquired the corporation holding an
option to acquire the station from the licensee. Upon completion of the
station's construction, the Company will exercise its option to acquire KWOK-TV,
and then include the station as partial consideration for the Company's pending
acquisition of WCFC-TV, Chicago, Illinois.
The Company also extended financing for the construction of television
station WPXP-TV, West Palm Beach, Florida, and subsequently acquired the
corporation which owns 33% of the licensee, exercised an option to increase its
ownership to 90%, and began operating WPXP pursuant to a time brokerage
agreement with the licensee.
FEDERAL REGULATION OF BROADCASTING
The FCC regulates television broadcast stations pursuant to the
Communications Act. The Communications Act permits the operation of television
broadcast stations only according to a license issued by the FCC upon a finding
that the grant of the license would serve the public interest, convenience and
necessity and to provide a fair, efficient and equitable distribution of
broadcast service throughout the United States.
The Communications Act empowers the FCC, among other things, to determine
the frequencies, location and power of broadcast stations; to issue, modify,
renew and revoke station licenses; to approve the assignment or transfer of
control of broadcast licenses; to regulate the equipment used by stations; to
impose fees for processing applications; and to impose penalties for violations
of the Communications Act or FCC regulations. The FCC may revoke licenses for,
among other things, false statements made to the FCC or willful or repeated
violations of the Communications Act or of FCC rules. Legislation has been
introduced from time to time to amend the Communications Act in various respects
and the FCC from time to time considers new regulations or amendments to its
existing regulations. The Telecommunications Act of 1996 (the "1996 Act")
changed many provisions of the Communications Act and required the FCC to change
its existing rules and adopt new rules in several areas affecting broadcasting.
The following is a brief summary of certain provisions of the
Communications Act and the rules of the FCC. Reference should be made to the
Communications Act and the rules, orders, decisions and published policies of
the FCC for further information on FCC regulation of television and radio
broadcast stations.
License Renewal. The Communications Act provides that a broadcast station
license may be granted to an applicant if the public interest, convenience and
necessity will be served thereby, subject to certain limitations. In making
licensing determinations, the FCC considers an applicant's legal, technical,
financial and other qualifications. Broadcast station licenses are granted for
specific, limited periods and upon application, are renewable for additional
terms. The license term for both television and radio broadcast stations is
eight years. The Company's full power licenses, and the licenses of stations
with which the Company has time brokerage and affiliation agreements expire on
the following dates:
<TABLE>
<CAPTION>
OWNED TELEVISION STATIONS MARKET(1) LICENSE EXPIRATION
- ------------------------- --------- ------------------
<S> <C> <C>
WPXN...................... New York City June 1, 1999
WIPX...................... New York City April 1, 1999
KPXN...................... Los Angeles December 1, 1998
</TABLE>
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<PAGE> 70
<TABLE>
<CAPTION>
OWNED TELEVISION STATIONS MARKET(1) LICENSE EXPIRATION
- ------------------------- --------- ------------------
<S> <C> <C>
WPPX...................... Philadelphia August 1, 1999
KWOK...................... San Francisco December 1, 1998
KKPX...................... San Francisco December 1, 1998
WPXB...................... Boston April 1, 1999
WPXW...................... Washington October 1, 2004
KPXD(3)................... Dallas August 1, 1998
WPXD...................... Detroit October 1, 2005
WPXA...................... Atlanta April 1, 2005
KPXB...................... Houston August 1, 1998*
KWPX...................... Seattle February 1, 1999
WVPX...................... Cleveland October 1, 2005
KPXM...................... Minneapolis April 1, 2006
WXPX...................... Tampa February 1, 2005
WPXM...................... Miami February 1, 2005
KBPX...................... Phoenix October 1, 1998
KPPX(4)................... Phoenix October 1, 1998
KPXC...................... Denver April 1, 2006
WOPX...................... Orlando February 1, 2005
WPXP...................... West Palm Beach February 1, 2005
KPXG...................... Portland, OR February 1, 1999
WFPX...................... Raleigh December 1, 2004
KPXE...................... Kansas City February 1, 2006
WPXE...................... Milwaukee December 1, 2005
WNPX...................... Nashville August 1, 2005
KUWB...................... Salt Lake City October 1, 1998
WPXV...................... Norfolk October 1, 2004
KOPX...................... Oklahoma City June 1, 2006
WGPX...................... Greensboro December 1, 2004
WQPX(4)................... Wilkes-Barre August 1, 1999
WPXQ(5)................... Providence April 1, 1999
WPXH...................... Birmingham April 1, 2005
WYPX...................... Albany June 1, 1999
WDPX...................... Dayton October 1, 2005
KPXF...................... Fresno December 1, 1998
WKRP(4)................... Charleston October 1, 2004
KTPX...................... Tulsa June 1, 2006
WPXR...................... Roanoke October 1, 2004
WPXG...................... Green Bay December 1, 2005
WAUP(4)................... Syracuse June 1, 1999
WPXU...................... Champaign December 1, 2005
KPXR...................... Cedar Rapids February 1, 2006
WJWN...................... San Sebastian, PR February 1, 2005
WKPV...................... Ponce, PR February 1, 2005
WJPX...................... San Juan, PR February 1, 2005
</TABLE>
<TABLE>
<CAPTION>
TIME BROKERAGE AND AFFILIATED
TELEVISION STATIONS MARKET(1) LICENSE EXPIRATION
- ----------------------------- --------- ------------------
<S> <C> <C>
WBPX........................ Boston April 1, 1999
WWPX........................ Washington October 1, 2004
KSPX........................ Sacramento December 1, 1998
WPXS........................ St. Louis December 1, 2005
WHPX........................ Hartford/New Haven April 1, 1999
</TABLE>
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<PAGE> 71
<TABLE>
<CAPTION>
TIME BROKERAGE AND AFFILIATED
TELEVISION STATIONS MARKET(1) LICENSE EXPIRATION
- ----------------------------- --------- ------------------
<S> <C> <C>
WRPX........................ Raleigh December 1, 2004
WZPX........................ Grand Rapids October 1, 2005
WCCL........................ New Orleans June 1, 2005
WFBI........................ Memphis August 1, 2005
KYPX(4)..................... Little Rock June 1, 2005
WPXK........................ Knoxville August 1, 2005
KPXO........................ Honolulu February 1, 1999
</TABLE>
<TABLE>
<CAPTION>
RADIO STATIONS(2) MARKET(1) LICENSE EXPIRATION
- ----------------- --------- ------------------
<S> <C> <C>
WHNZ-AM................... Tampa/St. Petersburg February 1, 2004
WYCL-FM................... Pensacola February 1, 2004
</TABLE>
- ---------------
* License renewal pending.
(1) Each station is licensed by the FCC to serve a specific community which is
included in the listed market.
(2) The formal call sign assigned by the FCC does not include the "AM" suffix
and does not necessarily include the "FM" suffixes. These stations are
contracted for sale.
(3) 80% owned
(4) 49% owned
(5) 50% owned.
Generally, the FCC renews licenses without a hearing. The Communications
Act authorizes the filing of petitions to deny during specified periods after
the renewal applications have been filed. Interested parties, including members
of the public, may file petitions to deny as a means to raise issues concerning
the renewal applicant's qualifications. The FCC will renew broadcast licenses if
the incumbent meets three requirements: (1) the station has served the public
interest, convenience and necessity; (2) the licensee has not seriously violated
the Communications Act or the FCC's rules; and (3) there have been no other
violations, which, taken together, would constitute a pattern of abuse. If an
applicant for renewal fails to satisfy this tripartite standard, the FCC
nevertheless may renew the license on appropriate terms and conditions,
including renewal for less than a full license term. The FCC may not consider
applications for the channel by other parties until it first has decided to deny
renewal to the incumbent. Before denying renewal to an incumbent, the FCC must
first allow the licensee a hearing on the licensee's alleged failure to satisfy
the statutory standard.
Ownership Matters. The Communications Act requires the prior approval of
the FCC for the assignment of a broadcast license or the transfer of control of
a corporation or other entity holding a license. In determining whether to
approve an assignment of a broadcast license or a transfer of control of a
broadcast licensee, the FCC considers, among other things, the financial and
legal qualifications of the prospective assignee or transferee, including
compliance with FCC restrictions on alien ownership and control, compliance with
rules limiting the common ownership of certain attributable interests in
broadcast, cable and newspaper properties, and the character qualifications of
the transferee or assignee and the individuals or entities holding attributable
interests in them.
The FCC generally applies its ownership limits to attributable interests
held by an individual, corporation, partnership, or other association or entity.
In the case of corporations holding broadcast licenses, the interests of
officers, directors, and those who, directly or indirectly, have the right to
vote five percent or more of the corporation's stock are generally attributable,
as are positions of an officer or director of a corporate parent of a broadcast
licensee. The FCC treats all partnership interests as attributable, except for
those limited partnership interests that are insulated under FCC policies. For
insurance companies, certain regulated investment companies and bank trust
departments, that hold stock for investment purposes only, such interests
becomes attributable with the ownership of ten percent or more of the stock of
the corporation holding broadcast licenses.
The Communications Act permits an entity to hold an attributable interest
in television stations reaching up to 35% of the United States television
households. The FCC utilizes a UHF discount in determining the reach of UHF
television stations by considering them to reach only fifty percent (50%) of the
households
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<PAGE> 72
within their markets. The FCC also has rules that limit the number of co-located
television broadcast stations in which a single entity may own an attributable
interest. No single entity may hold an attributable interest in television
stations with overlapping Grade B service contours. The 1996 Act directs the FCC
to conduct a rule making proceeding to determine whether these rules should be
retained. The FCC has established a liberal waiver policy to permit common
ownership of a radio station and a television station in any of the nation's 25
largest markets, and in some circumstances involving failed stations and in
other situations where more stringent waiver standards can be met. The 1996 Act
extends this waiver policy to the top 50 markets.
The FCC's cross-ownership rules prohibit the common ownership of
attributable interests in certain combinations of media outlets serving the same
geographic area. Under these rules, a single entity may not have an attributable
interest in: (i) both a radio station and a television station that serve
specified overlapping areas; (ii) a daily newspaper and either a radio station
or a television station that serve specified overlapping areas; or (iii) a
television station and a cable television system that serve specified
overlapping areas. The FCC has initiated proceedings to inquire whether it
should change or eliminate its cross interest policy, covering joint ventures
and common key employees. The policy does not necessarily prohibit these
interests, but may require that the FCC consider whether they could have a
significant adverse affect on programming diversity and competition in the
market.
In cases where one person or entity (such as Mr. Paxson in the case of the
Company) holds more than 50% of the combined voting power of the common stock of
a broadcasting corporation, a minority shareholder of the corporation generally
would not acquire an attributable interest in the corporation. If a majority
shareholder of a company (such as Mr. Paxson in the case of the Company) were no
longer to hold more than 50% of the combined voting power of the common stock of
the Company, the interests of minority shareholders that had theretofore been
considered non-attributable could become attributable, with the result that any
other media interests held by such shareholders would be combined with the media
interests of such company for purposes of determining the shareholders'
compliance with FCC ownership rules.
Under the Communications Act, no FCC broadcast license may be held by a
corporation of which any officer or director is an alien or of which more than
one-fifth of its capital stock is owned or voted by aliens or their
representatives or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country (collectively
"Aliens"). Furthermore, the Communications Act provides that no FCC broadcast
license may be granted to any corporation controlled by any other corporation of
which more than one-fourth of its capital stock is owned of record or voted by
Aliens if the FCC should find that the public interest would be served by the
refusal of such license. Restrictions on alien ownership also apply, in modified
form, to other types of business organizations, including partnerships.
Programming and Operation. The Communications Act requires broadcasters to
present programming that responds to community problems, needs and interests and
to maintain certain records demonstrating such responsiveness.
Broadcast of obscene or indecent material is regulated by the FCC as well
as by state and federal law. Stations also must follow various rules promulgated
under the Communications Act that regulate, among other things, political
advertising, sponsorship identifications, the advertising of contests and
lotteries, and technical operations, including limits on radio frequency
radiation. Pursuant to the Children's Television Act of 1990, the FCC has
adopted rules limiting advertising in children's television programming and has
required that television broadcast stations serve the educational and
informational needs of children.
Time Brokerage Agreements. Over the past several years a significant
number of broadcast licensees, including the Company, have entered into time
brokerage agreements. These arrangements are subject under FCC rules and
regulations to maintenance by the licensee of each station of independent
control over the programming and station operations of its own station.
Typically, a time brokerage agreement is a programming agreement between
two separately owned broadcast stations serving a common service area, whereby
the licensee of one station programs substantial parts of the broadcast day on
the other licensee's station, subject to ultimate editorial and other controls
being
62
<PAGE> 73
exercised by the licensee of the brokered station. The broker then sells
advertising time during such program segments for its own account.
The FCC has determined that issues of joint advertising sales should be
left to antitrust enforcement. In addition, it has specifically exempted time
brokerage agreements from its cross-interest policy. Furthermore, the FCC has
held that time brokerage agreements do not per se constitute a transfer of
control and are not contrary to the Communications Act provided that the
licensee of the station maintains ultimate responsibility for and control over
operations of its broadcast station (including, specifically, control over
station finances, licensee personnel and programming) and complies with
applicable FCC rules and with antitrust laws.
The FCC has no present rules on the attribution of television time
brokerage agreements as it does with radio time brokerage agreements. The 1996
Act grandfathered time brokerage agreements existing at the time of its passage
and included a provision that the broadcast ownership section of the 1996 Act is
not to be construed to prohibit the origination, continuation or renewal of any
television time brokerage agreement that complies with FCC regulations.
"Must Carry"/Retransmission Consent. The Communications Act contains
broadcast signal carriage requirements that allow local commercial television
broadcast stations to elect once every three years to require a cable system to
carry the station subject to certain exceptions, or to negotiate for
retransmission consent to carry the station. A cable system generally is
required to devote up to one-third of its activated channel capacity for the
mandatory carriage of local commercial television stations. Additionally, cable
systems are required to obtain retransmission consent for all distant commercial
television stations (except for commercial satellite-delivered independent super
stations such as WTBS), commercial radio stations and certain low power
television stations carried by such systems after October 6, 1993.
The 1996 Act modified the way in which markets for carriage will be
determined for purposes of the "must carry" rules. The 1996 Act provides that
the FCC will determine a broadcast station's market by using commercial
publications that delineate television markets based on viewing patterns. This
modification has resulted in the FCC ruling that for the election period
commencing January 1, 2000, a station's market will be defined by the DMA to
which it has been designated. The FCC is authorized to entertain requests for
expansion or other modification of television station markets, and is now
required to resolve any market modification request within 120 days after the
request is filed or within 120 days of enactment of the 1996 Act, whichever is
later.
Equal Employment Opportunity Requirements. The FCC's existing equal
employment opportunity ("EEO") regulations and reporting forms used by
television broadcast stations has been codified in the Communications Act. In
addition, the FCC has adopted rules providing for a review of the EEO
performance of each television station at the mid-point in its license term (in
addition to an examination at renewal time) and for the FCC to inform the
licensee of any improvements in recruiting practices that may be needed as a
result of the review. The FCC recently proposed rules that would reduce the EEO
record keeping and filing requirements of certain categories of stations.
Syndicated Exclusivity/Territorial Exclusivity. The FCC has imposed on
cable operators syndicated exclusivity rules and expanded existing network
non-duplication rules. These syndicated exclusivity rules allow local broadcast
stations to require that cable operators black out certain syndicated
non-network programming carried on distant signals (that is, signals of
broadcast stations, including so-called super stations, which serve areas
substantially removed from the cable system's local community). The network
non-duplication rules allow local broadcast network affiliates to require that
cable operators black out duplicating network broadcast programming carried on
more distant signals that are not significantly viewed over the air.
Television stations also may be subject to a number of other federal, state
and local regulation, including regulations of the Federal Aviation
Administration affecting tower height and marking, and federal, state and local
environmental and land use restrictions and general business regulation, and a
variety of local regulatory concerns.
Proposed Changes. The Congress and the FCC have under consideration, and
in the future may consider and adopt, new laws, regulations and policies
involving a wide variety of matters that could affect,
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<PAGE> 74
directly or indirectly, the operation, ownership and profitability of the
Company's broadcast stations, result in the loss of audience and advertising
revenue for the Company's broadcast stations and affect the ability of the
Company to acquire additional broadcast stations or finance such acquisitions.
FCC Proceedings to Revise Broadcast Ownership Rules. The FCC has issued a
further notice of proposed rule making which proposed the following changes in
regulations governing television broadcasting: (i) modifying the reach discount
as it applies to UHF stations; (ii) narrowing the geographic area where common
ownership restrictions would be triggered by limiting it to overlapping Grade A
contours and by permitting certain UHF/UHF or UHF/VHF overlaps; (iii) relaxing
the rules prohibiting cross-ownership of radio and television stations in the
same market; and (iv) treating television time brokerage agreements the same as
radio time brokerage agreements, which would presently preclude certain
television time brokerage agreements where the programmer owns or has an
attributable interest in another television station in the same market. In June
1995, the FCC announced an interim policy for processing television transfer and
assignment applications that include time brokerage agreements. Pending the
adoption of new rules, the FCC has stated that it will not grant applications
that propose a time brokerage arrangement if the arrangement also includes both
debt financing by the time broker and an option for the time broker to purchase
the brokered station. The FCC has stated that it will continue to grant
applications with time brokerage arrangements if they include only one of those
elements (that is, either debt financing by the broker or an option of the time
broker to purchase). The FCC also issued a further notice of proposed rule
making that combined several long-pending proceedings to consider changes in its
ownership rules and policies.
FCC Inquiry on Broadcast of Commercial Matter. The FCC also has initiated
a notice of inquiry proceeding seeking comment on whether the public interest
would be served by establishing limits on the amount of commercial matter
broadcast by television stations. No prediction can be made at this time as to
whether the FCC will propose any limits on commercial advertising at the
conclusion of its deliberation or the effect the imposition of limits on the
commercial matter broadcast by television stations would have upon the Company's
operations.
Advanced High Definition Television System. The FCC has adopted rules for
implementing advanced (high definition) television ("ATV") in the United States.
Implementation of ATV service should improve the technical quality of television
broadcasts. In anticipation of the implementation of ATV operations, the FCC has
adopted ATV technical standards and other rules necessary to protect the public
interest. The FCC has conditioned ATV licenses on recapture of either the new
ATV spectrum or television licensees' initial spectrum. Ten years after it first
issues ATV licenses, the FCC must evaluate its regulation and public acceptance
of ATV, including possible alternative uses of and reduction in ATV spectrum.
The FCC is required to adopt rules permitting ATV licensees to offer
"ancillary or supplementary services" on newly-available ATV spectrum, so long
as such services are consistent with the FCC's ATV standards; do not derogate
required ATV services, including high definition television; and are regulated
in the same manner as similar non-ATV services. The FCC has decided that it will
set aside specific new channel allotments for ATV service. Initial eligibility
for these channels will be limited to existing television licensees.
Beginning in May 2002 the Company will be required to air a certain number
of broadcast hours in the ATV format.
EMPLOYEES
As of April 30, 1998, the Company had approximately 505 full-time employees
and 171 part-time employees. The substantial majority of the Company's employees
are not represented by labor unions. The Company considers its relations with
its employees to be good.
SEASONALITY
Seasonal revenue fluctuations are common within the television broadcasting
industry and result primarily from fluctuations in advertising expenditures.
Because of the short operating history of inTV and the start-up nature of PAX
NET, the Company's ability to assess the effects of seasonality on either inTV
or PAX
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<PAGE> 75
NET is limited. It appears, however, that inTV experiences its highest revenues
during the first and fourth calendar quarters.
TRADEMARKS AND SERVICE MARKS
The Company has 4 federally registered trademarks and service marks with
another 21 applications pending. It does not own any patents or patent
applications.
APPRAISALS
The Company has obtained appraisals from two independent media valuation
firms which have valued the Company's owned and operated stations in a range
between $1.5 billion and $1.9 billion. As of March 31, 1998, pro forma for the
Transactions, the book value of the Company's assets was approximately $1.4
billion. BIA Consulting, Inc. has prepared a business valuation report which
estimated the value as of March 1, 1998 of the Company's stations using
different valuation methodologies. BIA estimated the value of the Company's
owned and operated stations if sold individually at $1.5 billion and the value
of the Company's owned and operated stations if sold to a single buyer in a
range of $1.8 billion to $1.9 billion. CEA, whose principal was formerly a
member of the Company's Board of Directors, has also prepared a business
valuation report which estimated the value of the Company's owned or operated
stations as of March 1, 1998 at between $1.5 billion and $1.8 billion, using
comparable transactions to arrive at their opinion of the fair market value of
the Company's stations. CEA supported this opinion of value using various other
valuation methodologies. These valuations are subject to certain limiting
conditions and assumptions and must be read in their entirety. In addition,
these valuations represent only the appraisers' opinions with respect to value,
and there can be no assurance that the Company's stations can be sold for the
amounts stated therein.
PROPERTIES AND FACILITIES
The following table sets forth information with respect to the Company's
offices and its studios and broadcast tower locations. Management believes that
the Company's properties are in good condition and are suitable for its
operations.
<TABLE>
<CAPTION>
MARKET(L) PROPERTY OWNED/LEASED LEASE EXPIRATION
--------- -------- ------------ ----------------
<S> <C> <C> <C>
New York, NY................................ Studio Leased March 2001
Offices Leased June 2000
Los Angeles, CA............................. Tower Leased March 2006
Studio/Offices Leased April 2008
Tower Leased June 2005
Chicago, IL................................. Offices Leased June 2000
Philadelphia, PA............................ Sales Office Leased July 1998
Studio Leased September 2000
San Francisco, CA........................... Tower Leased June 2020
Sales Office Leased April 2003
Studio/Offices Leased June 2005
Boston, MA.................................. Studio/Offices Leased February 2006
Tower Leased February 2012
Washington, DC.............................. Tower Owned
Studio Owned
Dallas, TX.................................. Studio Leased October 2001
Tower Leased March 2016
Detroit, MI................................. Studio Leased August 1999
Tower Owned
Atlanta, GA................................. Tower Leased October 2015
Studio/Offices Leased June 2001
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
MARKET(L) PROPERTY OWNED/LEASED LEASE EXPIRATION
--------- -------- ------------ ----------------
<S> <C> <C> <C>
Houston, TX................................. Tower Owned
Studio Owned
Seattle, WA................................. Tower Leased August 2002
Studio Leased October 2000
Cleveland, OH............................... Tower Owned May 2006
Studio Leased October 1999
Minneapolis, MN............................. Studio Owned
Tower Owned
Tampa, FL................................... WHNZ-AM Tower Owned
WXPX Tower Leased May 2004
WXPX Studio Leased April 2001
Miami, FL................................... Tower Leased October 1999
Studio Leased July 2001
Phoenix, AZ................................. KBPX Studio Leased September 1999
KBPX Tower Leased October 2001
KAJW Tower Leased June 2012
Denver, CO.................................. Studio Leased August 2001
Tower Leased August 2003
Orlando, FL................................. Tower Leased August 2015
Tower Owned
Studio/Offices Leased Month to Month
Portland, OR................................ Tower Leased August 2001
Indianapolis, IN............................ Tower Leased June 1999
Raleigh/Fayetteville, NC.................... Studio Leased January 2003
Tower Leased January 2003
Kansas City, MO............................. Studio Leased August 2004
Tower Leased August 2047
Milwaukee, WI............................... Studio Owned
Tower Leased June 2012
Nashville, TN............................... Studio Leased January 2003
Tower Leased January 2013
Salt Lake City, UT.......................... Studio Leased July 2000
Tower Leased January 1999
Norfolk, VA................................. Studio Leased June 1998
Tower Leased May 1999
West Palm Beach, FL......................... Headquarters Owned
Annex Leased February 2000
Undeveloped
Land Owned
Oklahoma City, OK........................... Studio Leased October 2003
Tower Leased September 2003
Greensboro, NC.............................. Tower Leased October 2011
Studio Leased September 2002
Providence, RI.............................. Tower Leased August 2006
Birmingham, AL.............................. Studio Leased November 1999
Tower Owned
Albany, NY.................................. Tower Owned
Studio Leased November 2003
Dayton, OH.................................. Tower Owned
Studio Owned
Fresno, CA.................................. Studio Leased Month to Month
Tower Leased June 2000
</TABLE>
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<PAGE> 77
<TABLE>
<CAPTION>
MARKET(L) PROPERTY OWNED/LEASED LEASE EXPIRATION
--------- -------- ------------ ----------------
<S> <C> <C> <C>
Jacksonville, FL............................ Tower Leased July 1998*
Little Rock, AR............................. Tower Leased January 2012
Tulsa, OK................................... Tower Leased December 2006
Studio Leased February 2004
Las Vegas, NV............................... Tower Leased April 2001
Knoxville, TN............................... Tower Leased Year to Year
Studio Owned
Roanoke, VA................................. Studio Leased December 2003
Tower Owned
Green Bay, WI............................... Studio Leased December 2007
Tower Leased January 2012
Champaign, IL............................... Studio Owned
Tower Owned
Cedar Rapids, IA............................ Studio Leased December 1999
Tower Owned
Tower land Leased December 2015
Columbus, OH................................ Tower Leased August 1998
Puerto Rico................................. Towers -- two Owned
Tower Leased Month to Month
Studio Leased November 2001
</TABLE>
- ---------------
* Lease currently being renegotiated.
(1) Market listed may differ from actual location.
LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company or any of its property is subject.
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<PAGE> 78
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning the Company's directors
and executive officers.
<TABLE>
<CAPTION>
DIRECTORS AGE POSITION, BUSINESS EXPERIENCE AND DIRECTORSHIPS
--------- --- -----------------------------------------------
<S> <C> <C>
Lowell W. Paxson.......................... 63 Chairman of the Board of the Company since 1991
(inception), and Chief Executive Officer of the
Company from 1991 to May 1998. President, Home
Shopping Network, Inc. ("HSN") from 1985 to 1990.
William E. Simon, Jr. .................... 46 Vice Chairman of the Company since May 1998.
Executive Director since 1988 of William E. Simon &
Sons, L.L.C., a private investment firm and
merchant bank. Director, Hanover Compressor
Company and Geologistics Corporation.
Jeffrey Sagansky.......................... 46 President and Chief Executive Officer of the Company
since May 1998. Co-President of Sony Pictures
Entertainment since October 1996 and Executive
Vice President of Sony Corp. of America from 1994
to 1996. President of CBS Entertainment from 1990
to 1994.
James B. Bocock........................... 54 Co-President since May 1998, Chief Operating Officer
since 1991 and President 1991-1998 of the Company.
Vice President -- Broadcast Affiliations of HSN
from 1986 to 1991.
Arthur D. Tek............................. 48 Vice President and Chief Financial Officer of the
Company since 1992, and Treasurer of the Company
since 1994. Chief Financial Officer and Controller
from 1990 to 1992 of Chase Communications, Inc., a
television and radio broadcasting firm.
Bruce L. Burnham.......................... 64 President since 1993 of The Burnham Group, a firm
providing consulting and marketing services to the
retail industry. Director, Forcenergy, Inc., and
J.B. Rudolph, Inc.
James L. Greenwald........................ 71 Chairman and Chief Executive Officer from 1975 to
1994 of Katz Communications, Inc., a broadcast
advertising representative sales firm; Chairman
Emeritus since 1994. Director, Granite
Broadcasting Company and Source Media, Inc.
</TABLE>
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OTHER EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
EXECUTIVE OFFICER AGE POSITION, BUSINESS EXPERIENCE AND DIRECTORSHIPS
----------------- --- -----------------------------------------------
<S> <C> <C>
Dean M. Goodman........................... 51 President, PAX NET Television since 1998. President
from 1995-1997 of the Company's inTV and Paxson
Network-Affiliated Television divisions. General
Manager from 1993 to 1995 of the Company's Miami
radio group. Executive Vice President until 1993
of the television and radio broadcast group of
Gilmore Broadcasting Corp.
Jon Jay Hoker............................. 59 President, Paxson Television Station Group since
1997. President from 1995-1997 of the Company's
Paxson Radio division. President from 1994 to 1995
of Paxson Networks, Inc. President from 1985 to
1994 of Hoker Broadcasting, a radio station
owner/operator.
S. William Scott.......................... 65 President, Programming since January 1998.
Consultant to various media companies since 1987.
Director of the Company from February 1995 until
his resignation from the Board in February 1998.
Anthony L. Morrison....................... 37 Vice President, Secretary and General Counsel of the
Company since 1995. Attorney with the New York
office of O'Melveny & Meyers from 1990 to 1995.
Kenneth M. Gamache........................ 36 Vice President and Controller of the Company since
1997. Chief Accounting Officer since 1994 and
Controller of the Company since 1993.
Seth A. Grossman.......................... 33 Senior Vice President, Investor Relations and
Corporate Development since 1998. Vice President,
Corporate Development of the Company from
1997-1998. Director of Finance 1995-1997.
</TABLE>
All officers are elected until the next annual meeting of the Board of
Directors or until their respective successors are chosen and qualified.
Directors serve for a one-year term or until their successors are elected.
COMPENSATION OF DIRECTORS
All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. Mr. Burnham and
Mr. Greenwald were granted certain options to purchase shares of Class A Common
Stock in consideration for their services as directors of the Company, which
commenced in 1996. In connection with Mr. Simon's election as Vice Chairman of
the Board of Directors in May 1998, an affiliate of Mr. Simon received certain
warrants to purchase shares of Class A Common Stock. See "Certain Relationships
and Related Transactions -- William E. Simon, Jr." No other directors receive
separate compensation for services rendered as a director.
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<PAGE> 80
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents certain information concerning the
compensation received or accrued for services rendered during the fiscal years
ended December 31, 1997, 1996 and 1995 for the Company's Chief Executive Officer
and four highest paid executive officers (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------
ANNUAL COMPENSATION NUMBER OF
---------------------- OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) UNDERLYING OPTIONS COMPENSATION
- --------------------------- ---- --------- ---------- --------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson......... 1997 $423,500 $1,875,000 $ -- -- $ --
Chairman of the Board 1996 385,000 -- -- -- --
of Directors* 1995 350,000 -- -- -- --
James B. Bocock.......... 1997 325,000 1,885,000 -- -- 33,500(3)(4)
Co-President and Chief 1996 275,000 -- 415,140 225,000 14,750(3)(4)
Operating Officer 1995 225,000 -- 164,325 850,000 --
Dean M. Goodman.......... 1997 300,000 1,099,000 -- -- 31,000(3)(4)
President -- PAX 1996 250,000 101,200 289,340 150,000 13,500(3)(4)
NET Television 1995 200,000 75,000 229,625 223,361 --
Jon Jay Hoker............ 1997 300,000 1,581,000 -- -- 26,200(3)(4)
President -- Paxson 1996 250,000 50,000 201,280 150,000 13,500(3)(4)
Television Station Group 1995 200,000 50,000 182,688 150,000 --
Arthur D. Tek............ 1997 225,000 800,000 1,209,491 -- 23,500(3)(4)
Vice President, 1996 175,000 -- 289,340 125,000 9,750(3)(4)
Treasurer and Chief 1995 150,000 -- -- 150,000 3,000(5)
Financial Officer
</TABLE>
- ---------------
* Mr. Paxson also served as Chief Executive Officer from 1991 to May 1998.
(1) Includes amount Named Executive Officer elected to defer pursuant to the
Company's Profit Sharing Plan.
(2) Represents the difference between the price paid by the Named Executive
Officer upon the exercise of certain of his options granted under the Stock
Incentive Plan and the fair market value of the underlying Common Stock at
the time of exercise.
(3) Includes the following Company contributions to supplemental retirement
plans during 1997: Mr. Bocock -- $32,500; Mr. Goodman -- $30,000; Mr.
Hoker -- $25,200; and Mr. Tek -- $22,500. Includes the following Company
contributions to supplemental retirement plans during 1996: Mr.
Bocock -- $13,750; Mr. Goodman -- $12,500; Mr. Hoker -- $12,500; and Mr.
Tek -- $8,750.
(4) Includes $1,000 Company contributions to the Profit Sharing Plan during 1997
and 1996 for each of Messrs. Bocock, Goodman, Hoker, and Tek.
(5) Represents relocation allowance in excess of general allowance under
Company's relocation plan.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
DECEMBER 31, 1997 DECEMBER 31, 1997
SHARES ------------------------- --------------------
OPTIONS ACQUIRED ON VALUE EXERCISABLE NON- EXERCISABLE/
NAME EXERCISE REALIZED (2) EXERCISABLE NON-EXERCISABLE
- ------- ----------- ---------- ----------- ----------- --------------------
<S> <C> <C> <C> <C> <C>
Lowell W. Paxson................. -0- $ -0- -0- -0- $-0-/$-0-
James B. Bocock.................. -0- -0- 847,000 180,000 3,455,760/734,400
Dean M. Goodman.................. -0- -0- 180,361 150,000 735,873/612,000
Jon Jay Hoker.................... -0- -0- 269,000 -0- 1,097,520/-0-
Arthur D. Tek.................... 152,000 1,209,491 -0- 100,000 -0-/408,000
</TABLE>
- ---------------
(1) Based on the public trading price of the Class A Common Stock of $7.50 on
December 31, 1997.
(2) Excludes securities underlying options which vested January 1, 1998 as
follows: James B. Bocock -- 45,000; Dean M. Goodman -- 60,000; Arthur D.
Tek -- 25,000.
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<PAGE> 81
STOCK INCENTIVE PLANS
The Company established its Stock Incentive Plan in November 1994, its 1996
Stock Incentive Plan in October 1996, and its 1998 Stock Incentive Plan in June
1998 (collectively, the "Stock Incentive Plans"), to provide incentives to
officers and other employees who contribute significantly to the strategic and
long-term performance objectives and growth of the Company. The Stock Incentive
Plans are administered by the Compensation Committee of the Company's Board of
Directors.
The Stock Incentive Plans provide for the granting of awards, in the form
of incentive stock options, non-qualified stock options or restricted shares of
Class A Common Stock, to officers and employees as determined by the
Compensation Committee except that the class of persons eligible to receive
awards under the 1996 and 1998 Stock Incentive Plans includes all persons
performing services for the Company or any of its subsidiaries and all persons
who have in the past performed such services (whether or not such persons are
officers or employees of the Company or any such subsidiary), and all persons
performing services relating to the Company in their capacity as an employee or
independent contractor of a corporation or other entity providing such services
to the Company. Under the Stock Incentive Plans, an aggregate of 11,343,575
shares have been made available for issuance pursuant to awards granted
thereunder, and approximately 1,000,000 shares remain available for future
awards.
The exercise price per share of Class A Common Stock deliverable upon the
exercise of each stock option granted under the Stock Incentive Plans is
determined by the Compensation Committee at the date the stock option is granted
and as provided in the terms of the Stock Incentive Plans. Stock options are
exercisable in whole or in part on such date or dates as are determined by the
Compensation Committee at the date of the grant. The Compensation Committee may,
in its sole discretion, accelerate the time at which any stock option may be
exercised. Stock options expire on the date or dates determined by the
Compensation Committee at the time the stock options are granted. Holders of
more than ten percent (10%) of the combined voting power of the capital stock of
the Company may be granted stock options, provided that if any of such options
are intended to be incentive stock options, the exercise price must be at least
110% of the fair market value of Class A Common Stock as of the date of the
grant and the term of the option may not exceed five years.
Nonqualified stock options granted under the Stock Incentive Plans are
transferable, to the extent permitted by applicable law, to family members of
the recipient, trusts for their benefit or partnerships of which they constitute
all of the partners. Incentive stock options are nontransferable except by will
or the laws of descent and distribution. If a participant's employment is
terminated by reason of death, disability or retirement in accordance with the
Company's normal retirement policies or by the Company other than for cause,
options will continue to be exercisable after termination of employment for
periods varying from 90 days to one year (provided that the option will not be
exercisable beyond the expiration date established at the date of grant unless
the Committee determines otherwise). If a participant's employment is terminated
for cause, each option which has not been exercised shall terminate.
The Compensation Committee also has the discretion to award restricted
stock, which are shares of Class A Common Stock which are subject to forfeiture
in whole or in part if the recipient's employment with the Company is terminated
prior to the end of the restrictive period. Participants who receive restricted
stock do not become 100% vested in their restricted stock until five years after
the effective date of the award. During the restricted period prior to vesting,
the participant may transfer the restricted stock to a trust for the benefit of
the participant or an immediate family member, but may not otherwise sell,
assign, transfer, give or otherwise dispose of, mortgage, pledge or encumber
such restricted stock. The Compensation Committee may, in its discretion,
provide that a participant shall be vested in whole or with respect to any
portion of the participant's award not previously vested if the participant's
employment with the Company is terminated because of death, disability or
retirement. To date, the Committee has not awarded any restricted stock under
the Stock Incentive Plans.
PROFIT SHARING PLAN
The Company has a profit sharing plan under Section 401(k) of the Internal
Revenue Code (the "Profit Sharing Plan"). The Profit Sharing Plan provides that
employees of the Company must complete one year of
71
<PAGE> 82
service in order to be eligible to defer salary and, if available, receive
matching contributions under the Section 401(k) portion of the Profit Sharing
Plan. Participants may elect to defer a specified percentage of their
compensation into the Profit Sharing Plan on a pre-tax basis. The Company may,
in its sole discretion, make matching contributions based on a percentage of
deferred salary contributions at a percentage rate to be determined by the Board
of Directors, which matching contributions may be in Company stock. In addition,
the Company may make supplemental profit sharing contributions in such amounts
as the Board of Directors may determine. Participants earn a vested right to
their profit sharing contribution in increasing amounts over a period of five
years. After five years of service, the participant's right to his or her profit
sharing contribution vests 100%. Thereafter the participant may receive a
distribution of the entire value of his or her account at age 55, 62 or 65 or
upon termination of employment, death or disability.
EMPLOYMENT AGREEMENTS
Mr. Paxson has been employed as Chairman and, until May 1998, Chief
Executive Officer of the Company under an employment agreement. The agreement
provides that Mr. Paxson will be employed for a five and one-half year period
commencing on June 30, 1994, unless sooner terminated. Mr. Paxson began
receiving an annual base salary of $350,000 commencing on January 1, 1995, which
increased to $385,000 in 1996, $423,500 in 1997, and will increase to $465,850
in 1998 and $500,000 in 1999. In addition to the base salary, Mr. Paxson may
receive an annual bonus at the discretion of, and in an amount set by, members
of the Compensation Committee that are not employees of the Company. Mr.
Paxson's employment agreement is renewable for successive one-year terms,
subject to good faith negotiation of its terms. Mr. Paxson is eligible to
participate in all employee benefit plans and arrangements that are generally
available to other senior executives and is reimbursed for all reasonable
expenses incurred by him in the discharge of his duties, including entertainment
and travel. Mr. Paxson's employment agreement is terminable by the Board of
Directors before expiration for good cause, as defined in the agreement, or by
Mr. Paxson for good reason, as defined in the agreement. In the event of Mr.
Paxson's permanent disability or death, the Company will pay Mr. Paxson, or his
estate, as the case may be, his then existing salary for the remaining term of
the agreement, in the case of disability, or one year, in the case of death.
Mr. Sagansky is employed as President and Chief Executive Officer of the
Company for a four year term expiring June 30, 2002 pursuant to an employment
agreement entered into in June 1998. The agreement provides for Mr. Sagansky to
receive a base salary of $600,000 with 10% increases each July 1 (commencing
July 1, 1999) and an annual bonus of up to twice his base salary based on the
Company's achievement of targeted financial results. The Company has agreed to
grant Mr. Sagansky options to purchase 1,200,000 shares of Class A Common Stock
at an exercise price of $7.25 per share, which are to become exercisable at the
rate of 30% after the first year of employment, 25% after each of the second and
third years, and 20% after the fourth year. The Company has agreed to pay up to
$200,000 of Mr. Sagansky's housing costs during the first year, and to pay Mr.
Sagansky 5% of any syndication fees received by the Company for any Company-
produced programming (after recouping production costs). Mr. Sagansky is
eligible to participate in all employee benefit plans and arrangements that are
generally available to other senior executives and is reimbursed for all
reasonable expenses incurred in the discharge of his duties, including
entertainment and travel. The Company may terminate Mr. Sagansky's employment
for good cause, as defined in the agreement. If Mr. Sagansky's employment is
terminated by reason of his disability or other than for good cause, or if Mr.
Sagansky terminates his employment for good reason, as defined in the agreement,
the Company will continue to pay Mr. Sagansky his base salary, plus annual
increases, and Mr. Sagansky will continue to be entitled to coverage under
employee benefit plans, for the balance of the employment term, and except in
the case of disability, Mr. Sagansky will continue to be entitled to receive any
annual bonuses he would otherwise have received had he remained employed by the
Company for the balance of the employment term. If Mr. Sagansky dies, the
Company will pay Mr. Sagansky's estate his then existing salary for a period of
one year and a pro rata bonus for the calendar year in which Mr. Sagansky dies.
Mr. Bocock is employed as Co-President and Chief Operating Officer of the
Company for a five year term commencing January 1, 1998 pursuant to an
employment agreement entered into in June 1998. The agreement provides for Mr.
Bocock to receive a base salary of $341,250 with at least 10% increases each
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<PAGE> 83
January 1 (commencing January 1, 1999) and an annual bonus. Mr. Bocock is
eligible to participate in all employee benefit plans and arrangements that are
generally available to other senior executives and to receive such other cash
and non-cash bonus awards and compensation (including awards under the Stock
Incentive Plans) as the Company may determine, and is reimbursed for all
reasonable expenses incurred in the discharge of his duties, including
entertainment and travel. The Company may terminate Mr. Bocock's employment for
good cause, as defined in the agreement. If Mr. Bocock's employment is
terminated by reason of his disability or other than for good cause, or if Mr.
Bocock terminates his employment for good reason, as defined in the agreement,
the Company will continue to pay Mr. Bocock his base salary for the balance of
the employment term. If Mr. Bocock dies, the Company will pay Mr. Bocock's
estate his then existing salary for a period of one year.
Mr. Goodman is employed as President of PAX NET Television for a five year
term commencing January 1, 1999 pursuant to an employment agreement entered into
in June 1998. The agreement provides for Mr. Goodman to receive a base salary of
$315,000 with at least 10% increases each January 1 (commencing January 1, 1999)
and an annual bonus. Mr. Goodman is eligible to participate in all employee
benefit plans and arrangements that are generally available to other senior
executives and to receive such other cash and non-cash bonus awards and
compensation (including awards under the Stock Incentive Plans) as the Company
may determine, and is reimbursed for all reasonable expenses incurred in the
discharge of his duties, including entertainment and travel. The Company may
terminate Mr. Goodman's employment for good cause, as defined in the agreement.
If Mr. Goodman's employment is terminated by reason of his disability or other
than for good cause, or if Mr. Goodman terminates his employment for good
reason, as defined in the agreement, the Company will continue to pay Mr.
Goodman his base salary for the lesser of two years or the balance of the
employment term in the case of disability; and for the balance of the employment
term in all other cases. If Mr. Goodman dies, the Company will pay Mr. Goodman's
estate his then existing salary for a period of one year.
Mr. Hoker is employed as President of Paxson Television Station Group for a
five year term commencing January 1, 1998 pursuant to an employment agreement
entered into in June 1998. The agreement provides for Mr. Hoker to receive a
base salary of $315,000 with at least 10% increases each January 1 (commencing
January 1, 1999) and an annual bonus. Mr. Hoker is eligible to participate in
all employee benefit plans and arrangements that are generally available to
other senior executives and to receive such other cash and non-cash bonus awards
and compensation (including awards under the Stock Incentive Plans) as the
Company may determine, and is reimbursed for all reasonable expenses incurred in
the discharge of his duties, including entertainment and travel. The Company may
terminate Mr. Hoker's employment for good cause, as defined in the agreement. If
Mr. Hoker's employment is terminated by reason of his disability or other than
for good cause, or if Mr. Hoker terminates his employment for good reason, as
defined in the agreement, the Company will continue to pay Mr. Hoker his base
salary for the lesser of two years or the balance of the employment term in the
case of disability; and for the balance of the employment term in all other
cases. If Mr. Hoker dies, the Company will pay Mr. Hoker's estate his then
existing salary for a period of one year.
Mr. Tek is employed as Vice President, Treasurer and Chief Financial
Officer of the Company for a five year term commencing January 1, 1998 pursuant
to an employment agreement entered into in June 1998. The agreement provides for
Mr. Tek to receive a base salary of $236,250 with at least 10% increases each
January 1 (commencing January 1, 1999) and an annual bonus. Mr. Tek is eligible
to participate in all employee benefit plans and arrangements that are generally
available to other senior executives and to receive such other cash and non-cash
bonus awards and compensation (including awards under the Stock Incentive Plans)
as the Company may determine, and is reimbursed for all reasonable expenses
incurred in the discharge of his duties, including entertainment and travel. The
Company may terminate Mr. Tek's employment for good cause, as defined in the
agreement. If Mr. Tek's employment is terminated by reason of his disability or
other than for good cause, or if Mr. Tek terminates his employment for good
reason, as defined in the agreement, the Company will continue to pay Mr. Tek
his base salary for the lesser of two years or the balance of the employment
term. If Mr. Tek dies, the Company will pay Mr. Tek's estate his then existing
salary for a period of one year.
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<PAGE> 84
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as to the shares of
Common Stock beneficially owned on May 31, 1998, by each director and named
executive officer, all directors and executive officers of the Company as a
group, and any person who is known by the Company to be the beneficial owner of
more than five percent of any class of the Company's Common Stock. Beneficial
ownership means sole or shared voting power or investment power with respect to
a security. The Company has been informed that all shares shown are held of
record with sole voting and investment power, except as otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF AGGREGATE
BENEFICIAL VOTING
CLASS OF STOCK NAME OF BENEFICIAL OWNER(1) OWNERSHIP % OF CLASS POWER
- -------------- --------------------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Class A Common Stock Lowell W. Paxson 23,357,543(2) 44.1% 17.2%
Landmark Communications, Inc.(3) 4,773,097 9.0% 3.5%
James B. Bocock 949,850(4) 1.8% *
Dean M. Goodman 286,836(4) * *
Jon Jay Hoker 316,325(4) * *
Arthur D. Tek 93,350 * *
Bruce L. Burnham 25,850(4) * *
James L. Greenwald 9,500(4) * *
Jeffrey Sagansky 0 * *
William E. Simon, Jr. 0 * *
All directors and executive officers
as a group 25,294,604(5) 47.7% 18.6%
Class B Common Stock Lowell W. Paxson 8,311,639 100.0% 61.1%
All directors and executive officers
as a group 8,311,639 100.0% 61.1%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise specified in the footnotes to this table, the address of
each person in this table is c/o Paxson Communications Corporation, 601
Clearwater Park Road, West Palm Beach, Florida 33401-6233.
(2) Does not include 8,311,639 shares of Class B Common Stock, each share of
which is convertible into one share of Class A Common Stock. Mr. Paxson is
the beneficial owner of all his shares of Class A Common Stock and Class B
Common Stock through his control of Second Crystal Diamond, Limited
Partnership and Paxson Enterprises, Inc.
(3) According to information contained in a Schedule 13D filed with the
Securities and Exchange Commission (the "Commission"), dated July 21, 1997.
Landmark Communications, Inc., whose address is 150 Brambleton Avenue,
Norfolk, Virginia 23510, acquired such shares pursuant to an Asset
Acquisition Agreement dated as of June 13, 1997 in connection with its sale
to the Company of the assets related to The Travel Channel, and continues to
hold such shares for investment purposes.
(4) Includes shares which may be acquired within 60 days through the exercise of
stock options granted under the Company's Stock Incentive Plans as follows:
James B. Bocock -- 892,000; Dean M. Goodman -- 240,361; Jon Jay
Hoker -- 269,000; Bruce L. Burnham -- 8,500; James L. Greenwald -- 7,000.
(5) Includes 1,596,261 shares which may be acquired within sixty (60) days
through the exercise of stock options granted under the Company's Stock
Incentive Plans.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE CHRISTIAN NETWORK, INC. The Company has entered into several
agreements with The Christian Network, Inc. and certain of its for-profit
subsidiaries (individually and collectively referred to herein as "CNI"). CNI is
a non-profit corporation to which Mr. Paxson, Chairman of the Board of the
Company, has been a substantial contributor and of which he was a member of the
Board of Stewards through 1993.
INVESTMENT IN BROADCAST PROPERTIES. The Company has made loans and
advances to CNI to finance television station acquisitions and related capital
expenditures. Such loans generally have borne interest at the prime rate and
been payable on demand. The highest aggregate outstanding balance of such loans
since
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<PAGE> 85
January 1, 1995, was $26.3 million as of June 30, 1996. At March 31, 1998, the
Company had approximately $15.5 million of advances to CNI to finance television
station acquisitions recorded as investments in broadcast properties. During
1996, the Company acquired certain stations from CNI for total consideration of
approximately $17.2 million. During 1997, the Company acquired television
stations from CNI in Miami, Orlando and Tampa for total consideration of
approximately $14 million. On December 30, 1997, the Company's advances to CNI
totaling approximately $5.5 million under a demand note bearing interest at the
prime rate were repaid out of the proceeds of the sale of television stations by
CNI to the Company in full.
KLDT-TV. During 1995, in connection with CNI securing the rights to
acquire television station KLDT-TV in Dallas, Texas and, prior to such
acquisition, operate the station pursuant to a time brokerage agreement, Mr.
Paxson initially loaned CNI $1 million to make a deposit in respect to such
acquisition and guaranteed the obligations of CNI under the purchase agreement
and the time brokerage agreement. On January 9, 1996, the Company purchased such
note from Mr. Paxson at its face value.
During 1996, as a result of third-party challenges to the FCC license
renewal application by KLDT-TV, CNI withdrew its application with the FCC for
the license of KLDT-TV. In connection therewith, the Company, CNI and certain
parties attempting to acquire KLDT-TV's FCC license entered into a settlement
agreement whereby CNI, and as a result, the Company, would be repaid a total of
$925,000 in connection with their cumulative investments in KLDT-TV. As a result
of the settlement agreement, the Company recorded a charge to operations of
approximately $252,000 in connection with its investment related to KLDT-TV.
CNI AGREEMENT. The Company and CNI entered into an agreement in May 1994
(the "CNI Agreement") under which the Company agreed that, if the tax exempt
status of CNI were jeopardized by virtue of its relationships with the Company
and its subsidiaries, the Company would take certain actions to ensure that
CNI's tax exempt status would no longer be so jeopardized. Such steps could
include, but not be limited to, rescission of one or more transactions or
payment of additional funds by the Company. The Company believes that all of its
agreements with CNI have been on terms as favorable to CNI as it would obtain in
arm's length transactions. The Company intends any future agreements with CNI to
be as favorable to CNI as CNI would obtain in arm's length transactions.
Accordingly, if the Company's activities with CNI are consistent with the terms
governing their relationship, the Company believes that it will not be required
to take any actions under the CNI Agreement. There can be no assurance however,
that the Company will not be required to take any actions under the CNI
Agreement at a material cost to the Company.
WORSHIP CHANNEL STUDIO. Since August 1, 1994, CNI and the Company have
contracted for the Company to lease CNI's television production and distribution
facility for the purpose of producing television programming. During the year
ended December 31, 1997, the Company incurred rental charges in connection with
this agreement of $231,000.
AIRCRAFT LEASE. During 1997, the Company entered into a three year lease
with a company owned by Mr. Paxson for a Boeing 727 aircraft. The lease provides
for monthly payments of $63,600. The Company incurred rental costs under the
lease of approximately $382,000 during 1997. Additionally, the Company has
recorded at December 31, 1997 leasehold improvements of approximately $107,000
in connection with the lease.
SPORTS VENTURES. During 1996, the Company invested in various ventures
which would own and operate interests in two Arena Football League teams located
in West Palm Beach and Miami, Florida, an inactive American Hockey League
franchise for Palm Beach County, Florida, and a proposed sports arena in West
Palm Beach, Florida. During 1996, the Company included in other expenses, net
the write-off of approximately $1.2 million relating to its investments in the
West Palm Beach Arena Football League team and the proposed sports arena and in
connection with its acquisition of the Arena Football League team in Miami,
Florida. During 1997, in conjunction with the decision to dispose of the Paxson
Radio segment, the Company wrote-off its investments in the remaining sports
ventures, resulting in a 1997 charge to other expenses, net of approximately
$2.9 million which is net of anticipated proceeds from the sale of the hockey
franchise which the Company has contracted to sell for $2.0 million.
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<PAGE> 86
TODD COMMUNICATIONS, INC. In 1993, Mr. Paxson contributed to the Company a
demand note receivable in the amount of approximately $1.8 million from Todd
Communications, Inc., a company which owned WFSJ-FM (St. Augustine, Florida) and
was beneficially owned by members of Mr. Paxson's family. The note receivable
accrued interest at the short-term annual applicable federal rate prescribed by
the Internal Revenue Service with the balance of principal and interest due upon
demand. Todd Communications also had a note outstanding to Mr. Paxson in the
principal amount of approximately $1.6 million. During June 1996, the Company
acquired Todd Communications for aggregate consideration of $5.0 million,
consisting of the cancellation of the Todd Communications note held by the
Company in the principal amount of approximately $1.8 million, the assumption
and immediate repayment by the Company of the note to Mr. Paxson and the
issuance of shares of Class A Common Stock valued at approximately $1.5 million
to the shareholders of Todd Communications.
WHITEHEAD MEDIA. The Company initially financed the acquisition by
Whitehead Media of each of WTVX-TV and WOAC-TV. Whitehead Media subsequently
obtained refinancing from Banque Paribas, an affiliate of a holder of the
Private Preferred Stock, and Canadian Imperial Bank of Commerce, the proceeds of
which were used to repay the debt owed by Whitehead Media to the Company and to
fund Whitehead Media's acquisition of WNGM-TV, and, in connection with such
refinancing, Mr. Paxson and Second Crystal Diamond, Limited Partnership
unconditionally guaranteed the obligations of Whitehead Media thereunder. In
December, 1996, the terms and conditions of the financing to Whitehead Media
were amended to, among other things, remove Canadian Imperial Bank of Commerce
as a lender thereunder, terminate the guaranty of Mr. Paxson and Second Crystal
Diamond, extend the term and change the interest rate thereof, and provide for
an unconditional guaranty by the Company of all obligations owed by Whitehead
Media to Banque Paribas thereunder. Subsequent to March 31, 1998, all remaining
indebtedness under this financing was repaid upon the Company's exercise of its
option to purchase WNGM-TV and payment of the option exercise price in
connection with the Company's sale of the station.
WORLD TRAVELERS NETWORK. Effective January 1, 1996, Mr. Paxson purchased
certain assets of World Travelers Network, Inc. ("WTN"), a wholly-owned
subsidiary of the Company. WTN's business was unprofitable and the Company had
determined to discontinue its operations. Mr. Paxson purchased all of the assets
of WTN except for its accounts receivable for $70,322 in cash, which price was
equal to the book value of such assets. WTN retained its accounts receivable and
accounts payable.
SOUTH CAROLINA RADIO NETWORK. Effective January 1, 1996, Mr. Paxson
purchased from the Company certain assets of the Company's unprofitable South
Carolina Radio Network. Mr. Paxson purchased all of the assets of the South
Carolina Radio Network other than cash and accounts receivable for $45,413 in
cash paid to the Company, which price was equal to the book value of such
assets. The Company retained the cash, accounts receivable and accounts payable
of the South Carolina Radio Network operation. The parties agreed that if Mr.
Paxson resold such assets at a profit prior to April 1, 1996, the amount of any
profit would be paid to the Company. Mr. Paxson subsequently sold such assets to
a third-party for $150,000, with the excess over $45,413 being paid to the
Company.
HOME SHOPPING NETWORK, INC. In connection with Mr. Paxson's departure from
HSN in 1990, he executed a consulting agreement containing various restrictions
upon activities by him that might be considered competitive with HSN, including
activities as an investor in competitive and other enterprises. Although Mr.
Paxson's consulting services to HSN terminated in 1994, certain of the
restrictions survived. As the Company's business evolved, the possible effect of
the consulting agreement upon Mr. Paxson's role as the Company's chief executive
officer and controlling stockholder became unclear. The Company considered it
advisable to eliminate doubts concerning, among other matters, Mr. Paxson's role
as a chief executive officer and controlling stockholder as the Company's
business developed, and the scope of HSN's rights under the consulting
agreement. Accordingly, on August 25, 1995, the Company and Mr. Paxson agreed
with HSN to, among other things, terminate HSN's rights under the consulting
agreement in consideration of a payment to HSN by the Company of $1.2 million.
In conjunction with this transaction Mr. Paxson advanced $1.2 million to the
Company and the Company executed a note bearing interest at 6%. The Company
repaid the note in October 1995.
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DP MEDIA, INC. In connection with the acquisition by DP Media, Inc. (DP
Media) of radio station WEBZ-FM, during September 1996, the Company agreed to
loan up to $750,000 to DP Media, a company beneficially owned by members of Mr.
Paxson's family. The loan bore interest at the rate of ten percent and required
monthly principal and interest payments. In 1996, the Company entered into a
five-year sales and related services agreement with DP Media under which the
Company agreed to pay a net minimum monthly fee of $22,000 for all of the thirty
and sixty second spot time of WEBZ-FM and agreed to provide certain other
services. The agreement is cancelable upon six months written notice by either
party.
During May 1997, the Company sold WWPX-TV serving the Washington, D.C.
market to DP Media in exchange for a $2.5 million promissory note. The note bore
interest at an annual rate of 8.25% with the entire principal due twenty-four
months from the date of closing. Upon its sale to DP Media, the station became a
Company network affiliate.
During June 1997, the Company financed DP Media's purchase of WRPX-TV
serving the Raleigh, North Carolina market from Roberts Broadcasting through a
loan of approximately $10.0 million (of which approximately $7.5 million, which
was assumed by DP Media, had been advanced to Roberts Broadcasting through the
date of closing). Upon its sale to DP Media, the station became a Company
network affiliate. The loan bore interest at an annual rate of 8.25%.
The loans to DP Media for WEBZ-FM, WWPX-TV and WRPX-TV were repaid to the
Company on July 30, 1997, using proceeds of third-party financing obtained by DP
Media from Banque Paribas, an affiliate of a holder of the Company's Private
Preferred Stock.
During July 1997, the Company entered into contracts to sell its interest
in television stations WPXS-TV and WZPX-TV, serving the St. Louis, Missouri and
Grand Rapids, Michigan markets for $4.8 million and $7.0 million, respectively,
to DP Media. The sale of WPXS-TV to DP Media was consummated in December 1997.
The sale of WZPX-TV was completed in January 1998. Upon their sale to DP Media,
these stations became Company network affiliates.
During February 1998, the Company contracted to sell WPXE-TV serving the
Milwaukee, Wisconsin market to DP Media for $6.0 million. Upon its sale to DP
Media, the station will become a Company network affiliate.
During 1997, the Company granted 33,000 fully vested non-qualified stock
options with a fair value of approximately $299,000 to the President and
Vice-President of DP Media, members of Mr. Paxson's family, as consideration for
past services as former employees of the Company.
DISCONTINUED OPERATIONS. In order to accelerate the payment of the
proceeds from the sales of the Paxson Network-Affiliated Television segment and
the Paxson Radio segment, the Company entered into certain bridge agreements
with Mr. Paxson or corporations owned and controlled by Mr. Paxson under similar
terms and conditions to those with the ultimate buyers. As of December 31, 1997,
all Paxson Network-Affiliated Television and Paxson Radio properties under these
bridge agreements had been sold to the ultimate buyers. Mr. Paxson did not
realize any direct financial benefit from these transactions with the Company
and, in accordance with the terms of the Company's Existing Notes and Existing
Preferred Stock, the Company obtained a written opinion as to the fairness of
such transactions from an independent investment banking firm.
STOCKHOLDERS AGREEMENT. The Company, certain entities controlled by Mr.
Paxson and entities which are affiliates of the holder of the Company's Private
Preferred Stock are parties to a stockholders agreement whereby the parties to
such agreement were granted registration rights with respect to certain shares
of common stock held by such parties and a right of first refusal to acquire a
pro rata share of any new securities the Company may issue. Additionally, the
stockholders agreement grants certain co-sale rights in the event that Mr.
Paxson should sell more than a predetermined percentage of his ownership
interest in the Company.
S. WILLIAM SCOTT. S. William Scott, a director of the Company from
February 1995 until his resignation from the Board in February 1998, had an
arrangement with the Company to provide consulting services to the Company with
respect to the development of its news programming for its radio and television
broadcast
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business and its radio network business. Mr. Scott was paid approximately
$10,000, $81,000 and $80,000 for such services during the years ended December
31, 1997, 1996 and 1995. Additionally, in 1996, Mr. Scott received benefits
under the Company's health and benefits plan and was granted options to purchase
20,000 shares of stock under the Company's Stock Incentive Plan. During 1997 the
Company hired Mr. Scott and subsequently named him President of Programming on
January 1, 1998.
WILLIAM E. SIMON, JR. The Company issued to an affiliate of Mr. Simon, who
was elected Vice Chairman of the Board of Directors in May 1998, warrants
expiring June 30, 2003 entitling the holder to purchase 155,500 shares of Class
A Common Stock at an exercise price of $16.00 per share. The Company has the
right to redeem the warrants with respect to up to 93,750 of the shares subject
thereto, at a price of $30.00 per share (less the warrant exercise price), at
such time as the public trading price of the Class A Common Stock averages $30
or more over any ten consecutive trading days.
An affiliate of Mr. Simon purchased, as part of the Convertible Preferred
Offering, $10 million aggregate liquidation preference of Convertible Preferred
Stock and warrants expiring June 30, 2003 to purchase 32,000 shares of Class A
Common Stock at an exercise price of $16.00 per share. The Company paid William
E. Simon & Sons, L.L.C., of which Mr. Simon serves as executive director,
$500,000 for consulting services provided in connection with the Convertible
Preferred Offering and $550,000 in placement fees relating to the placement of
additional Convertible Preferred Stock in the Convertible Preferred Offering.
OFFICER LOANS. During December, 1996, the Company agreed to extend loans
to certain of its key employees, including its executive officers, to finance
the purchase by such persons of shares of Class A Common Stock on the open
market. The loans are the personal obligations of each borrower and are secured
by a pledge of the shares of Class A Common Stock purchased with the loan
proceeds. Each loan accrues interest at a fixed annual rate of 5.75% and is due
and payable in full, with all accrued and unpaid interest, upon the earlier of
March 31, 1999, or the sale of the shares of Class A Common Stock pledged as
security for the loan. As of March 31, 1998, the outstanding balance of
principal and accrued interest on such loans to the Company's Executive Officers
was as follows: Mr. Bocock, $517,882; Mr. Goodman, $520,763; Mr. Hoker,
$416,051; Mr. Tek, $343,315; Mr. Morrison, $273,488; Mr. Gamache, $154,201; and
Mr. Grossman, $125,106.
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DESCRIPTION OF NEW JUNIOR PREFERRED STOCK AND
NEW EXCHANGE DEBENTURES
THE NEW JUNIOR PREFERRED STOCK
The shares of New Junior Preferred Stock which may be issued in exchange
for shares of Original Junior Preferred Stock in the Exchange Offer will be
issued pursuant to a Certificate of Designation relating thereto, the provisions
of which will be identical in all material respects to the provisions of the
Certificate of Designation relating to the Original Junior Preferred Stock. The
summary contained herein of certain provisions of the New Junior Preferred Stock
does not purport to be complete and is qualified in its entirety by reference to
the provisions of the Certificate of Designation relating thereto. The
definitions of certain capitalized terms used in the following summary are set
forth under "-- Certain Definitions" below. Other capitalized terms used herein
and not otherwise defined under "-- Certain Definitions" below are defined in
the Certificate of Designation.
GENERAL
The Company is authorized to issue 1,000,000 shares of preferred stock,
$0.001 par value per share. As of the date of this Prospectus, 231,282 shares of
Preferred Stock are outstanding, including 20,000 shares of Original Junior
Preferred Stock. The Certificate of Incorporation of the Company authorizes the
Board of Directors, without stockholder approval, to issue classes of preferred
stock from time to time in one or more series, with such designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions as may be determined by the Board of
Directors. The Board of Directors of the Company has adopted resolutions
creating a maximum of 72,000 shares of Junior Preferred Stock and has filed a
Certificate of Designation with respect thereto with the Secretary of State of
the State of Delaware as required by Delaware law. Of the authorized shares of
Junior Preferred Stock, 20,000 shares were issued in the Private Offering and
may be exchanged for a like number of shares of New Junior Preferred Stock in
the Exchange Offer, and the balance will be reserved for issuance as dividends
in the event the Company elects to pay dividends on the Junior Preferred Stock
by issuing additional shares of Junior Preferred Stock. See "-- Dividends"
below. Subject to certain conditions, the Junior Preferred Stock is exchangeable
for New Exchange Debentures at the option of the Company on any dividend payment
date. The Junior Preferred Stock is fully paid and nonassessable, and the
holders thereof do not have any subscription or preemptive rights.
RANKING
The Junior Preferred Stock, with respect to dividends and distributions
upon the liquidation, winding-up or dissolution of the Company, ranks (i) senior
to the Convertible Preferred Stock, to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
established after the date of this Prospectus by the Board of Directors of the
Company the terms of which do not expressly provide that it ranks senior to, or
on a parity with, the Junior Preferred Stock as to dividends and distributions
upon the liquidation, winding-up or dissolution of the Company (collectively
referred to with the common stock of the Company as "Junior Securities"); (ii)
subject to certain conditions, on a parity with any class of capital stock or
series of preferred stock issued by the Company established after the date of
this Prospectus by the Board of Directors of the Company the terms of which
expressly provide that such class will rank on a parity with the Junior
Preferred Stock as to dividends and distributions upon the liquidation,
winding-up or dissolution of the Company (collectively referred to as "Parity
Securities"); and (iii) junior to the Existing Preferred Stock and, subject to
certain conditions, to each other class of capital stock or series of preferred
stock issued by the Company established after the date of this Prospectus by the
Board of Directors of the Company the terms of which expressly provide that such
class or series will rank senior to the Junior Preferred Stock as to dividends
and distributions upon the liquidation, winding-up or dissolution of the Company
(collectively referred to as "Senior Securities"). The Junior Preferred Stock
will be subject to the issuance of series of Junior Securities, Parity
Securities and Senior Securities; provided that the Company may not issue 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
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majority of the shares of Junior Preferred Stock then outstanding, voting or
consenting, as the case may be, together as one class; provided, however, that
the Company may: (A) issue additional shares of Junior Preferred Stock to pay
dividends on the Junior Preferred Stock in accordance with its terms on the
Issue Date, (B) issue additional shares of (i) Public Preferred Stock or Senior
Securities, which Senior Securities are pari passu with the Public Preferred
Stock, or (ii) Junior Preferred Stock or Parity Securities, 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 the Private Preferred Stock (as existing on the Issue Date) and which
does not prevent either the payment of cash dividends on the Junior Preferred
Stock or the exchange of the Junior Preferred Stock for the New Exchange
Debentures, in an amount sufficient to acquire the Private 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 Company in
acquiring such Private Preferred Stock and issuing such additional Junior
Preferred Stock, Public Preferred Stock, Parity Securities or Senior Securities
(as the case may be); with such shares being issued no sooner than the date the
Company repurchases, redeems or otherwise retires the Private Preferred Stock
and (C) issue additional shares of Public Preferred Stock as dividends on the
Public Preferred Stock in accordance with the certificate of designation of the
Public Preferred Stock, as in existence on the Issue Date.
DIVIDENDS
Holders of the Junior Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors of the Company, out of funds legally
available therefor, dividends on the Junior Preferred Stock at a rate per annum
equal to 13 1/4% of the liquidation preference per share of Junior Preferred
Stock, payable semi-annually. All dividends will be cumulative, whether or not
earned or declared, on a daily basis from the Issue Date and will be payable
semi-annually in arrears on May 15 and November 15 of each year, commencing on
November 15, 1998, to holders of record on May 1 and November 1 immediately
preceding the relevant Dividend Payment Date. Dividends may be paid, at the
Company's option, on any Dividend Payment Date either in cash or by the issuance
of additional shares of Junior Preferred Stock (including fractional shares)
having an aggregate liquidation preference equal to the amount of such
dividends. In the event that dividends are declared and paid through the
issuance of additional shares of Junior Preferred Stock, such dividends shall be
deemed paid in full and will not accumulate. If any dividend payable on any
Dividend Payment Date subsequent to May 15, 2003 is not paid in full in cash,
the per annum dividend rate will be increased by 1.00% per annum for such
dividend payment period. After the date of which such dividend is paid in cash,
the dividend rate will revert to the rate originally borne by the Junior
Preferred Stock. The Credit Facility, the Existing Debt Indentures and the
Existing Preferred Stock restrict the Company's ability to pay cash dividends on
its Capital Stock and will prohibit such payments in certain instances and other
future agreements may provide the same. See "Description of Indebtedness" and
"Description of Capital Stock -- Existing Preferred Stock."
Unpaid dividends accumulating on the Junior Preferred Stock for any past
dividend period and dividends in connection with any optional redemption may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, not more than forty-five (45) days
prior to the payment thereof, as may be fixed by the Board of Directors of the
Company.
OPTIONAL REDEMPTION
The Junior Preferred Stock may be redeemed (subject to contractual and
other restrictions with respect thereto and to the legal availability of funds
therefor) at any time on or after May 15, 2003, in whole or in part, at the
option of the Company, at the redemption prices (expressed as a percentage of
liquidation preference) set forth below, plus, without duplication, an amount in
cash equal to all accumulated and unpaid dividends (including an amount in cash
equal to a prorated dividend for the period from the Dividend Payment Date
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immediately prior to the redemption date to the redemption date) if redeemed
during the 12-month period beginning May 15 of each of the years set forth
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 106.625%
2004........................................................ 103.313%
2005 and thereafter......................................... 100.000%
</TABLE>
In addition, on or prior to May 15, 2001, the Company may, at its option,
use the Net Proceeds of either or both of one or more Public Equity Offerings or
Major Asset Sales to redeem for cash up to an aggregate of 35% of the shares of
Junior Preferred Stock (whether initially issued or issued as a dividend
payment) at a redemption price equal to 113.25% of the liquidation preference
thereof, plus, without duplication, an amount in cash equal to all accumulated
and unpaid dividends (including an amount in cash equal to a prorated dividend
for the period from the Dividend Payment Date immediately prior to the
redemption date to the redemption date); provided, however, that after any such
redemption, there is at least (i) $75,000,000 aggregate liquidation preference
of the Junior Preferred Stock or (ii) $130,000,000 of combined aggregate
liquidation preference of the Junior Preferred Stock and aggregate principal
amount of the New Exchange Debentures remaining outstanding. Any such redemption
will be required to occur on or prior to 90 days after the receipt by the
Company of the proceeds of each Public Equity Offering or Major Asset Sale.
In the event of partial redemptions of Junior Preferred Stock, the shares
to be redeemed will be determined pro rata, except that the Company 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 Company. No optional redemption may be authorized or
made unless prior thereto all accumulated and unpaid dividends shall have been
paid in cash or a sum set apart for such payment on the Junior Preferred Stock.
The certificates of designation governing the Existing Preferred Stock
prohibit or restrict the redemption of the Junior Preferred Stock so long as any
shares of Existing Preferred Stock are outstanding. The Credit Facility and the
Existing Debt Indentures also restrict the ability of the Company to redeem the
Junior Preferred Stock. See "Description of Indebtedness" and "Description of
Capital Stock -- Existing Preferred Stock."
MANDATORY REDEMPTION
The Junior Preferred Stock is subject to mandatory redemption (subject to
contractual and other restrictions with respect thereto and to the legal
availability of funds therefor) in whole on November 15, 2006 at a price equal
to the liquidation preference thereof, plus, without duplication, all
accumulated and unpaid dividends to the date of redemption. The certificates of
designation governing the Existing Preferred Stock prohibit or restrict the
redemption of the Junior Preferred Stock so long as any shares of Existing
Preferred Stock are outstanding. The Existing Debt Indentures and the Credit
Facility also restrict the ability of the Company to redeem the Junior Preferred
Stock and will prohibit any such redemption in certain instances and other
future agreements or certificates of designation with respect to Senior
Securities or Parity Securities may contain similar restrictions and/or
prohibitions. See "Description of Indebtedness" and "Description of Capital
Stock -- Existing Preferred Stock."
PROCEDURE FOR REDEMPTION
On and after a redemption date, unless the Company defaults in the payment
of the applicable redemption price, dividends will cease to accumulate on shares
of Junior Preferred Stock called for redemption and all rights of holders of
such shares will terminate except for the right to receive the redemption price,
without interest. If a notice of redemption shall have been given as provided in
the succeeding sentence and the funds necessary for redemption (including an
amount in respect of all dividends that will accumulate to the redemption date)
shall have been segregated and irrevocably set apart by the Company, in trust
for the benefit of the holders of the shares called for redemption, then at the
close of business on the day when such funds are segregated and set apart, the
holders of the shares to be redeemed shall cease to be stockholders of the
Company and shall be entitled only to receive the redemption price for such
shares. The Company will send a written notice of redemption by first class mail
to each holder of record
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of shares of Junior Preferred Stock, not less than 30 days nor more than 60 days
prior to the date fixed for such redemption. Shares of Junior Preferred Stock
issued and reacquired will, upon compliance with the applicable requirements of
Delaware law, have the status of authorized but unissued shares of preferred
stock of the Company undesignated as to series and may with any and all other
authorized but unissued shares of preferred stock of the Company be designated
or redesignated and issued or reissued, as the case may be, as part of any
series of preferred stock of the Company.
EXCHANGE
The Company may at its option from time to time on any Dividend Payment
Date exchange, in whole or in part, on a pro rata basis, the then outstanding
shares of Junior Preferred Stock for New Exchange Debentures; provided that
immediately after giving effect to any partial exchange, there shall be shares
of Junior Preferred Stock outstanding with an aggregate liquidation preference
of not less than $75,000,000 and not less than $75,000,000 aggregate principal
amount of New Exchange Debentures are then outstanding; and provided, further,
that (i) on the date of such exchange there are no accumulated and unpaid
dividends on the Junior Preferred Stock (including the dividend payable on such
date) or other contractual impediments to such exchange; (ii) there shall be
legally available funds sufficient therefor; (iii) such exchange would be
permitted under the terms of the Existing Preferred Stock, to the extent then
outstanding, and immediately after giving effect to such exchange, no Default or
Event of Default (each 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 would be caused thereby; (iv) the New Exchange Indenture
has been qualified under the Trust Indenture Act, if such qualification is
required at the time of exchange; and (v) the Company shall have delivered a
written opinion to the effect that all conditions to be satisfied prior to such
exchange have been satisfied. The Company intends to comply with the provisions
of Rule 13e-4 promulgated pursuant to the Exchange Act in connection with the
exchange, to the extent applicable. The certificates of designation governing
the Existing Preferred Stock prohibit or restrict the Company from exchanging
the Junior Preferred Stock so long as any shares of Existing Preferred Stock are
outstanding. The Credit Facility and the Existing Debt Indentures currently
prohibit or restrict the exchange of the Junior Preferred Stock and may restrict
the Company's ability to exchange the Junior Preferred Stock in the future. See
"Description of Indebtedness" and "Description of Capital Stock -- Existing
Preferred Stock."
The holders of outstanding shares of Junior Preferred Stock will be
entitled to receive, subject to the second succeeding sentence, $1.00 principal
amount of New Exchange Debentures for each $1.00 liquidation preference of
Junior Preferred Stock held by them. The New Exchange Debentures will be issued
in registered form, without coupons. New Exchange Debentures issued in exchange
for Junior Preferred Stock will be issued in principal amounts of $1,000 and
integral multiples thereof to the extent possible, and will also be issued in
principal amounts less than $1,000 so that each holder of Junior Preferred Stock
will receive certificates representing the entire amount of New Exchange
Debentures to which such holder's shares of Junior Preferred Stock entitle such
holder; provided that the Company may pay cash in lieu of issuing a New Exchange
Debenture in a principal amount less than $1,000. The Company will send a
written notice of exchange by mail to each holder of record of shares of Junior
Preferred Stock not less than 30 nor more than 60 days before the date fixed for
such exchange. On and after the exchange date, dividends will cease to
accumulate on the outstanding shares of Junior Preferred Stock that are to be
exchanged, and all rights of the holders of Junior Preferred Stock that is to be
exchanged (except the right to receive the New Exchange Debentures, an amount in
cash equal to the accumulated and unpaid dividends to the exchange date and, if
the Company so elects, cash in lieu of any New Exchange Debenture which is in an
amount that is not an integral multiple of $1,000) will terminate. The Person
entitled to receive the New Exchange Debentures issuable upon such exchange will
be treated for all purposes as the registered holder of such New Exchange
Debentures. See "-- The New Exchange Debentures."
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LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of the Junior Preferred Stock will initially be entitled to
be paid, out of the assets of the Company available for distribution, $10,000
per share, plus an amount in cash equal to accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding-up),
before any distribution is made on any Junior Securities, including, without
limitation, the Convertible Preferred Stock and the common stock of the Company.
If upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, the amounts payable with respect to the Junior Preferred Stock and
all other Parity Securities are not paid in full, the holders of the Junior
Preferred Stock and the Parity Securities will share equally and ratably in any
distribution of assets of the Company 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. After payment of the full amount of the liquidation
preferences and accumulated and unpaid dividends to which they are entitled, the
holders of shares of Junior Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. However, 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 Company nor the consolidation or merger of the Company with one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of the
Company.
The Certificate of Designation for the Junior Preferred Stock does not
contain any provision requiring funds to be set aside to protect the liquidation
preference of the Junior Preferred Stock, although such liquidation preference
will be substantially in excess of the par value of such shares of Junior
Preferred Stock. In addition, the Company is not aware of any provision of
Delaware law or any controlling decision of the courts of the State of Delaware
(the state of incorporation of the Company) that requires a restriction upon the
surplus of the Company solely because the liquidation preference of the Junior
Preferred Stock will exceed its par value. Consequently, there will be no
restriction upon the surplus of the Company solely because the liquidation
preference of the Junior Preferred Stock will exceed the par value and there
will be no remedies available to holders of the Junior Preferred Stock before or
after the payment of any dividend, other than in connection with the liquidation
of the Company, solely by reason of the fact that such dividend would reduce the
surplus of the Company to an amount less than the difference between the
liquidation preference of the Junior Preferred Stock and its par value.
VOTING RIGHTS
Holders of the Junior Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by Delaware law or as
set forth in the Certificate of Designation. The Certificate of Designation
provides that if (i) the Company fails to redeem the Junior Preferred Stock on
or before November 15, 2006 or fails to discharge any redemption obligation with
respect to the Junior Preferred Stock or (ii) the Company fails to make a Change
of Control Offer if such an offer is required by the provisions set forth under
"-- Change of Control" below or fails to purchase shares of Junior Preferred
Stock from holders who elect to have such shares purchased pursuant to the
Change of Control Offer or (iii) a breach or violation of any of the provisions
described under the caption "-- Certain Covenants" below occurs and the breach
or violation continues for a period of 60 days or more after the Company
receives notice thereof specifying the default from the holders of at least 25%
of the shares of Junior Preferred Stock then outstanding or (iv) the Company
fails to pay at the final stated maturity (giving effect to any extensions
thereof) the principal amount of any Indebtedness of the Company or any
Restricted Subsidiary of the Company, 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 the number of directors constituting
the Board of Directors will be adjusted to permit the holders of a majority
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of the then outstanding shares of Junior Preferred Stock, voting separately and
as a class, to elect the lesser of two directors and that number of directors
constituting 25% of the members of the Board of Directors of the Company. Such
voting rights will continue until such time as any failure, breach or default
giving rise to such voting rights is remedied, cured (including, but not limited
to, in the case of clause (iv) 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 Junior Preferred
Stock then outstanding, at which time the term of any directors elected pursuant
to the provisions of this paragraph shall terminate. Each such event described
in clauses (i) through (v) above is referred to herein as a "Voting Rights
Triggering Event." The voting rights provided herein shall be the holder's
exclusive remedy at law or in equity.
In addition, the Certificate of Designation provides that except as stated
above under "-- Ranking," the Company will not authorize any additional shares
of Junior Preferred Stock or any class of Senior Securities or Parity Securities
without the affirmative vote or consent of holders of at least a majority of the
shares of Junior Preferred Stock of the Company then outstanding which are
entitled to vote thereon, voting or consenting, as the case may be, as one
class. The Certificate of Designation also provides that the Company may not
amend the Certificate of Designation so as to affect materially and adversely
the specified rights, preferences, privileges or voting rights of the holders of
shares of Junior Preferred Stock, or authorize the issuance of any additional
shares of Junior Preferred Stock (other than shares of Junior Preferred Stock
issued as a dividend on shares of Junior Preferred Stock or under "-- Ranking"),
without the affirmative vote or consent of the holders of at least a majority of
the then outstanding shares of Junior Preferred Stock which are entitled to vote
thereon, voting or consenting, as the case may be, as one class. The Certificate
of Designation also provides that, except as set forth above, (a) the creation,
authorization or issuance of any shares of Junior Securities, Parity Securities
or Senior Securities or (b) the increase or decrease in the amount of authorized
capital stock of any class, including any preferred stock, shall not require the
consent of the holders of Junior Preferred Stock and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of holders
of shares of Junior Preferred Stock.
Under Delaware law, holders of Junior Preferred Stock are entitled to vote
as a class upon a proposed amendment to the certificate of incorporation of the
Company, whether or not entitled to vote thereon by the certificate of
incorporation, if the amendment would increase or decrease the par value of the
shares of such class, or alter or change the powers, preferences, or special
rights of the shares of such class so as to affect them adversely.
CHANGE OF CONTROL
Within 30 days of the occurrence of a Change of Control, the Company shall
make an offer to purchase (the "Change of Control Offer") all then outstanding
Junior Preferred Stock at a purchase price equal to 101% of the liquidation
preference thereof plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends thereon (including an amount in cash equal to a
prorated dividend for the period from the immediately preceding Dividend Payment
Date to the Change of Control Payment Date (as hereinafter defined) (such
applicable purchase price being hereinafter referred to as the "Change of
Control Purchase Price")) in accordance with the procedures set forth below.
Within 30 days of the occurrence of a Change of Control, the Company shall
(i) 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
(ii) send by first-class mail, postage prepaid, to each holder of Junior
Preferred Stock, at the address appearing in the register maintained by the
Transfer Agent, a notice stating:
(i) that the Change of Control Offer is being made and that all Junior
Preferred Stock tendered will be accepted for payment, and otherwise
subject to the terms and conditions set forth in the Certificate of
Designation;
(ii) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 Business Days and no more than
60 Business Days from the date such notice is mailed (the "Change of
Control Payment Date"));
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(iii) that any Junior Preferred Stock not tendered will continue to
accumulate dividends;
(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Junior Preferred Stock accepted for payment
pursuant to the Change of Control Offer shall cease to accumulate dividends
after the Change of Control Payment Date;
(v) that holders accepting the offer to have their Junior Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender their certificates representing Junior Preferred Stock to the
Company 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
Company 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 Junior Preferred Stock delivered for
purchase and a statement that such holder is withdrawing his election to
have such Junior Preferred Stock purchased;
(vii) that holders whose Junior Preferred Stock is being purchased
only in part will be issued a new certificate representing the number of
shares of Junior Preferred Stock equal to the unpurchased portion of the
certificates surrendered; and
(viii) any other procedures that a holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance.
On the Change of Control Payment Date, the Company shall accept for payment
the Junior Preferred Stock tendered pursuant to the Change of Control Offer and
promptly mail to each holder of Junior Preferred Stock so accepted payment in an
amount equal to the purchase price for such Junior Preferred Stock, and the
Company shall execute and issue a new Junior Preferred Stock certificate equal
to any unpurchased shares represented by a certificate surrendered.
Prior to the mailing of the notice referred to above, 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 Junior 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 the Company will, to the extent needed to permit such
purchase of Junior Preferred Stock, either (i) 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 and such other
Senior Debt, terminate all commitments thereunder and effect the termination of
any such prohibition under the Existing Preferred Stock or (ii) obtain the
requisite consents 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
Junior Preferred Stock as provided below. The Company will first comply with the
covenant in the preceding sentence before it will be required to repurchase
Junior Preferred Stock pursuant to the provisions described above.
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
redemption of the Junior Preferred Stock pursuant to a Change of Control Offer.
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 shares of Junior Preferred Stock protection in the
event of certain highly leveraged transactions, reorganizations, restructurings,
mergers and other similar transactions that might adversely affect the holders
of shares of Junior Preferred Stock but would not constitute a Change of
Control. The Company could, in the future, enter into certain transactions,
including certain recapitalizations of the Company, that would not constitute a
Change of Control, but would increase the amount of Indebtedness outstanding at
such time. If a Change of Control were to occur, there can be no assurance that
the Company would have sufficient funds to pay the purchase price for all the
Junior Preferred Stock that the Company might be required to redeem.
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Moreover, as of the date of this Prospectus, after giving effect to the sale of
the Junior Preferred Stock and the application of the proceeds therefrom, the
Company would not have sufficient funds available to redeem all the Junior
Preferred Stock pursuant to a Change of Control Offer. In the event that the
Company is required to redeem the Junior Preferred Stock pursuant to a Change of
Control Offer, the Company expects that it would need to seek third-party
financing to the extent it does not have available funds to meet its redemption
obligations. However, there can be no assurance that the Company would be able
to obtain such financing on favorable terms, if at all. In addition, the Credit
Facility, the Existing Debt Indentures and the Existing Preferred Stock restrict
the Company's ability to redeem the Junior Preferred Stock, including pursuant
to a Change of Control Offer. See "Description of Indebtedness" and "Description
of Capital Stock -- Existing Preferred Stock."
None of the provisions in the Certificate of Designation relating to a
repurchase upon a Change of Control may be waived by the Board of Directors of
the Company.
EXCHANGE OFFER; REGISTRATION RIGHTS
Holders of shares of New Junior Preferred Stock will not be entitled to any
registration rights. The Company entered into the Registration Rights Agreement
pursuant to which it agreed, for the benefit of the holders of the Original
Junior Preferred Stock, that it will, at its cost, (i) within 60 days after the
Issue Date, file a registration statement (the "Exchange Offer Registration
Statement") with the Commission with respect to a registered offer to exchange
the Original Junior Preferred Stock for the New Junior Preferred Stock, which
will have terms substantially identical in all material respects to the Original
Junior Preferred Stock (except that the Original Junior Preferred Stock will not
contain terms with respect to transfer restrictions), and (ii) use its best
efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act within 150 days after the Issue Date. The
registration statement of which this Prospectus is a part constitutes the
Exchange Offer Registration Statement. Upon the Exchange Offer Registration
Statement being declared effective, the Company will offer the New Junior
Preferred Stock in exchange for surrender of the Original Junior Preferred
Stock. The Company will keep the Exchange Offer open for not less than 30 days
(or longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the holders of the Original Junior Preferred Stock. For each
share of Original Junior Preferred Stock surrendered to the Company pursuant to
the Exchange Offer, the holder of such shares of Original Junior Preferred Stock
will receive shares of New Junior Preferred Stock having a liquidation
preference equal to that of the surrendered shares of Original Junior Preferred
Stock. Dividends on the New Junior Preferred Stock will accumulate from (A) the
later of (i) the last dividend payment date on which dividends were paid on the
Original Junior Preferred Stock surrendered in exchange therefor or (ii) if the
Original Junior Preferred Stock is surrendered for exchange on a date in a
period which includes the record date for a dividend payment date to occur on or
after the date of such exchange and as to which dividends will be paid, the date
of such dividend payment date or (B) the Issue Date, if no dividend has been
paid on the Original Junior Preferred Stock.
Under existing Commission interpretations, shares of New Junior Preferred
Stock would, in general, be freely transferable after the Exchange Offer without
further registration under the Securities Act; provided that, in the case of
broker-dealers, a prospectus meeting the requirements of the Securities Act will
be delivered as required. The Company has agreed for a period of 180 days after
consummation of the Exchange Offer to make available a prospectus meeting the
requirements of the Securities Act to any broker-dealer for use in connection
with any resale of any such New Junior Preferred Stock acquired as described
below. A broker-dealer which delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act, and will be bound by the provisions of the
Registration Rights Agreement (including certain indemnification rights and
obligations).
Each holder of shares of Original Junior Preferred Stock who wishes to
exchange such shares for shares of New Junior Preferred Stock in the Exchange
Offer is required to make certain representations including representations that
(i) any shares of New Junior Preferred Stock to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement with
any person to participate in the distribution of the New Junior Preferred Stock
and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities
Act,
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of the Company or if it is an affiliate, it will comply with the registration
and prospectus delivery requirements of the Securities Act to the extent
applicable. If the holder is not a broker-dealer, it will be required to
represent that it is not engaged in, and does not intend to engage in, the
distribution of the New Junior Preferred Stock. If the holder is a broker-dealer
that will receive shares of New Junior Preferred Stock for its own account in
exchange for shares of Original Junior Preferred Stock that were acquired as a
result of market-making activities or other trading activities, it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such shares of New Junior Preferred Stock.
In the event that applicable interpretations of the staff of the Commission
do not permit the Company to effect the Exchange Offer, or if for any other
reason the Exchange Offer is not consummated within 150 days of the Issue Date
or, under certain circumstances, if the Initial Purchaser shall so request, the
Company will, at its own expense, (a) as promptly as practicable, file a Shelf
Registration Statement covering resales of the Junior Preferred Stock (the
"Shelf Registration Statement"), (b) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and (c)
use its best efforts to keep effective the Shelf Registration Statement until
the earlier of the disposition of the Original Junior Preferred Stock covered by
the Shelf Registration Statement or two years after the Issue Date (or such
earlier time when the shares of Original Junior Preferred Stock are eligible for
resale pursuant to Rule 144(k) under the Securities Act). The Company will, in
the event of the Shelf Registration, provide to each holder of shares of the
Original Junior Preferred Stock copies of the prospectus which is a part of the
Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resales of the Original Junior Preferred
Stock. A holder of shares of Original Junior Preferred Stock that sells such
shares pursuant to the Shelf Registration Statement generally would be required
to be named as a selling securityholder in the related prospectus and to deliver
a prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such a holder (including certain indemnification rights and
obligations).
If the Company fails to comply with the above provisions or if any such
registration statement fails to become effective, then, as liquidated damages,
additional dividends shall become payable in respect of the Original Junior
Preferred Stock as follows:
If (i) notwithstanding that the Company has consummated or will
consummate the Exchange Offer, the Company is required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed
on or prior to the date required by the Registration Rights Agreement;
(ii) (A) the Exchange Offer registration statement or Shelf
Registration Statement is not declared effective within 150 days after the
Issue Date or (B) notwithstanding that the Company has consummated or will
consummate the Exchange Offer, the Company is required to file a Shelf
Registration Statement and such Shelf Registration Statement is not
declared effective by the Commission on or prior to the 90th day following
the date such Shelf Registration Statement was filed; or
(iii) either (A) the Company has not exchanged the New Junior
Preferred Stock for all Original Junior Preferred Stock validly tendered in
accordance with the terms of the Exchange Offer on or prior to 60 days
after the date on which the Exchange Offer Registration Statement was
declared effective or (B) the Exchange Offer Registration Statement ceases
to be effective at any time prior to the time that the Exchange Offer is
consummated or (C) if applicable, the Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be
effective at any time prior to the second anniversary of the Issue Date;
(each such event referred to in clauses (i) through (iii) above is a "Junior
Preferred Stock Registration Default"), the sole remedy available to holders of
the Original Junior Preferred Stock will be the immediate assessment of
additional dividends ("Additional Dividends") as follows: the per annum dividend
rate on the Original Junior Preferred Stock will increase by 50 basis points,
and the per annum accumulate rate will increase by an additional 25 basis points
premium for each subsequent 90-day period during which the Junior Preferred
Stock Registration Default remains uncured, up to a maximum additional dividend
rate of 200 basis points per annum in excess of the dividend rate on the cover
of this Prospectus. All Additional Dividends will
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be payable to holders of the Original Junior Preferred Stock in cash on each
dividend payment date, commencing with the first such date occurring after any
such Additional Dividend commences to accrue, until such Junior Preferred Stock
Registration Default is cured. After the date on which such Junior Preferred
Stock Registration Default is cured, the dividend rate on the Original Junior
Preferred Stock will revert to the dividend rate originally borne by the
Original Junior Preferred Stock (as shown on the cover of this Prospectus).
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available from the Company upon request.
CERTAIN COVENANTS
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will 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 limitation, the Company
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 Company's total
Indebtedness to the Company's Adjusted 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 Adjusted 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 Adjusted EBITDA in making the determinations described above.
Limitation on Restricted Payments. (a) The Company will not, and will 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 Company could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness" covenant; 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
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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 (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 Company 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 Junior Preferred Stock or the exchange thereof for New Exchange Debentures.
Limitations on Transactions with Affiliates. The Company will not, and
will 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
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 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 Board
Resolution 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.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "-- Limitation on Restricted
Payments" contained herein, (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.
Merger, Consolidation and Sale of Assets. Without the affirmative vote of
the holders of a majority of the issued and outstanding shares of Junior
Preferred Stock, voting or consenting, as the case may be, as a separate class,
the Company will not, in a single transaction or a 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 (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 (i) either (1) the Company is the surviving or continuing Person or (2)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or the Person that acquires by conveyance, transfer
or lease the properties and assets of the Company substantially as an entirety
or, in the case of a plan of liquidation, the Person to which assets of the
Company 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; (ii) the Junior Preferred Stock shall be converted
into or exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or resulting
Person the same powers, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions
thereon, that the Junior Preferred Stock had immediately prior to such
transaction; (iii) immediately after giving effect to such
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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 Company (in the case of
clause (1) of the foregoing clause (i)) or such Person (in the case of clause
(2) of the foregoing clause (i)) shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant; (iv) immediately
after giving effect to such transactions, no Voting Rights Triggering Event
shall have occurred or be continuing; and (v) the Company shall have delivered
to the Transfer Agent for the Junior 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
Certificate of Designation and that all conditions precedent in the Certificate
of Designation 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 or assets of the
Company, will be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
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 the "Limitation on Incurrence of Additional
Indebtedness" covenant in an aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued.
Transfer Agent and Registrar. First Union National Bank, Charlotte, North
Carolina, is the transfer agent (the "Transfer Agent") and registrar for the
Junior Preferred Stock.
Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the
Company will be obligated to provide to the holders of Junior Preferred Stock
all annual and quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to such Sections 13 and
15(d) had it been so subject and provide to all holders of Junior Preferred
Stock, without costs to such holders, copies of such reports and documents.
THE NEW EXCHANGE DEBENTURES
The New Exchange Debentures, if issued, will be issued under a new Exchange
Indenture (the "New Exchange Indenture"), to be dated as of June 10, 1998
between the Company, the Guarantors and The Bank of New York (the "Trustee").
The following summary of certain provisions of the New Exchange Indenture does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the Trust Indenture Act of 1939, as amended, as in effect on
the date of the New Exchange Indenture (the "TIA"), and to all of the provisions
of the New Exchange Indenture, including the definitions of certain terms
therein and those terms made a part of the New Exchange Indenture by reference
to the TIA as in effect on the date of the New Exchange Indenture. A copy of the
form of the New Exchange Indenture may be obtained from the Company by any
prospective investor upon request. The definitions of certain capitalized terms
used in the following summary are set forth under "-- Certain Definitions"
below. The Credit Facility, the Existing Debt Indentures and the Existing
Preferred Stock restrict the Company's ability to issue the New Exchange
Debentures. See "Description of Indebtedness" and "Description of Capital
Stock -- Existing Preferred Stock."
The New Exchange Debentures will be general unsecured obligations of the
Company and will be limited in aggregate principal amount to the liquidation
preference of the Junior Preferred Stock, plus, without duplication, accumulated
and unpaid dividends, on the date or dates on which it is exchanged for New
Exchange Debentures (plus any additional New Exchange Debentures issued in lieu
of cash interest as described herein). The New Exchange Debentures will be
issued in fully registered form only, in denominations of $1,000 and integral
multiples thereof (other than as described in "-- The Junior Preferred Stock --
Exchange" or with respect to additional New Exchange Debentures issued in lieu
of cash interest as described
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herein). The New Exchange Debentures will be subordinated to all existing and
future Senior Debt of the Company and will rank pari passu with the Senior
Subordinated Notes and the Existing Exchange Debentures.
Principal of, premium, if any, and interest on the New Exchange Debentures
will be payable, and the New Exchange Debentures may be presented for
registration of transfer or exchange at the office of the Paying Agent and
Registrar. At the Company's option, interest, to the extent paid in cash, may be
paid by check mailed to the registered address of holders of the New Exchange
Debentures as shown on the register for the New Exchange Debentures. The Trustee
will initially act as Paying Agent and Registrar. The Company may change any
Paying Agent and Registrar without prior notice to holders of the New Exchange
Debentures. Holders of the New Exchange Debentures must surrender New Exchange
Debentures to the Paying Agent to collect principal payments.
The New Exchange Debentures will mature on November 15, 2006. Each Exchange
Debenture will bear interest at the rate of 13 1/4% per annum from the Exchange
Date or from the most recent interest payment date to which interest has been
paid or provided for or, if no interest has been paid or provided for, from the
Exchange Date. Interest will be payable semi-annually in cash (or, on or prior
to May 15, 2003, in additional New Exchange Debentures, at the option of the
Company) in arrears on each May 15 and November 15, commencing with the first
such date after the Exchange Date. Interest on the New Exchange Debentures will
be computed on the basis of a 360-day year comprised of twelve 30-day months and
the actual number of days elapsed.
OPTIONAL REDEMPTION
The New Exchange Debentures will be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after May 15, 2003 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on May 15 of the year set
forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 106.625%
2004........................................................ 103.313%
2005 and thereafter......................................... 100.000%
</TABLE>
In addition, on or prior to May 15, 2001, the Company may, at its option,
use the Net Proceeds of either or both of one or more Public Equity Offerings or
Major Asset Sales to redeem for cash up to an aggregate of 35% of the aggregate
principal amount of the New Exchange Debentures whether initially issued or
issued in payment of interest obligations thereon at a redemption price equal to
113.25% of the aggregate principal amount so redeemed, plus accrued interest to
the redemption date; provided, however, that after any such redemption, at least
(i) $75,000,000 aggregate principal amount of New Exchange Debentures or (ii)
$130,000,000 of the combined aggregate liquidation preference of the Junior
Preferred Stock and aggregate principal amount of the New Exchange Debentures
remain outstanding. Any such redemption will be required to occur on or prior to
90 days after the receipt by the Company of the proceeds of each Public Equity
Offering or Major Asset Sale.
The Credit Facility restricts the Company's ability to optionally redeem
the New Exchange Debentures. See "Description of Indebtedness."
CHANGE OF CONTROL
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 New Exchange Debentures
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 (as
hereinafter defined) (such applicable purchase price being hereinafter referred
to as the "Change of Control Purchase Price") in accordance with the procedures
set forth below.
Within 30 days of the occurrence of a Change of Control, the Company 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
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service in the United States and (ii) send by first-class mail, postage prepaid,
to the Trustee and to each holder of the New Exchange Debentures, at the address
appearing in the register maintained by the Registrar of the New Exchange
Debentures, a notice stating:
(i) that the Change of Control Offer is being made and that all New
Exchange Debentures tendered will be accepted for payment, and otherwise
subject to the terms and conditions set forth in the New Exchange
Indenture;
(ii) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 business days nor more than 60
days from the date such notice is mailed (the "Change of Control Payment
Date"));
(iii) that any New Exchange Debenture not tendered will continue to
accrue interest;
(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any New Exchange Debentures 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 New Exchange
Debentures purchased pursuant to a Change of Control Offer will be required
to surrender the New Exchange Debentures 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 New Exchange Debentures delivered for
purchase, and a statement that such holder is withdrawing his election to
have such New Exchange Debentures purchased;
(vii) that holders whose New Exchange Debentures are being purchased
only in part will be issued a new certificate representing New Exchange
Debentures equal in principal amount to the unpurchased portion of the New
Exchange Debentures surrendered, provided that each New Exchange Debenture
purchased and each such New Exchange Debenture 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.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment New Exchange Debentures 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 New Exchange Debentures
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee New Exchange Debentures so accepted together with an Officers'
Certificate stating the New Exchange Debentures or portions thereof tendered to
the Company. The Paying Agent shall promptly mail to each holder of New Exchange
Debentures so accepted payment in an amount equal to the purchase price for such
New Exchange Debentures, and the Company shall execute and issue, and the
Trustee shall promptly authenticate and mail to such holder, a New Exchange
Debenture equal in principal amount to any unpurchased portion of the New
Exchange Debentures surrendered; provided that each such New Exchange Debenture
shall be issued in an original principal amount in denominations of $1,000 and
integral multiples thereof.
The New Exchange Indenture will provide that, prior to the mailing of the
notice referred to above, 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 New Exchange Debentures 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 New Exchange Debentures,
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
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requisite consents under the Credit Facility and the instrument governing such
Senior Debt to permit the repurchase of the New Exchange Debentures as provided
below. The Company will first comply with the covenant in the preceding sentence
before it will be required to repurchase New Exchange Debentures pursuant to the
provisions described 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 (iii) under "Events of Default" below.
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 New Exchange Debentures pursuant to a Change of Control Offer.
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 New Exchange Debentures protection in the event of
certain highly leveraged transactions, reorganizations, restructurings, mergers
and other similar transactions that might adversely affect the holders of New
Exchange Debentures, but would not constitute a Change of Control. The Company
could, in the future, enter into certain transactions, including certain
recapitalizations of the Company, that would not constitute a Change of Control,
but would increase the amount of Indebtedness outstanding at such time. If a
Change of Control were to occur, there can be no assurance that the Company
would have sufficient funds to pay the purchase price for all New Exchange
Debentures, Existing Notes and Existing Exchange Debentures that the Company
might be required to purchase. Moreover, as of the date of this Memorandum,
after giving effect to the sale of the Junior Preferred Stock and the
application of the proceeds therefrom, the Company would not have sufficient
funds available to purchase all the New Exchange Debentures, assuming they had
been issued, pursuant to a Change of Control Offer. In the event that the
Company were required to purchase New Exchange Debentures pursuant to a Change
of Control Offer, the Company expects that it would need to seek third-party
financing to the extent it does not have available funds to meet its purchase
obligations. However, there can no assurance that the Company would be able to
obtain such financing on favorable terms, if at all. In addition, the Credit
Facility restricts and any Credit Agreement the Company enters into is likely to
restrict the Company's ability to repurchase the New Exchange Debentures,
including pursuant to a Change of Control Offer. See "Description of
Indebtedness."
None of the provisions in the New Exchange 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
New Exchange Debentures to redeem its New Exchange Debentures upon a Change of
Control, except to the extent the Trustee is acting at the direction of the
holders of the New Exchange Debentures then outstanding.
SUBORDINATION
The Obligations represented by the New Exchange Debentures are, to the
extent and in the manner provided in the New Exchange Indenture, subordinated in
right of payment to the prior indefeasible payment and satisfaction in full of
all existing and future Senior Debt of the Company.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, 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 any liquidation,
dissolution or other winding-up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or any general assignment
for the benefit of creditors or other marshaling 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 under the circumstances
described under "-- Merger, Consolidation and Sale of Assets") (all of the
foregoing referred to herein individually as a "Bankruptcy Proceeding" and
collectively as "Bankruptcy Proceedings"), the holders of Senior Debt of the
Company will be entitled to receive payment and satisfaction in full of all
amounts due on or in respect of all Senior Debt of the Company before the
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holders of the New Exchange Debentures are entitled to receive or retain any
payment or distribution of any kind on account of the New Exchange Debentures.
In the event that, notwithstanding the foregoing, the Trustee or any holder of
New Exchange Debentures receives any payment or distribution of assets of the
Company of any kind, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the New Exchange
Debentures before all Senior Debt of the Company is paid and satisfied in full,
then such payment or distribution will be held by the recipient in trust for the
benefit of holders of Senior Debt and will 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. By reason of such subordination,
in the event of liquidation or insolvency, creditors of the Company who are
holders of Senior Debt may recover more, ratably, than other creditors of the
Company, and creditors of the Company who are not holders of Senior Debt or of
the New Exchange Debentures may recover more, ratably, than the holders of the
New Exchange Debentures.
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 New Exchange Debentures 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 the New Exchange Debentures, or for or on account of the purchase, redemption
or other acquisition of the New Exchange Debentures, and neither the Trustee nor
any holder or owner of any New Exchange Debentures 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 New Exchange Debentures 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, the Company
shall resume making any and all required payments in respect of the New Exchange
Debentures, including any missed payments.
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 may be
made by the Company, including, without limitation, by way of set-off or
otherwise, on account of the New Exchange Debentures, or on account of the
purchase or redemption or other acquisition of New Exchange Debentures, for a
period (a "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) the earliest of (w) more than 179 days
shall have elapsed since 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 paid in
full or (z) such Payment Blockage Period shall have been terminated by written
notice to the Company or the Trustee from such Representative, 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 New Exchange Debentures, including any
missed payments. Notwithstanding any other provision of the New Exchange
Indenture, in no event shall a Payment Blockage Period commenced in accordance
with the provisions of the New Exchange Indenture described in this paragraph
extend beyond 179 days from the date of the receipt by the Trustee of the notice
referred to above (such period, an "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 until at least 180
consecutive days have elapsed from the last day of the Initial Blockage Period.
Notwithstanding any other provision of the New Exchange 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
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initiated by the Representative, whether or not within the Initial Blockage
Period, unless such Non-Payment Event of Default shall have been waived for a
period of not less than 90 consecutive days.
Each Guarantee will, to the extent set forth in the New Exchange Indenture,
be subordinated in right of payment to the prior payment in full of all Senior
Debt of the respective Guarantor, including obligations of such Guarantor with
respect to the Credit Facility (including any guarantee thereof) to the extent
then existing, and will be subject to the rights of holders of Designated Senior
Debt of such Guarantor to initiate blockage periods, upon terms substantially
comparable to the subordination of the New Exchange Debentures to all Senior
Debt of the Company.
If the Company or any Guarantor fails to make any payment on the New
Exchange Debentures or any Guarantee, as the case may be, when due or within any
applicable grace period, whether or not on account of payment blockage
provisions, such failure would constitute an Event of Default under the New
Exchange Indenture and would enable the holders of the New Exchange Debentures
to accelerate the maturity thereof. See "-- Events of Default."
A holder of New Exchange Debentures by his acceptance of New Exchange
Debentures agrees to be bound by such provisions and authorizes and expressly
directs the Trustee, on his behalf, to take such action as may be necessary or
appropriate to effectuate the subordination provided for in the Indenture and
appoints the Trustee his attorney-in-fact for such purpose.
GUARANTEES
The New Exchange Debentures are guaranteed on a senior subordinated basis
by the Guarantors. All payments pursuant to the Guarantees by the Guarantors are
subordinated in right of payment to the prior payment in full of all Senior Debt
of the Guarantor, to the same extent and in the same manner that all payments
pursuant to the New Exchange Debentures are subordinated in right of payment to
the prior payment in full of all Senior Debt of the Company.
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 the New Exchange
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 contribution from each other Guarantor in a pro rata amount
based on the Adjusted Net Assets of each Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if all or substantially all of its assets are sold or all of its
Capital Stock is sold, in each case in a transaction in compliance with the
covenant described under "-- Limitation on Certain Asset Sales," or 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 "-- Merger, Consolidation and Sale of Assets,"
and such 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 transaction have been complied with.
CERTAIN COVENANTS
The New Exchange Indenture will contain, among others, the following
covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will 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 Adjusted 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
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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 Adjusted 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 Adjusted 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.
Limitation on Restricted Payments. (a) The Company will not, and will 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 the "Limitation on
Incurrence of Additional Indebtedness" covenant; 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 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; (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 the Company) 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 New Exchange Debentures 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 New Exchange Debentures, at
least to the extent that the Indebtedness being acquired is subordinated to the
New Exchange Debentures 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 the Company) 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 New Exchange Debentures, at least to the extent that the Indebtedness
being acquired is subordinated to the New Exchange Debentures and has a Weighted
Average Life to Maturity no less than that of the Indebtedness being refinanced;
(4) the retirement of the Junior Preferred Stock in accordance with the optional
and mandatory redemption and put provisions as in effect on the Issue Date and
the payment of cash dividends on the Junior 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 at
times and in amounts no less favorable to holders of the New
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Exchange Debentures than such provisions as are in effect in the related
certificate of designations 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 the covenant "Limitation on Restricted Payments" 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.
Limitations on Transactions with Affiliates. The Company will not, and
will 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.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "-- Limitation on Restricted
Payments" contained herein, (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.
Limitation on Certain Asset Sales. The Company will not, and will 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
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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 Indenture;
and (d) fourth, to make an offer for the New Exchange Debentures as described
under "-- Optional Redemption" above 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 New Exchange
Debentures, 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 New Exchange Debentures.
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 New Exchange Debentures 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, 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 New Exchange Debentures repurchased; and (4) the calculations used
in determining the amount of Available Asset Sale Proceeds to be applied to the
repurchase of such New Exchange Debentures.
Limitation on Other Senior Subordinated Debt. The Company will not, and
will 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 New
Exchange Debentures and the Guarantees, as the case may be. For purposes of this
covenant, Indebtedness is deemed to be senior in right of payment to the New
Exchange Debentures 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 New Exchange Debentures and the Guarantees, as the case may be,
are subordinate to Senior Debt.
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
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 the "Limitation on Incurrence of Additional
Indebtedness" covenant in an aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued.
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 the
New Exchange 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 the New Exchange
Indenture and opinions of counsel as to the enforceability of such guarantee),
pursuant to which such Restricted Subsidiary shall become a Guarantor. As of the
Issue Date, the Company will have no Subsidiaries other than the Guarantors.
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Merger, Consolidation and Sale of Assets. The Company will 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 (a) the Company, is the survivor of such merger or
consolidation or (b) 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 New Exchange Debentures and the New Exchange 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 the
"Limitation on Incurrence of Additional Indebtedness" covenant; (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 the New
Exchange Indenture, that the surviving Person agrees by supplemental indenture
to be bound thereby, and that all conditions precedent in the New Exchange
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
"-- Limitation on Certain Asset Sales," 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 the Exchange Debenture 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 "-- Limitation on Additional Indebtedness."
EVENTS OF DEFAULT
The following events are defined in the New Exchange Indenture as "Events
of Default": (i) the failure to pay interest on any New Exchange Debentures 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 subordination provisions
of the New Exchange Indenture); (ii) the failure to pay the principal, or
premium, if any, on any New Exchange Debentures, when such principal becomes due
and payable, at maturity, upon redemption or otherwise (whether or not such
payment is prohibited by the subordination provisions of the New Exchange
Indenture); (iii) a default in the observance or performance of any other
covenant or agreement contained in the New Exchange Debentures or the New
Exchange Indenture which default continues for a period of 60 days after the
Company receives written notice thereof specifying the default from the Trustee
or holders of at least 25% in aggregate principal amount of outstanding New
Exchange Debentures; (iv) 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
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rescinded or annulled within 20 days after written notice as provided in the New
Exchange Indenture; (v) any final judgment or judgments which can no longer be
appealed for the payment of money in excess of $10,000,000 shall be rendered
against the Company or any Restricted Subsidiary thereof, and shall not be
discharged for any period of 60 consecutive days during which a stay of
enforcement shall not be in effect; and (vi) certain events of bankruptcy,
insolvency or reorganization affecting the Company or any of its Restricted
Subsidiaries.
Upon the happening of any Event of Default specified in the New Exchange
Indenture, the Trustee may, and the Trustee upon the request of 25% in principal
amount of the New Exchange Debentures shall or the holders of at least 25% in
aggregate principal amount of outstanding New Exchange Debentures may, declare
the principal of and accrued but unpaid interest, if any, on all the New
Exchange Debentures to be due and payable by notice in writing to the Company
and the Trustee specifying the respective Event of Default and that it is a
"notice of acceleration" (the "Acceleration Notice"), and the same (i) shall
become immediately due and payable or (ii) if there are any amounts outstanding
under any of the instruments constituting the Senior Debt, will 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 such Acceleration Notice
(unless all Events of Default specified in such Acceleration Notice have been
cured or waived). If an Event of Default with respect to bankruptcy proceedings
occurs and is continuing, then such amount will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any holder of New Exchange Debentures.
The New Exchange Indenture will provide that, at any time after a
declaration of acceleration with respect to the New Exchange Debentures as
described in the preceding paragraph, the holders of a majority in principal
amount of the New Exchange Debentures then outstanding (by notice to the
Trustee) may rescind and cancel such declaration and its consequences if (i) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest on the New Exchange Debentures
that has become due solely by such declaration of acceleration, (iii) to the
extent the payment of such interest is lawful, interest (at the same rate
specified in the New Exchange Debentures) on overdue installments of interest
and overdue principal which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of a
Default or Event of Default of the type described in clause (vi) of the
description above of Events of Default, the Trustee has received an officers'
certificate and an opinion of counsel that such Default or Event of Default has
been cured or waived. The holders of a majority in principal amount of the New
Exchange Debentures may waive any existing Default or Event of Default under the
New Exchange Indenture, and its consequences, except a default in the payment of
the principal of or interest on any New Exchange Debentures.
The Company will deliver to the Trustee, on or before 100 days after the
end of the Company's fiscal year and on or before 50 days after the end of the
first, second and third fiscal quarters of such years, a certificate indicating
whether the signing officers know of any Default or Event of Default that
occurred during the previous year or quarter, as the case may be, and whether
the Company has complied with its obligations under the New Exchange Indenture.
In addition, the Company will be required to notify the Trustee of the
occurrence and continuation of any Default or Event of Default within five
business days after the Company becomes aware of the same.
Subject to the provisions of the New Exchange Indenture relating to the
duties of the Trustee in case an Event of Default thereunder should occur and be
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under the New Exchange Indenture at the request or direction of
any of the holders of the New Exchange Debentures unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Subject to such provision for security or indemnification
and certain limitations contained in the New Exchange Indenture, the holders of
a majority in principal amount of the outstanding New Exchange Debentures have
the right to direct the time, method and
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place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.
SATISFACTION AND DISCHARGE OF NEW EXCHANGE INDENTURE; DEFEASANCE
The New Exchange Indenture provides the Company may elect either (a) to
defease and be discharged from any and all obligations with respect to the New
Exchange Debentures (except for the obligations to register the transfer or
exchange of such New Exchange Debentures, to replace temporary or mutilated,
destroyed, lost or stolen New Exchange Debentures, to maintain an office or
agency in respect of the New Exchange Debentures and to hold monies for payment
in trust) ("defeasance") or (b) to be released from their obligations with
respect to the New Exchange Debentures under certain covenants contained in the
New Exchange Indenture and described above under "-- Certain Covenants"
("covenant defeasance"), upon the deposit with the Trustee (or other qualifying
trustee), in trust for such purpose, of money and/or U.S. Government Obligations
which through the payment of principal and interest in accordance with their
terms will provide money, in an amount sufficient to pay the principal of,
premium, if any, and interest on the New Exchange Debentures on the scheduled
due dates therefor or on a selected date of redemption in accordance with the
terms of the New Exchange Indenture. Such a trust may only be established if,
among other things, the Company had delivered to the Trustee an opinion of
counsel (as specified in the New Exchange Indenture) (i) to the effect that
neither the trust nor the Trustee will be required to register as an investment
company under the Investment Company Act of 1940, as amended, and (ii) to the
effect that holders of the New Exchange Debentures or persons in their positions
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount and in the same amount and in the same manner and
at the same times, as would have been the case if such deposit, defeasance and
discharge had not occurred which, in the case of a defeasance only, must be
based upon a private ruling concerning the New Exchange Debentures, a published
ruling of the Internal Revenue Service or a change in applicable federal income
tax law.
REPORTS TO HOLDERS
The Company will file with the Trustee and provide to the holders of New
Exchange Debentures, within 15 days after it 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, copies of the annual reports and of the information, documents
and other financial reports (or copies of such portions of any of the
foregoing).
MODIFICATION OF THE NEW EXCHANGE INDENTURE
From time to time, the Company, the Guarantors and the Trustee may, without
the consent of the holders of the New Exchange Debentures, amend the New
Exchange Indenture or the New Exchange Debentures or supplement the New Exchange
Indenture for certain specified purposes, including curing any ambiguity, defect
or inconsistency or making any change that does not materially and adversely
affect the rights of any of the holders. The New Exchange Indenture contains
provisions permitting the Company, the Guarantors and the Trustee, with the
consent of the holders of a majority in principal amount of the outstanding New
Exchange Debentures, to modify or supplement the New Exchange Indenture and the
New Exchange Debentures except that, without the consent of each holder of the
New Exchange Debentures affected thereby, no such modification shall: (i) reduce
the amount of New Exchange Debentures whose holders must consent to an
amendment, supplement or waiver to the New Exchange Indenture or the New
Exchange Debentures; (ii) reduce the rate of or change the time for payment of,
interest on any New Exchange Debentures; (iii) reduce the principal of or
premium on or change the stated maturity of any Exchange Debenture; (iv) make
any New Exchange Debentures payable in money other than that stated in the New
Exchange Debentures or change the place of payment from New York, New York; (v)
change the amount or time of any payment required by the New Exchange Debentures
or reduce the premium payable upon any redemption of New Exchange Debentures or
change the time before which no redemption may be made; (vi) waive a default in
the payment of principal or interest on, or redemption payment with respect to
any New Exchange Debentures; or (vii) take any other action otherwise prohibited
by the New Exchange
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Indenture to be taken without the consent of each holder affected thereby. In
addition, as long as any Shares of Junior Preferred Stock remain outstanding,
the holders of Junior Preferred Stock will have the right to vote together with
the holders of New Exchange Debentures with respect to amendments and
modifications of the New Exchange Indenture.
The consent of holders is not necessary to approve the particular form of
any proposed amendment. It is sufficient if such consent approves the substance
of the proposed amendment.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Certificate of Designation and the New Exchange Indenture. Reference is made to
the Certificate of Designation and the New Exchange Indenture for the full
definition of all such terms, as well as any other terms used herein for which
no definition is provided.
"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 EBITDA" means, for any Person, prior to the date specified by the
Company in a written notice delivered to the Trustee of the Company's election
of its one time right to change the calculation of Adjusted EBITDA (the
"Calculation Change Notice"), the sum of (a) Consolidated EBITDA of such Person
and its Restricted Subsidiaries for the four most recent fiscal quarters for
which internal financial statements are available, minus inTV EBITDA for the
most recent four fiscal quarter period and (b) inTV EBITDA for the most recent
quarterly period, multiplied by four and, subsequent to the effective date
specified by the Company in its Calculation Change Notice, the Consolidated
EBITDA of such Person and its Restricted Subsidiaries for the four most recent
fiscal quarters for which internal financial statements are available.
"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.
"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
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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 "-- New Exchange Debentures -- Certain
Covenants -- Limitation on Certain Asset Sales."
"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.
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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.
"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.
"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 Junior Preferred Stock and the
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
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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 New Exchange Debentures, 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.
"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 June 10, 1998 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, for
purposes of the Certificate of Designation, any cash dividends paid on Senior
Securities or Parity Securities not already reflected in Consolidated Interest
Expense that do not require the approval of the holders of a majority of the
shares of Junior Preferred Stock outstanding to be issued, in each case from
June 10, 1998 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.
"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 (i) the mandatory redemption date of the Junior Preferred Stock, in
the case of the Junior Preferred Stock or (ii) the final maturity date of the
New Exchange Debentures, in the case of the New Exchange Debentures. Without
limitation of the foregoing, Disqualified Capital Stock shall be deemed to
include (i) any Preferred Stock of a Restricted Subsidiary, (ii) any
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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 redemption date of the Junior Preferred Stock or
the maturity date of the New Exchange Debentures; and (iii) as long as the
Junior 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, which provisions have
substantially the same effect as the provisions of the Certificates of
Designation, Existing Debt Indentures and the New Exchange Indenture described
under "Change of Control," shall not be deemed to be Disqualified Capital Stock
solely by virtue of such provisions; (ii) the Junior Preferred Stock, the
Existing Preferred Stock and the Convertible Preferred Stock, as in effect on
the Issue Date, shall not be considered Disqualified Capital Stock; (iii)
Disqualified Capital Stock paid as dividends on Preferred Stock existing on the
date hereof 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; and (iv) issuances of Junior Preferred Stock, Senior
Securities and Parity Securities that the Company is permitted to issue, as
described under "-- Ranking", without the approval of the holders of at least a
majority of the shares of Junior Preferred Stock then outstanding.
"Exchange Date" means the date of original issuance of the New Exchange
Debentures.
"Existing Exchange Indenture" means the indenture dated October 4, 1996
between the Company, the guarantors thereto and The Bank of New York, as
trustee, which governs the Existing Exchange Debentures.
"Existing Exchange Debentures" means the 12 1/2% Exchange Debentures due
2006 (if issued) issued under the Existing Exchange Indenture.
"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 Debt Indentures" means the Existing Indenture and the Existing
Exchange Indenture.
"Existing Notes" means the 11 5/8% Senior Subordinated Notes due 2002
issued under the Existing Indenture.
"Existing Preferred Stock" means the Private Preferred Stock and the Public
Preferred Stock, collectively.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"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 the New Exchange 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 the New Exchange Indenture.
"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
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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.
"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 Company at the time of
determination and (ii) which, in the judgment of the Company, is independent
from the Company as evidenced by an Officer's Certificate.
"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.
"inTV EBITDA" means Consolidated EBITDA for the Infomall TV Network
determined on a basis consistent with the Company's internal financial
statements, generated by stations declared by the Board of Directors as inTV
properties.
"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 New Exchange Debentures,
the Existing Exchange Debentures, the Existing Preferred Stock, the Junior
Preferred Stock or the Convertible Preferred Stock by the Company.
"Issue Date" means the date of original issuance of the Junior Preferred
Stock or the New Exchange Debentures, as the case may be.
"Junior Preferred Stock" means the 13 1/4% Cumulative Junior Exchangeable
Preferred Stock, par value $.001 per share.
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"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.
"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).
"New Exchange Debentures" shall mean the 13 1/4% Exchange Debentures due
2006, issuable pursuant to an indenture dated as of June 10, 1998 among the
Company and The Bank of New York, as trustee.
"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.
"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 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,
including any New Exchange Debentures issued in accordance with the New
Exchange Indenture as payment of interest on the New Exchange Debentures;
(ii) Indebtedness under the Existing Exchange Debentures, and the
Guarantees related thereto, including any Existing Exchange Debentures
issued in accordance with the Existing Exchange Indenture as payment of
interest on the Existing Exchange Debentures;
(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 Designations or the New Exchange
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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 the New Exchange Indenture and the New Exchange
Debentures 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 "-- Limitation on
Certain Asset Sales";
(vi) time brokerage and other similar agreements 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;
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(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.
"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.
"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.
"Public Preferred Stock" means the Cumulative Exchangeable Preferred Stock,
$.001 par value, 12 1/2% dividend rate per annum, of which 170,782 shares are
currently 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.
"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 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.
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"Restricted Payment" means the following:
(A) For purposes of the New Exchange Indenture, (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, the Junior
Preferred Stock and the 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 Public Preferred
Stock for the Existing Exchange Debentures or the exchange of shares of Junior
Preferred Stock for the New Exchange Debentures 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 New Exchange Debentures, (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.
(B) For purposes of the Certificate of Designation, (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 Parity Securities or Junior
Securities, or any warrants, rights or options to acquire shares of Parity
Securities or Junior Securities, other than through the exchange of such Parity
Securities or Junior Securities or any warrants, rights or options to acquire
shares of any class of such Parity Securities or 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 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.
"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 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 Company to any of its
Subsidiaries, (ii) Indebtedness represented by the New
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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
the New Exchange Indenture.
"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 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 the covenant set forth under "Limitation on Restricted
Payments." 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.
"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.
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DESCRIPTION OF CONVERTIBLE PREFERRED STOCK
Concurrently with the Private Offering, the Company issued and sold 7,500
shares ($75,000,000 aggregate liquidation preference) of 9 3/4% Series A
Convertible Preferred Stock, par value $.001 per share. The summary contained
herein of certain provisions of the Convertible Preferred Stock does not purport
to be complete and is qualified in its entirety by reference to the provisions
of the certificate of designation relating thereto. Capitalized terms used
herein and not otherwise defined below are defined in the certificate of
designation relating thereto.
Dividends. The holders of the Convertible Preferred Stock are entitled to
receive dividends at a rate equal to 9 3/4% per annum of the liquidation
preference thereof per share, payable quarterly beginning September 30, 1998 and
accumulating from the Issue Date. The Company, at its option, may pay dividends
on any dividend payment date either in cash or by the issuance of additional
shares of Convertible Preferred Stock having an aggregate liquidation preference
equal to the amount of such dividends or shares of Class A Common Stock having a
market value equal to the amount of such dividends; provided that if the Company
elects to pay such dividends in shares of Class A Common Stock and such shares
are not freely tradeable without volume or manner of sale limitations by any
holder of Convertible Preferred Stock which is not an Affiliate of the Company,
the dividend rate per annum for such payment shall be increased to 12 1/4%.
Voting Rights. Holders of the Convertible Preferred Stock will have voting
rights (voting as a class with the Class A Common Stock) on all matters
equivalent to one vote for each share of Class A Common Stock into which their
Convertible Preferred Stock is convertible. In addition, if the Company (i)
fails to make a mandatory redemption or a Change of Control Offer (as defined),
(ii) fails to comply with certain covenants or make certain payments on its
indebtedness or (iii) any event occurs or condition exists which results in an
increase in the dividend rate on the Private Preferred Stock, holders of a
majority of the outstanding shares of Convertible Preferred Stock, voting as a
class, will be entitled to elect the lesser of two directors or that number of
directors constituting at least 25% of the Board of Directors.
Liquidation Rights. The Convertible Preferred Stock, with respect to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company, ranks senior to all classes of common stock and junior to all other
classes of preferred stock of the Company outstanding on the Issue Date,
including the Junior Preferred Stock.
Redemption. The Convertible Preferred Stock is redeemable, at the option
of the Company, in whole or in part, at any time on or after June 30, 2003 at
the redemption prices set forth in the certificate of designation relating
thereto, plus, without duplication, accumulated and unpaid dividends to the date
of redemption. The Company is required, subject to certain conditions, to redeem
all of the Convertible Preferred Stock outstanding on December 31, 2006 at a
redemption price equal to 100% of the liquidation preference thereof, plus,
without duplication, accumulated and unpaid dividends to the date of redemption.
Conversion Rights. The Convertible Preferred Stock will be convertible at
any time, on or after June 30, 1999, or immediately in the event of a Change of
Control or a Major Asset Sale, or at any time after the trading price of the
Class A Common Stock averages $25.00 or more above for five consecutive trading
days, at the option of the holder thereof. The Convertible Preferred Stock is
convertible into a number of shares of Class A Common Stock equal to the
aggregate liquidation preference of the shares of Convertible Preferred Stock
surrendered for conversion divided by the Conversion Price. The Conversion Price
will be an initial conversion rate of 625 shares of Common Stock for each share
of Convertible Preferred Stock (equivalent to a conversion price of $16.00 per
share of Class A Common Stock, representing a 45.5% conversion premium per share
of Class A Common Stock over the closing sale price of the Class A Common Stock
on June 4, 1998), subject to adjustment in certain events.
Warrants. In conjunction with the Convertible Preferred Offering, the
Company issued warrants to purchase 240,000 shares of Class A Common Stock of
the Company at an exercise price equivalent to the Conversion Price, which
warrants are exercisable until June 30, 2003.
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DESCRIPTION OF INDEBTEDNESS
CREDIT FACILITY
In May 1998, the Company refinanced its outstanding indebtedness under its
prior revolving credit facility with a $122.0 million senior credit facility
maturing June 2002 (the "Credit Facility"). The following summary of the Credit
Facility is based upon the terms of the credit agreement and related documents
("Credit Facility Loan Documents"), and is subject to and qualified in its
entirety by reference to the terms and conditions of the Credit Facility Loan
Documents.
The Company is required to begin making quarterly principal payments under
the Credit Facility beginning December 31, 2000. The Credit Facility matures on
June 30, 2002, unless previously terminated. The Company is required to be in
compliance with certain financial ratios subsequent to March 2000.
Borrowings under the Credit Facility bear interest at a rate equal to, at
the option of the Company, either (i) the Base Rate (which is defined as the
higher of 1/2% plus the Federal Funds Rate or the prime rate most recently
announced by the agent under the Credit Facility) plus 1.75%, or (ii) LIBOR plus
2.75%.
The obligations of the Company under the Credit Facility are
unconditionally guaranteed, jointly and severally, by all material subsidiaries
of the Company. The obligations of the Company and such guarantors under the
Credit Facility are secured primarily by a first priority lien on all the assets
of the Company and such guarantors.
The Credit Facility contains customary representations, warranties and
indemnities, and contains, among other things, covenants restricting the ability
of the Company and its subsidiaries to dispose of assets, pay dividends,
repurchase or redeem capital stock and indebtedness, create liens, make capital
expenditures, make certain investments or acquisitions, enter into transactions
with affiliates and otherwise restrict corporate activities. The Credit Facility
also contains the following financial covenants: maximum ratio of total debt to
operating cash flow, minimum permitted interest coverage and a minimum permitted
fixed charge coverage ratio, beginning March 31, 2000.
Events of defaults under the Credit Facility include those usual and
customary for transactions of this type, including, among other things, default
in the payment of principal or interest in respect of material amounts of
indebtedness of the Company or its subsidiaries, any non-payment default on such
indebtedness and a change of control, any material breach of the covenants or
representations and warranties included in the Credit Facility and related
documents, the institution of any bankruptcy proceedings and the failure of any
security agreement related to the Credit Facility or lien granted thereunder to
be valid and enforceable. Upon the occurrence and continuance of an event of
default under the Credit Facility, the lenders may declare the then outstanding
loans due and payable.
SENIOR SUBORDINATED NOTES MATURING OCTOBER 1, 2002 (THE "EXISTING NOTES")
The following summary is based upon the terms of the Existing Notes and the
Existing Indenture. This summary does not purport to be a complete description
of the Existing Notes or the Existing Indenture and is subject to and qualified
in its entirety by reference to the terms of the Existing Notes and the Existing
Indenture (including the definitions contained therein), copies of which are
available from the Company upon request.
The Existing Notes are limited in aggregate principal amount to $230.0
million. The Existing Notes are general unsecured obligations of the Company,
subordinated in right of payment to Senior Indebtedness (as defined in the
Existing Indenture) of the Company and senior in right of payment to any current
or future indebtedness of the Company subordinated thereto.
The Existing Notes are fully and unconditionally guaranteed, on a senior
subordinated basis, as to payment of principal, premium, if any, and interest,
jointly and severally (the "Existing Guarantees"), by all of the direct and
indirect subsidiaries of the Company (the "Guarantors"). The Existing Guarantees
are subordinated to all Senior Indebtedness of the respective Guarantors.
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The Existing Notes will mature on October 1, 2002. The Existing Notes bear
interest at a rate of 11 5/8% per annum from the date of original issuance until
maturity. Interest is payable semi-annually in arrears on April 1 and October 1,
commencing April 1, 1996.
The Existing Notes are redeemable at the option of the Company, in whole or
in part, at any time on or after October 1, 1999 at a redemption price equal to
104% of the principal amount thereof during the twelve-month period beginning on
October 1, 1999, 102% of the principal amount thereof during the twelve-month
period beginning on October 1, 2000, and 100% of the principal amount thereof on
or after October 1, 2001, together with accrued and unpaid interest to the
redemption date. In addition, the Company, at its option, may redeem in the
aggregate up to 25% of the original principal amount of the Existing Notes at
any time prior to October 1, 1998, at a redemption price equal to 110% of the
principal amount thereof plus accrued interest to the redemption date with the
Net Proceeds of one or more Public Equity Offerings or Major Asset Sales (each
as defined in the Existing Indenture); provided, however, that at least $172.5
million aggregate principal amount of Existing Notes remains outstanding and
that such redemption occurs within 90 days following the closing of any such
Public Equity Offering or Major Asset Sale.
In the event of a Change of Control (as defined in the Existing Indenture)
of the Company, the Company will be required to make an offer to purchase all
outstanding Existing Notes at a price equal to 101% of the principal amount
thereof plus accrued and unpaid interest to the date of repurchase.
The Existing Indenture contains covenants for the benefit of the holders of
the Existing Notes that, among other things, and subject to certain exceptions,
restrict the ability of the Company and its Restricted Subsidiaries (as defined
in the Existing Indenture) to: (i) incur additional indebtedness; (ii) pay
dividends and make distributions; (iii) issue stock of subsidiaries; (iv) make
certain investments; (v) repurchase stock; (vi) create liens; (vii) enter into
transactions with affiliates; (viii) enter into sale and leaseback transactions;
(ix) merge or consolidate the Company or the Guarantors; and (x) transfer and
sell assets.
EXISTING EXCHANGE DEBENTURES
The following summary is based on the terms of the Existing Exchange
Debentures and the indenture relating to the Existing Exchange Debentures (the
"Existing Exchange Indenture"). This summary does not purport to be a complete
description of the Existing Exchange Debentures and the Existing Exchange
Indenture and is qualified in its entirety by reference to the terms of the
Existing Exchange Debentures and the Existing Exchange Indenture (including the
definitions contained therein), copies of which are available from the Company
upon request.
Currently, no Existing Exchange Debentures are outstanding. At the
Company's option, the Public Preferred Stock is exchangeable into the Existing
Exchange Debentures, subject to certain conditions, in whole or in part;
provided that immediately after giving effect to any such partial exchange,
there shall be outstanding shares of Public Preferred Stock (whether initially
issued or issued in lieu of cash dividends) with an aggregate liquidation
preference of not less than $75.0 million and not less than $75.0 million of
aggregate principal amount of Existing Exchange Debentures. Subject to certain
conditions, the Company has agreed to exchange all outstanding Public Preferred
Stock for Existing Exchange Debentures when such an exchange is permitted under
the terms of certain indebtedness and capital stock of the Company.
The Existing Exchange Debentures are limited in aggregate principal amount
to $440.0 million, which amount approximates the maximum amount of Existing
Exchange Debentures that could be outstanding if the Company immediately
exchanged all of the outstanding Public Preferred Stock into Existing Exchange
Debentures and paid all interest accruing on the Existing Exchange Debentures,
prior to October 31, 2001, by issuing additional Existing Exchange Debentures in
lieu of cash interest payments. If issued, the Existing Exchange Debentures will
be general unsecured obligations of the Company, subordinated in right of
payment to Senior Indebtedness (as defined in the Existing Exchange Indenture)
of the Company and senior in right of payment to any current or future
indebtedness of the Company subordinated thereto.
If issued, the Existing Exchange Debentures will be fully and
unconditionally guaranteed, on a senior subordinated basis, as to payment of
principal, premium, if any, and interest, jointly and severally (the
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"Existing Exchange Guarantees"), by all of the direct and indirect Guarantors.
The Existing Exchange Debentures are subordinated to all Senior Indebtedness of
the respective Guarantors.
If issued, the Existing Exchange Debentures will mature on October 31,
2006, and bear interest at a rate of 12 1/2% per annum from the date of original
issuance until maturity. Interest would be payable semi-annually in arrears on
April 30 and October 31.
If issued, the Existing Exchange Debentures will be redeemable at the
option of the Company, in whole or in part, at any time on or after October 31,
2001, at a redemption price equal to 106.25% of the principal amount thereof
during the twelve-month period beginning on October 31, 2001, 104.167% of the
principal amount thereof during the twelve-month period beginning on October 31,
2002, 102.083% of the principal amount thereof during the twelve-month period
beginning on October 31, 2003, and 100% of the principal amount thereof on or
after October 1, 2004, together with accrued and unpaid interest to the
redemption date. In addition, the Company, at its option, may redeem in the
aggregate up to 35% of the original principal amount of the Existing Exchange
Debentures at any time prior to October 31, 1999, at a redemption price equal to
112.50% of the principal amount thereof plus accrued interest to the redemption
date with the Net Proceeds of one or more Public Equity Offerings or Major Asset
Sales (each as defined in the Existing Exchange Indenture); provided, however,
that at least $75.0 million aggregate principal amount of Existing Exchange
Debentures remains outstanding and that such redemption occurs within 90 days
following the closing of any such Public Equity Offering or Major Asset Sale.
In the event of a Change of Control (as defined in the Existing Exchange
Indenture) of the Company, the Company will be required to make an offer to
purchase all outstanding Existing Exchange Debentures at a price equal to 101%
of the principal amount thereof plus accrued and unpaid interest to the date of
repurchase.
The Existing Exchange Indenture contains covenants for the benefit of the
holders of the Existing Exchange Debentures that, among other things, and
subject to certain exceptions, restrict the ability of the Company and its
Restricted Subsidiaries (as defined in the Existing Exchange Indenture) to: (i)
incur additional indebtedness; (ii) pay dividends and make certain other
restricted payments; (iii) issue certain stock of subsidiaries; (iv) enter into
transactions with affiliates; (v) merge or consolidate the Company or the
Guarantors; and (vi) transfer and sell assets.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's authorized capital stock consists of 197,500,000 shares of
common stock with a par value of $.001 per share, and 1,000,000 shares of
preferred stock with a par value of $.001 per share. Of the 197,500,000 shares
of common stock that the Company is authorized to issue: (a) 150,000,000 shares
are designated as Class A Common Stock (the "Class A Common Stock"), (b)
35,000,000 shares are designated as Class B common stock (the "Class B Common
Stock"), and (c) 12,500,000 shares are designated as Class C non-voting common
stock (the "Class C Common Stock" and with the Class A Common Stock and Class B
Common Stock, collectively, the "Common Stock"). Of the 1,000,000 shares of
preferred stock that the Company is authorized to issue: (a) 33,000 shares have
been designated as Junior Cumulative Compounding Redeemable Preferred Stock (the
"Private Preferred Stock,"), (b) 440,000 shares have been designated as 12 1/2%
Cumulative Exchangeable Preferred Stock (the "Public Preferred Stock"), with
150,000 of such shares originally issued by the Company and the remaining shares
reserved to be available from time to time to be issued as dividends on the then
outstanding shares of Public Preferred Stock, in lieu of the payment of cash
dividends thereon, (c) 72,000 shares have been designated as Original Junior
Preferred Stock, (d) 17,500 shares have been designated as 9 3/4% Series A
Convertible Preferred Stock (collectively with the Junior Preferred Stock and
the Existing Preferred Stock, the "Preferred Stock"), and (e) effective upon
consummation of the Exchange Offer, 72,000 shares have been designated as New
Junior Preferred Stock. As of March 31, 1998, 51,868,800 shares of Class A
Common Stock, 8,311,639 shares of Class B Common Stock, no shares of Class C
Common Stock, 33,000 shares of Private Preferred Stock and 170,782 shares of
Public Preferred Stock were outstanding. In addition, 12,267,138 shares of Class
A Common Stock
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are reserved for issuance with respect to: (a) the conversion of shares of Class
B Common Stock to Class A Common Stock, (b) the exercise of warrants issued in
connection with the Private Preferred Stock, and (c) the exercise of outstanding
options under the Company's Stock Incentive Plans.
COMMON STOCK
Dividends. Subject to the Preferred Stock's prior right to dividends,
holders of record of shares of Class A Common Stock, Class B Common Stock and
Class C Common Stock on the record date are entitled to receive such dividends
as may be declared by the Company's Board of Directors out of funds legally
available for such purpose. No dividends may be declared or paid in cash or
property on any share of any class of the Common Stock, however, unless
simultaneously the same dividend is declared or paid on each share of the other
classes of Common Stock. In the case of any stock dividend, holders of Class A
Common Stock are entitled to receive the same percentage dividend (payable in
shares of Class A Common Stock) as holders of Class B Common Stock receive
(payable in shares of Class B Common Stock) and holders of Class C Common Stock
receive (payable in shares of Class C Common Stock). So long as any Existing
Preferred Stock is outstanding, the Company cannot declare dividends on its
Common Stock, except under certain limited circumstances.
Voting Rights. Holders of shares of Class A Common Stock and Class B
Common Stock will vote as a single class on all matters submitted to a vote of
the stockholders of the Company, with each share of Class A Common Stock
entitled to one vote and each share of Class B Common Stock entitled to ten
votes, except as otherwise provided by law. Holders of Class C Common Stock have
no right to vote on any matter voted on by the stockholders of the Company,
except as may be provided by law or as provided in limited circumstances in the
Company's certificate of incorporation.
Liquidation Rights. Upon liquidation, dissolution, or winding-up of the
Company, the holders of the Common Stock are entitled to share pro rata in all
assets available for distribution after payment in full to creditors and payment
in full to any holders of Preferred Stock then outstanding of any amount
required to be paid under the terms of such Preferred Stock.
Other Provisions. Each share of Class B Common Stock and Class C Common
Stock is generally convertible or exchangeable at the option of its holder into
one share of Class A Common Stock at any time, subject to certain restrictions
in the case of the conversion or exchange of Class C Common Stock. Holders of
Common Stock do not have preemptive rights, although holders of Private
Preferred Stock have limited preemptive rights under the Stockholders Agreement.
PRIVATE PREFERRED STOCK
Dividends. The holders of the Private Preferred Stock are entitled under
the Company's certificate of incorporation to cumulative dividends on a basis
preferential to the holders of Common Stock and all other Preferred Stock. The
Company may not declare or pay any dividends, whether in cash, property or
otherwise or make any distributions in respect of any other Preferred Stock
until all accrued and unpaid dividends on the Private Preferred Stock have been
declared and paid and, in the event the Company is required to redeem the
Private Preferred Stock, monies sufficient for such purpose have been set aside.
Until December 22, 2001, the holders of Private Preferred Stock are entitled to
receive cumulative dividends from the Company on each share of Private Preferred
Stock at the per annum rate of 12% of the liquidation price of such share
($1,000) plus all accrued and unpaid dividends with respect to such share,
including any deferred dividends as described below and any dividends thereon.
For each year thereafter, the per annum rate shall increase by 1%. The dividend
rate on the Private Preferred Stock will increase to an annual rate of 30% (i)
upon the occurrence of certain bankruptcy events, (ii) upon a change of control
(as defined in the Stockholders Agreement) of the Company, (iii) upon the
failure to choose a successor to Mr. Paxson in the event of his death or
incapacity as provided in the Stockholders Agreement, (iv) if the Company incurs
indebtedness in excess of that permitted by certain financial leverage ratios,
(v) upon the failure to pay dividends on or after December 22, 2000 equal to the
amount of dividends payable in any twelve month period or (vi) if the Private
Preferred Stock remains outstanding after December 22, 2003. Such increased
dividend rate shall remain in effect for so long as any
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such event continues and will increase by 5% on each anniversary of such event
or, in the case of a bankruptcy event, upon the failure of the Company to redeem
the Private Preferred Stock at the request of the holders thereof.
Accrued dividends on the Private Preferred Stock are payable semi-annually
to the holders of record of the Private Preferred Stock as of the close of
business on the applicable record date. Until December 22, 1999, the Company may
at its option defer the payment of accrued dividends until the earlier of the
date the Private Preferred Stock is redeemed or the liquidation, dissolution or
winding up of the Company. On January 1 and July 1 of each year, all dividends
that have accrued on each share of Private Preferred Stock and that have not
theretofore been accumulated shall, to the extent not paid for any reason, be
accumulated, and dividends will accrue on such accumulation until such
accumulated dividends are paid. As of December 31, 1997, the Company has not
paid any cash dividends on the Private Preferred Stock, and there were
$13,949,641 in accrued and unpaid dividends on the Private Preferred Stock.
Voting Rights. The affirmative vote or written consent of the holders of a
majority of the outstanding shares of Private Preferred Stock is required in
order for the Company to take the following actions: amend, alter or repeal any
of the provisions of the certificate of incorporation or any resolution of the
Company's Board of Directors or any other instrument establishing and
designating the Private Preferred Stock or any other capital stock of the
Company so as to adversely affect the rights, privileges, preferences or powers
of the Private Preferred Stock; create or designate any stock on a parity with
or senior to the Private Preferred Stock; enter into an agreement that would
prevent the Company from performing its obligations with respect to the Private
Preferred Stock; or pay dividends to the holders of, or redeem, securities of
the Company or its subsidiaries junior to the Private Preferred Stock, except as
specifically provided therein.
Liquidation Rights. Upon liquidation, dissolution or winding-up of the
Company, the holders of Private Preferred Stock are entitled to a preference of
$1,000 per share, plus accrued and unpaid dividends, over all classes and series
of junior stock, including the Common Stock, with respect to the assets
available for distribution after payment in full of creditors.
Redemption Rights; Priorities. So long as any shares of Private Preferred
Stock remain outstanding, the Company may not directly or indirectly purchase,
redeem, exchange or otherwise acquire any other Preferred Stock or any Common
Stock. All the shares of Private Preferred Stock are redeemable, at the option
of the Company, in whole at any time, at a redemption price equal to the
liquidation price for such shares, plus the amount of all accrued and unpaid
dividends thereon, as of the redemption date, payable in cash. The Company is
obligated to redeem on December 22, 2003, out of unrestricted funds legally
available therefor, all the shares of the Private Preferred Stock then
outstanding, at a redemption price equal to the liquidation price for such
shares, as of the redemption date (plus a 2% premium if redeemed between
December 23, 1997, and December 22, 1998), plus the amount of all accrued and
unpaid dividends thereon, payable in cash. Holders of shares of the Private
Preferred Stock are entitled to require the Company to redeem their shares of
Private Preferred Stock upon the occurrence of a bankruptcy or similar event
relating to the Company or the default by the Company under the terms of the
Stockholders Agreement.
PUBLIC PREFERRED STOCK
Dividends. The holders of the Public Preferred Stock are entitled to
receive dividends at a rate equal to 12 1/2% per annum of the liquidation
preference per share, payable semi-annually beginning April 30, 1997 and
accumulating from the Issue Date. The Company, at its option, may pay dividends
on any dividend payment date occurring on or before October 31, 2002 either in
cash or by the issuance of additional shares of Public Preferred Stock having an
aggregate liquidation preference equal to the amount of such dividends. To date
the Company has paid no cash dividends on the Public Preferred Stock, but has
issued approximately additional shares of Public Preferred Stock in
lieu of cash dividends.
Voting Rights. The Public Preferred Stock is non-voting, except as
otherwise required by law and except in certain circumstances, including (i)
amending certain rights of the holders of the Public Preferred Stock and (ii)
the issuance of any class of equity securities that ranks on a parity with or
senior to the Public Preferred Stock, other than certain additional shares of
Public Preferred Stock or parity securities issued to
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finance the redemption by the Company of the Private Preferred Stock. In
addition, if the Company (i) after October 31, 2002, fails to pay cash dividends
in respect of three or more semi-annual dividend periods in the aggregate, (ii)
fails to make a mandatory redemption or a Change of Control Offer (as defined)
or (iii) fails to comply with certain covenants or make certain payments on its
indebtedness, holders of a majority of the outstanding shares of Public
Preferred Stock, voting as a class, will be entitled to elect the lesser of two
directors or that number of directors constituting at least 25% of the Board of
Directors.
Liquidation Rights. The Public Preferred Stock, with respect to dividend
rights and rights on liquidation, winding-up and dissolution of the Company,
ranks senior to all classes of common stock and junior to all other classes of
preferred stock of the Company outstanding on October 1, 1996.
Redemption; Priorities. The Public Preferred Stock is redeemable, at the
option of the Company, in whole or in part, at any time on or after October 31,
2001 at the redemption prices set forth herein, plus, without duplication,
accumulated and unpaid dividends to the date of redemption. In addition, prior
to October 31, 1999, the Company may, at its option, use the net proceeds of one
or more Public Equity Offerings or Major Asset Sales to redeem up to an
aggregate of 35% of the shares of Public Preferred Stock (whether initially
issued or issued in lieu of cash dividends) at the redemption prices set forth
herein, plus, without duplication, accumulated and unpaid dividends to the date
of redemption; provided, however, that after any such redemption, there is at
least $75.0 million aggregate liquidation preference of the Public Preferred
Stock outstanding and that such redemption occurs within 90 days following the
closing of such Public Equity Offering or Major Asset Sale. The Company is
required, subject to certain conditions, to redeem all of the Public Preferred
Stock outstanding on October 31, 2006 at a redemption price equal to 100% of the
liquidation preference thereof, plus, without duplication, accumulated and
unpaid dividends to the date of redemption.
Exchange Provisions. The Public Preferred Stock is exchangeable into the
Existing Exchange Debentures, at the Company's option, subject to certain
conditions in whole or in part, on a pro rata basis, on any scheduled dividend
payment date; provided that immediately after giving effect to any such partial
exchange, there shall be outstanding shares of Public Preferred Stock (whether
initially issued or issued in lieu of cash dividends) with an aggregate
liquidation preference of not less than $75.0 million and not less than $75.0
million of aggregate principal amount of Existing Exchange Debentures.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
Limitation of Liability and Indemnification. As permitted by the Delaware
General Corporation Law, the Company's Certificate of Incorporation provides
that directors of the Company shall not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which the director derives an improper personal benefit. In
addition, the Company's Bylaws provide that the Company shall, to the fullest
extent authorized by Section 145 of the Delaware General Corporation Law, as
amended from time to time, indemnify all directors and officers and all persons
serving at the request of the company as director, trustee, officer, employee or
agent of another corporation or of a partnership, trust or other enterprise.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that, in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Securities Act and, therefore, is unenforceable.
Delaware Business Combination Statute. Section 203 of the Delaware General
Corporation Law (Section 203) provides that, subject to certain exceptions
specified therein, an interested stockholder of a Delaware corporation shall not
engage in any business combination with the corporation for a three-year period
following the date that such stockholder becomes an interested stockholder
unless (i) prior to such date, the Board of Directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder, (ii) upon consummation of
the
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transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares) or (iii) on or subsequent to such date, the business combination
is approved by the Board of Directors of the corporation and authorized at an
annual or special meeting of stockholders by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Except as otherwise specified in Section 203, an interested
stockholder is defined to include (x) any person that is the owner of 15% or
more of the outstanding voting stock of the corporation, or is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within three years immediately prior
to the relevant date and (y) the affiliates and associates of any such person.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The certificate of incorporation does not exclude the Company from
the restrictions imposed under Section 203. The provisions of Section 203 may
encourage companies interested in acquiring the Company to negotiate in advance
with the Company's Board of Directors because the stockholder approval
requirement would be avoided if a majority of the directors then in office
approve either the business combination or the transaction which results in the
stockholder becoming an interested stockholder. Such provisions also may have
the effect of preventing changes in the management of the Company. It is
possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the Exchange Offer which may be applicable to holders
of shares of Original Junior Preferred Stock. This discussion is a summary for
general information only and does not consider all aspects of U.S. federal
income tax that may be relevant to a holder of shares of Original Junior
Preferred Stock. The discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations, IRS rulings and pronouncements
and judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action (possibly on a
retroactive basis). The Company has not sought and will not seek any rulings or
opinions from the IRS or counsel with respect to the matters discussed below.
There can be no assurance that the IRS will not take positions concerning the
tax consequences of the Exchange Offer which are different from those discussed
herein.
HOLDERS OF SHARES OF ORIGINAL JUNIOR PREFERRED STOCK SHOULD CONSULT THEIR
OWN ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL
AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THE EXCHANGE
OFFER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.
The exchange of shares of Original Junior Preferred Stock for shares of New
Junior Preferred Stock pursuant to the Exchange Offer should not constitute a
taxable exchange. As a result, (i) a holder should not recognize taxable gain or
loss as a result of exchanging shares of Original Junior Preferred Stock for
shares of New Junior Preferred Stock pursuant to the Exchange Offer; (ii) the
holding period of the shares of New Junior Preferred Stock should include the
holding period of the shares of Original Junior Preferred Stock exchanged
therefor; and (iii) the adjusted tax basis of the shares of New Junior Preferred
Stock should be the same as the adjusted tax basis of the shares of Original
Junior Preferred Stock exchanged therefor immediately before the exchange.
120
<PAGE> 131
PLAN OF DISTRIBUTION
Each broker-dealer that received shares of New Junior Preferred Stock for
its own account pursuant to the Exchange Offer ("Restricted Holder") must
acknowledge that it will deliver a prospectus in connection with any resale of
such shares of New Junior Preferred Stock. This Prospectus, as it may be amended
or supplemented from time to time may be used by a Restricted Holder in
connection with resales of shares of New Junior Preferred Stock received in
exchange for shares of Original Junior Preferred Stock where such shares of
Original Junior Preferred Stock were acquired as a result of market-making
activities or other trading activities. For a period of 180 days after the
Expiration Date, the Company will use reasonable efforts to make this Prospectus
available to any Restricted Holder for use in connection with any such resale,
provided that such Restricted Holder indicates in the Letter of Transmittal that
it is a broker-dealer. In addition, until , all Restricted Holders
effecting transactions in the New Junior Preferred Stock may be required to
deliver a Prospectus.
The Company will not receive any proceeds from any sale of shares of New
Junior Preferred Stock by Restricted Holders. Shares of New Junior Preferred
Stock received by Restricted Holders for their own account pursuant to the
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the New Junior Preferred Stock or a combination of such methods of
resale, at market prices prevailing at the time of resale, or at prices related
to such prevailing market prices on negotiated prices. Any such resale may be
made directly to purchasers or to or through Restricted Holders who may receive
compensation in the form of commissions or concessions from any such Restricted
Holder and/or the purchasers of any New Junior Preferred Stock. Any Restricted
Holder that resells shares of New Junior Preferred Stock that were received by
it for its own account pursuant to the Exchange Offer and any person that
participates in the distribution of such New Junior Preferred Stock may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of shares of New Junior Preferred Stock and any
commissions or concessions received by any such Restricted Holders may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a Restricted Holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment of
supplement to this Prospectus to any Restricted Holder that requires such
documents in the Letter of Transmittal.
By acceptance of the Exchange Offer, each Restricted Holder that receives
shares of New Junior Preferred Stock pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Company of the happening of any event which
makes any statement in the Prospectus untrue in any material respect or which
requires the making of any changes in the Prospectus in order to make the
statements therein not misleading (which notice the Company agrees to deliver
promptly to such Restricted Holder), such Restricted Holder will suspend use of
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Restricted Holder. If the Company gives any such
notice to suspend the use of the Prospectus, it shall extend the 180-day period
referred to above by the number of days during the period from and including the
date of the giving of such notice up to and including when Restricted Holders
shall have received copies of the supplemental or amended Prospectus necessary
to permit resales of shares of New Junior Preferred Stock.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the New Junior
Preferred Stock will be passed upon for the Company by Holland & Knight LLP (a
registered limited liability partnership).
121
<PAGE> 132
EXPERTS
The financial statements of Paxson Communications Corporation as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 included in this Prospectus have been so included in reliance
on the report of PricewaterhouseCoopers LLP, independent certified public
accountants, given on the authority of said firm as experts in auditing and
accounting.
122
<PAGE> 133
PAXSON COMMUNICATIONS CORPORATION
INDEX OF FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PAXSON COMMUNICATIONS CORPORATION
Consolidated Financial Statements -- December 31, 1997,
1996, and 1995
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statement of Changes in Common Stockholders'
Equity.................................................... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-8
PAXSON COMMUNICATIONS CORPORATION
Unaudited Interim Consolidated Financial Statements --
March 31, 1997 and 1998
Consolidated Balance Sheets March 31, 1998 and December 31,
1997...................................................... F-33
Consolidated Statements of Operations....................... F-34
Consolidated Statement of Changes in Common Stockholders'
Equity.................................................... F-35
Consolidated Statements of Cash Flows....................... F-36
Notes to Consolidated Financial Statements.................. F-37
</TABLE>
F-1
<PAGE> 134
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
of Paxson Communications Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in common
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Paxson Communications Corporation and its subsidiaries
at December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
March 13, 1998
F-2
<PAGE> 135
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1997 1996
-------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 82,641,444 $ 61,748,788
Restricted cash........................................... 17,000,000 --
Accounts receivable, less allowance for doubtful accounts
of $911,941 and $1,576,593, respectively................ 4,813,524 29,860,998
Prepaid expenses and other current assets................. 2,765,984 2,713,565
Current program rights.................................... -- 1,512,019
-------------- ------------
Total current assets............................... 107,220,952 95,835,370
Cash held by qualified intermediary......................... 418,949,550 --
Property and equipment, net................................. 105,896,873 144,415,412
Intangible assets, net...................................... 205,400,029 220,409,421
Investments in broadcast properties......................... 72,762,195 53,297,022
Investment in cable network................................. 58,974,491 --
Other assets, net........................................... 87,908,884 28,149,699
Program rights, net......................................... -- 1,075,536
-------------- ------------
Total assets....................................... $1,057,112,974 $543,182,460
============== ============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 11,305,782 $ 10,676,692
Accrued interest.......................................... 8,475,686 6,684,373
Current portion of program rights payable................. -- 1,628,959
Current portion of long-term debt......................... 496,378 644,509
-------------- ------------
Total current liabilities.......................... 20,277,846 19,634,533
Program rights payable...................................... -- 1,000,260
Deferred gain............................................... 12,100,000 --
Deferred income taxes....................................... 95,747,156 --
Long-term debt.............................................. 122,299,025 3,407,688
Senior subordinated notes, net.............................. 227,958,736 227,655,096
Redeemable Cumulative Compounding Junior preferred stock,
$0.001 par value; 12% dividend rate per annum, 33,000
shares authorized, issued and outstanding................. 42,610,662 36,780,496
Redeemable Exchangeable preferred stock, $0.001 par value;
12.5% dividend rate per annum, 440,000 shares authorized,
170,782 and 150,000 shares issued and outstanding......... 168,375,990 147,929,150
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 50,701,600 and 40,442,482
shares issued and outstanding............................. 50,702 40,442
Class B common stock, $0.001 par value; ten votes per share;
35,000,000 shares authorized and 8,311,639 shares issued
and outstanding........................................... 8,312 8,312
Class A and B common stock warrants......................... 2,316,225 6,862,647
Class C common stock warrants............................... -- 2,335,528
Stock subscription notes receivable......................... (2,813,250) (1,873,139)
Additional paid-in capital.................................. 285,795,787 209,621,241
Deferred option plan compensation........................... (2,205,240) (6,397,916)
Retained earnings (accumulated deficit)..................... 84,591,023 (103,821,878)
Commitments and contingencies (Note 18)..................... -- --
-------------- ------------
Total liabilities, redeemable securities and common
stockholders' equity............................. $1,057,112,974 $543,182,460
============== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-3
<PAGE> 136
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Local and national advertising..................... $ 87,654,004 $ 60,772,499 $ 29,464,515
Other.............................................. 545,344 1,400,169 2,131,037
Trade and barter................................... 222,105 159,950 188,763
------------ ------------ ------------
Total revenues....................................... 88,421,453 62,332,618 31,784,315
------------ ------------ ------------
Operating expenses:
Direct............................................. 14,648,173 10,609,812 6,771,051
Programming........................................ 5,010,635 2,607,796 1,349,787
Sales and promotion................................ 5,809,864 3,642,038 2,424,629
Technical.......................................... 8,982,149 5,011,353 2,259,341
General and administrative......................... 23,562,985 20,814,808 12,259,416
Trade and barter................................... 266,674 110,449 118,339
Time brokerage and affiliation agreement fees ..... 16,961,427 3,568,192 898,643
Option plan compensation........................... 3,369,812 6,975,830 9,052,003
Compensation associated with Paxson Radio asset
sales........................................... 9,700,000 -- --
Depreciation and amortization...................... 22,044,109 12,887,776 4,647,942
------------ ------------ ------------
Total operating expenses............................. 110,355,828 66,228,054 39,781,151
------------ ------------ ------------
Operating loss....................................... (21,934,375) (3,895,436) (7,996,836)
Other income (expense):
Interest expense................................... (37,728,307) (31,525,927) (17,151,099)
Interest income.................................... 9,494,894 6,741,552 1,651,193
Other expenses, net................................ (5,721,743) (1,755,660) (488,725)
Equity in loss of unconsolidated investment........ (2,492,691) -- --
------------ ------------ ------------
Loss from continuing operations before income tax
benefit and extraordinary item..................... (58,382,222) (30,435,471) (23,985,467)
Income tax benefit................................... 21,879,260 -- 1,280,000
------------ ------------ ------------
Loss from continuing operations before extraordinary
item............................................... (36,502,962) (30,435,471) (22,705,467)
------------ ------------ ------------
Discontinued operations:
Income (loss) from discontinued operations, net of
applicable income taxes......................... (3,555,186) 4,216,570 (142,096)
Gain on disposal of discontinued operations, net of
applicable income taxes......................... 254,748,055 -- --
------------ ------------ ------------
251,192,869 4,216,570 (142,096)
------------ ------------ ------------
Income (loss) before extraordinary item.............. 214,689,907 (26,218,901) (22,847,563)
Extraordinary item................................... -- -- (10,625,727)
------------ ------------ ------------
Net income (loss).................................... 214,689,907 (26,218,901) (33,473,290)
Dividends and accretion on redeemable preferred stock
and redeemable common stock warrants............... (26,277,006) (21,908,584) (13,297,206)
------------ ------------ ------------
Net income (loss) attributable to common stock....... $188,412,901 $(48,127,485) $(46,770,496)
============ ============ ============
Basic and diluted (loss) earnings per share:
Loss from continuing operations before extraordinary
item............................................... $ (1.17) $ (1.20) $ (1.05)
Discontinued operations.............................. 4.67 0.10 --
Extraordinary item................................... -- -- (0.31)
------------ ------------ ------------
Net income (loss).................................... $ 3.50 $ (1.10) $ (1.36)
============ ============ ============
Weighted average shares outstanding.................. 53,808,472 43,836,526 34,429,517
============ ============ ============
</TABLE>
The accompanying Notes to Consolidated Financial statements are an integral part
of the consolidated financial statements.
F-4
<PAGE> 137
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS CLASS C STOCK DEFERRED
COMMON STOCK A AND B COMMON SUBSCRIPTION ADDITIONAL OPTION
----------------- STOCK STOCK NOTES PAID-IN PLAN
CLASS A CLASS B WARRANTS WARRANTS RECEIVABLE CAPITAL COMPENSATION
------- ------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994........... $26,042 $8,312 $ 5,338,952 $ (77,666) $ 20,647,647
Stock issued for Cookeville
acquisition.......................... 95 1,199,905
Deferred option plan compensation...... 90 12,187,508 $(12,187,508)
Option plan compensation............... 10,803,241
Stock options exercised................ 307,026
Increase in stock subscription
receivable........................... (48,029)
Repayments of stock subscription notes
receivable........................... 9,981
Dividends on redeemable preferred
stock................................
Accretion on Senior redeemable
preferred stock......................
Accretion on Series B preferred
stock................................
Accretion on Junior preferred stock....
Accretion on Class A and B common stock
warrants.............................
Net loss...............................
------- ------ ----------- ----------- ----------- ------------ ------------
Balance at December 31, 1995........... 26,227 8,312 5,338,952 (115,714) 34,342,086 (1,384,267)
Release of put option on Class A and B
common stock warrants................ $ 9,116,399
Issuance of common stock, net of
issuance costs of $10,000,000........ 10,300 154,789,700
Exercise of Class A, B and C common
stock warrants....................... 3,623 (2,253,752) (3,003,424) 5,253,548
Stock issued for Todd Communications
acquisition.......................... 139 1,534,967
Deferred option plan compensation...... 12,932,506 (12,932,506)
Option plan compensation............... 7,918,857
Stock options exercised................ 153 768,434
Increase in stock subscription
receivable........................... (1,873,139)
Repayment of stock subscription notes
receivable........................... 115,714
Dividends on redeemable preferred
stock................................
Accretion on Senior redeemable
preferred stock......................
Accretion on Series B preferred
stock................................
Accretion on Junior preferred stock....
Accretion on Redeemable Exchangeable
preferred stock......................
Accretion on Class A and B common stock
warrants.............................
Net loss...............................
------- ------ ----------- ----------- ----------- ------------ ------------
Balance at December 31, 1996........... 40,442 8,312 6,862,647 2,335,528 (1,873,139) 209,621,241 (6,397,916)
Stock issued for acquisitions.......... 6,069 66,118,931
Exercise of Class A, B and C common
stock warrants....................... 3,923 (4,546,422) (2,335,528) 6,878,028
Deferred option plan compensation...... 2,263,167 (2,263,167)
Option plan compensation............... 6,455,843
Stock options exercised................ 268 914,420
Increase in stock subscription notes
receivable........................... (940,111)
Dividends on redeemable preferred
stock................................
Accretion on Junior preferred stock....
Accretion on Redeemable Exchangeable
preferred stock......................
Net income.............................
------- ------ ----------- ----------- ----------- ------------ ------------
Balance at December 31, 1997........... $50,702 $8,312 $ 2,316,225 $ -- $(2,813,250) $285,795,787 $ (2,205,240)
======= ====== =========== =========== =========== ============ ============
<CAPTION>
RETAINED
EARNINGS
(ACCUMULATED
DEFICIT)
-------------
<S> <C>
Balance at December 31, 1994........... $ (8,923,897)
Stock issued for Cookeville
acquisition..........................
Deferred option plan compensation......
Option plan compensation...............
Stock options exercised................
Increase in stock subscription
receivable...........................
Repayments of stock subscription notes
receivable...........................
Dividends on redeemable preferred
stock................................ (7,275,516)
Accretion on Senior redeemable
preferred stock...................... (332,156)
Accretion on Series B preferred
stock................................ (325,208)
Accretion on Junior preferred stock.... (634,988)
Accretion on Class A and B common stock
warrants............................. (4,729,338)
Net loss............................... (33,473,290)
-------------
Balance at December 31, 1995........... (55,694,393)
Release of put option on Class A and B
common stock warrants................
Issuance of common stock, net of
issuance costs of $10,000,000........
Exercise of Class A, B and C common
stock warrants.......................
Stock issued for Todd Communications
acquisition..........................
Deferred option plan compensation......
Option plan compensation...............
Stock options exercised................
Increase in stock subscription
receivable...........................
Repayment of stock subscription notes
receivable...........................
Dividends on redeemable preferred
stock................................ (13,223,227)
Accretion on Senior redeemable
preferred stock...................... (1,805,599)
Accretion on Series B preferred
stock................................ (3,418,615)
Accretion on Junior preferred stock.... (650,084)
Accretion on Redeemable Exchangeable
preferred stock...................... (159,977)
Accretion on Class A and B common stock
warrants............................. (2,651,082)
Net loss............................... (26,218,901)
-------------
Balance at December 31, 1996........... (103,821,878)
Stock issued for acquisitions..........
Exercise of Class A, B and C common
stock warrants.......................
Deferred option plan compensation......
Option plan compensation...............
Stock options exercised................
Increase in stock subscription notes
receivable...........................
Dividends on redeemable preferred
stock................................ (24,942,740)
Accretion on Junior preferred stock.... (665,540)
Accretion on Redeemable Exchangeable
preferred stock...................... (668,726)
Net income............................. 214,689,907
-------------
Balance at December 31, 1997........... $ 84,591,023
=============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-5
<PAGE> 138
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ 214,689,907 $ (26,218,901) $ (33,473,290)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization........................... 35,511,000 25,974,909 17,771,109
Option plan compensation................................ 6,455,843 7,918,857 10,803,241
Program rights amortization............................. 703,789 1,381,582 1,765,942
Provision for doubtful accounts......................... 2,011,337 1,287,819 1,098,181
Deferred income tax benefit............................. (21,879,260) -- (1,280,000)
Loss on sale or disposal of assets...................... 3,794,027 181,586 145,857
Loss on extinguishment of long-term debt................ -- -- 10,625,727
Equity in loss of unconsolidated investment............. 2,492,691 -- --
Gain on disposal of discontinued operations, net........ (254,748,055) -- --
Changes in assets and liabilities:
Increase in restricted cash........................... (17,000,000) -- --
Decrease (increase) in accounts receivable............ 5,172,545 (13,422,402) (5,255,398)
(Increase) decrease in prepaid expenses and other
current assets..................................... (1,631,864) (1,742,202) 608,591
Increase in intangible assets......................... -- -- (1,200,000)
(Increase) decrease in other assets................... (5,352,711) (1,886,853) 2,578,733
(Decrease) increase in accounts payable and accrued
liabilities........................................ (10,590,638) 5,646,000 131,529
Increase (decrease) in accrued interest............... 1,815,673 (247,969) 6,707,814
------------- ------------- -------------
Net cash (used in) provided by operating
activities....................................... (38,555,716) (1,127,574) 11,028,036
------------- ------------- -------------
Cash flows from investing activities:
Acquisitions of broadcasting and billboard properties..... (253,804,699) (186,662,299) (58,510,509)
Increase in investments in broadcast properties........... (8,026,173) (32,104,992) (19,442,030)
Deposits on broadcasting properties....................... (26,597,000) (3,837,000) (2,381,619)
Increase in programming deposits.......................... (36,682,500) -- --
Cash held by qualified intermediary....................... (418,949,550) -- --
Purchases of property and equipment....................... (44,473,918) (36,709,477) (25,016,816)
Investment in cable network............................... (5,342,182) -- --
Deposits (made) refunded on buildings and equipment....... (320,000) 555,341 (735,074)
Proceeds from sales of discontinued operations............ 721,978,459 -- --
Proceeds from sale of assets.............................. 13,764,020 228,279 466,820
------------- ------------- -------------
Net cash used in investing activities.............. (58,453,543) (258,530,148) (105,619,228)
------------- ------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net............... -- 154,800,000 --
Proceeds from issuance of long-term debt.................. 120,000,000 17,700,000 327,539,000
Repayments of long-term debt.............................. (1,269,978) (28,230,464) (169,722,340)
Payment of loan origination costs......................... -- (2,985,742) (15,896,473)
Payments for program rights............................... (802,684) (1,424,912) (1,098,731)
Proceeds from issuance of redeemable preferred stock,
net..................................................... -- 143,197,254 --
Redemption of Senior and Series B preferred stock......... -- (28,455,758) --
Proceeds from exercise of common stock options, net....... 914,688 492,567 307,116
Increase in stock subscription notes receivable........... (940,111) (1,873,139) (48,029)
Repayment of stock subscription notes receivable.......... -- 115,714 9,981
------------- ------------- -------------
Net cash provided by financing activities.......... 117,901,915 253,335,520 141,090,524
------------- ------------- -------------
Increase (decrease) in cash and cash equivalents............ 20,892,656 (6,322,202) 46,499,332
Cash and cash equivalents, beginning of year................ 61,748,788 68,070,990 21,571,658
------------- ------------- -------------
Cash and cash equivalents, end of year...................... $ 82,641,444 $ 61,748,788 $ 68,070,990
============= ============= =============
</TABLE>
F-6
<PAGE> 139
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest.................................... $ 33,895,837 $ 28,342,148 $ 8,292,274
============= ============= =============
Cash paid for income taxes................................ $ 975,000 $ -- $ --
============= ============= =============
Non-cash operating, investing and financing activities:
Accretion of discount on Senior Subordinated Notes........ $ 303,640 $ 280,185 $ 65,911
============= ============= =============
Issuance of common stock in connection with
acquisitions............................................ $ 66,125,000 $ 1,535,106 $ 1,200,000
============= ============= =============
Note payable incurred for WYPX-TV acquisition............. $ -- $ 1,650,000 $ --
============= ============= =============
Dividends accreted on redeemable preferred stock.......... $ 24,942,740 $ 12,273,227 $ 7,275,516
============= ============= =============
Discount accretion on redeemable securities............... $ 1,334,266 $ 9,635,357 $ 6,021,690
============= ============= =============
Trade and barter revenue.................................. $ 3,656,597 $ 4,154,986 $ 3,068,354
============= ============= =============
Trade and barter expense.................................. $ 3,732,765 $ 4,166,918 $ 2,604,950
============= ============= =============
Sale of broadcast property for note receivable............ $ 15,000,000 $ -- $ --
============= ============= =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-7
<PAGE> 140
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Paxson Communications Corporation (the "Company"), a Delaware corporation,
was organized in December 1993 for the purpose of owning and operating radio and
television broadcasting stations and networks.
OPERATIONS
The Company currently operates a nationwide network of owned, operated or
affiliated television stations carrying programming from its proprietary
network, which presently broadcasts long form paid programming consisting
primarily of infomercials. At December 31, 1997, the Company operates 33 owned,
11 time brokered and 7 affiliated television stations. The Company announced in
November 1997 its intention to launch a new broadcast television network of
family values oriented programming ("PAX NET") effective August 31, 1998. The
Company also owns a 30% interest in The Travel Channel, L.L.C., a cable
television network joint venture with Discovery Communications, Inc. ("DCI").
(See Note 3.)
During January 1998, the Company adopted new call letters for 39 of its
television stations in an effort to more closely align the station call letters
with PAX NET. These new call letters have been utilized in the notes to the
financial statements.
Two other business segments, Paxson Radio and Paxson Network-Affiliated
Television, have been classified as discontinued operations in the accompanying
consolidated statements of operations for all periods presented as a result of
the Company's sale of these operations during 1997 (see Note 2).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. The Company accounts for its investment in
The Travel Channel L.L.C. under the equity method of accounting. All
intercompany balances and transactions have been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less. At December 31, 1997 and 1996, approximately
$96 million and $45 million, respectively, of debt securities, all classified as
available for sale and consisting of money market accounts, commercial paper and
overnight repurchase agreements, were included in cash and cash equivalents.
RESTRICTED CASH
Restricted cash consists of cash held in an escrow account to be applied to
the payment of interest due pursuant to an amendment to the Company's revolving
credit facility executed in March 1998 (see Note 10).
CASH HELD BY QUALIFIED INTERMEDIARY
The Company placed a portion of the proceeds received from the Paxson Radio
segment sale with a qualified intermediary in order to reinvest such proceeds
and, to the extent reinvested, qualify for tax deferred exchange treatment in
connection with such sale. In order to qualify for deferral, these funds must be
used to fund broadcast properties acquisitions prior to March 27, 1998.
Accordingly, they have been classified as long term in the accompanying
Consolidated Balance Sheet at December 31, 1997.
F-8
<PAGE> 141
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated using the straight line method over their estimated useful lives
as follows (see Note 6):
<TABLE>
<S> <C>
Broadcasting towers and equipment........................... 6-13 years
Office furniture and equipment.............................. 5-10 years
Buildings and building improvements......................... 15-40 years
Leasehold improvements...................................... Term of lease
Aircraft, vehicles and other................................ 5 years
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
INTANGIBLE ASSETS
The excess of cost over the fair value of acquired net assets has been
recorded as goodwill. Intangible assets are being amortized using the straight
line method over their estimated useful lives as follows (see Note 7):
<TABLE>
<S> <C>
FCC licenses................................................ 25 years
Goodwill.................................................... 25 years
Covenants not to compete.................................... Generally 3 years
Favorable lease and other contracts......................... Contract term
</TABLE>
INVESTMENTS IN BROADCAST PROPERTIES
Investments in broadcast properties primarily represent the Company's
financing of television and radio station acquisitions by third parties, and
purchase options or equity investments in entities owning broadcasting stations
or television construction permits. In connection with the financing of
acquisitions by third parties, the Company has entered into time brokerage
agreements ("TBAs") with such parties for the broadcast operations and has
written options to purchase certain of the related station assets and Federal
Communications Commission ("FCC") licenses at various amounts and terms (see
Notes 9 and 18).
PROGRAM RIGHTS
The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements. Pursuant
to a licensing agreement, an asset is recorded for the program rights acquired
and a liability is recorded for the obligation incurred, at the gross amount of
the liability when programming is available to air. Program rights are amortized
on a method that approximates the straight line method per the number of
available runs. Program rights which will not be aired are charged to expense.
Current program rights represent programs which will be amortized during the
next year; current liabilities represent program rights which will be paid
within the next year under contractual arrangements (see Note 18).
OTHER ASSETS
Other assets consist primarily of escrow funds, programming deposits and
loan origination costs. Escrow funds represent funds held in escrow on
acquisitions pending FCC approval. Programming deposits represent deposits for
broadcast rights contracts available for airing beginning in August 1998. Loan
origination costs are stated at cost and are amortized to interest expense over
the life of the loan or agreement using the effective interest method. Other
assets are stated at cost (see Note 8).
F-9
<PAGE> 142
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-LIVED ASSETS
The Company reviews long-lived assets, identifiable intangibles and
goodwill and reserves for impairment whenever events or changes in circumstances
indicate, based on estimated undiscounted future cash flows, the carrying amount
of the assets may not be fully recoverable.
REVENUE RECOGNITION
Revenue is recognized as advertising air time is broadcast.
TRADE AND BARTER AGREEMENTS
The Company enters into trade and barter agreements which give rise to
sales of advertising air time in exchange for products, services and
programming. Sales from trade and barter agreements are recognized at the fair
market value of products, services or programs received as the related
advertising air time is broadcast. Products, services and programs received are
expensed when used or when programs are broadcast. If the Company uses trade
products or services before advertising air time is provided, a trade liability
is recognized. At times, the Company trades air time for property and equipment.
TIME BROKERAGE AGREEMENTS
The Company operates certain stations under TBAs whereby the Company has
agreed to purchase from the broadcast station licensee certain broadcast time on
the station and to provide programming to and sell advertising on the station
during the purchased time.
Accordingly, the Company receives all the revenue derived from the
advertising sold during the purchased time, pays certain expenses of the station
and performs other functions. The broadcast station licensee retains
responsibility for ultimate control of the station in accordance with FCC
policies. The Company currently operates 11 stations under TBAs which expire
from May 1998 through October 2005. The financial results of TBA operated
stations have been included in the Company's statements of operations since the
respective date of commencement of the TBA.
STOCK-BASED COMPENSATION
The Company's employee stock option plans are accounted for using the
intrinsic value method. The Company also provides disclosure of certain pro
forma information as if the Company's employee stock option plans were accounted
for using the fair value method (see Note 13).
INCOME TAXES
The Company records deferred income taxes using the liability method. Under
the liability method, deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between the financial
statement and income tax bases of the Company's assets and liabilities. An
allowance is recorded, based upon currently available information, when it is
more likely than not that any or all of a deferred tax asset will not be
realized. The provision for income taxes includes taxes currently payable, if
any, plus the net change during the year in deferred tax assets and liabilities
recorded by the Company.
PER SHARE DATA
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128"), which require the
retroactive restatement of previously reported earnings per share data. SFAS 128
requires the presentation of basic and diluted earnings per share. Because
F-10
<PAGE> 143
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of losses from continuing operations, the effect of stock options and warrants
is antidilutive. Accordingly, the Company's presentation of diluted earnings per
share is the same as that of basic earnings per share.
Basic and diluted loss per share from continuing operations was computed by
dividing the loss from continuing operations before extraordinary item less
dividends and accretion on redeemable preferred stock and redeemable common
stock warrants by the weighted average number of common shares outstanding
during the period.
Potentially dilutive common shares in the amount of 4,523,210, 8,433,108,
and 10,218,205 for the years ended December 31, 1997, 1996 and 1995,
respectively, have been excluded from the computation of diluted earnings per
share as the effect of their inclusion is antidilutive.
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform with the 1997 presentation.
2. DISCONTINUED OPERATIONS
During 1997, the Company sold its interests in WTVX-TV and WPBF-TV and thus
discontinued the operations of the Paxson Network-Affiliated Television segment.
The results of operations for the Paxson Network-Affiliated Television segment
through the date of disposition, net of applicable income taxes, have been
reclassified and presented as discontinued operations in the accompanying
Consolidated Statements of Operations for all periods presented. Aggregate
consideration of approximately $119 million was received in conjunction with the
disposition of these operations during the second and third quarters of 1997. Of
the consideration received, approximately $19 million was used to exercise the
Company's option to acquire WTVX-TV from Whitehead Media, Inc. The Company
realized a gain of approximately $69 million from these sales which is net of
brokerage fees and other estimated costs in connection with such sale.
The Paxson Network Affiliated Television operations generated revenues of
approximately $12,319,000, $20,517,000 and $16,537,000 for the years ended
December 31, 1997, 1996 and 1995, respectively.
During 1997, the Company also sold substantially all of its Paxson Radio
segment assets for approximately $602 million. The results of operations for
Paxson Radio, net of applicable income taxes, have been presented as
discontinued operations in the accompanying Consolidated Statements of
Operations for all periods presented. The Company realized a gain of
approximately $186 million from the sale of these assets which is net of
applicable income taxes, closing costs and other estimated costs attributable to
the segment disposal. The sale of certain assets was structured as a tax
deferred exchange, permitting the Company to defer a substantial portion of the
gain for tax purposes to the extent the sales proceeds are reinvested in like
kind broadcasting properties during the first quarter of 1998. It is anticipated
that the Company will not pay current taxes on the remaining non-deferred gain
as it has sufficient net operating losses to offset such gain.
Included in operating expenses are approximately $9.7 million of cash
bonuses paid to certain members of the Company's management in connection with
their efforts in assimilating, operating and arranging for the sale of the radio
stations and related properties. Although the payment of such bonuses was
contingent upon the
F-11
<PAGE> 144
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
successful disposition of the segment and directly associated with such
disposition, the Company has recorded these amounts as operating expenses
because the actual amount of such payments was discretionary in nature.
In order to accelerate the payment of the proceeds from the sales of the
Paxson Network-Affiliated Television segment and the Paxson Radio segment, the
Company entered into certain bridge agreements with its principal shareholder
under similar terms and conditions to those with the ultimate buyers. As of
December 31, 1997, all Network-Affiliated Television and Radio properties under
these bridge agreements had been sold to the ultimate third party. The principal
shareholder did not realize any direct financial benefit from the transactions
with the Company and, in accordance with the terms of the Company's senior
subordinated notes and preferred stock, the Company obtained a written opinion
as to the fairness of such transactions from an independent investment banking
firm.
The Paxson Radio operations generated revenues of approximately
$78,190,000, $82,165,000 and $54,752,000 for the years ended December 31, 1997,
1996 and 1995, respectively.
The net assets of discontinued operations at December 31, 1997 consist of
the assets of two remaining radio stations which are under contract to be sold
for $3,000,000. The components of net assets of discontinued operations included
in the consolidated balance sheets at December 31, 1997 and December 31, 1996,
are as follows:
<TABLE>
<CAPTION>
1997 1996
---------- ------------
<S> <C> <C>
Current assets.............................................. $ 23,017,001
Noncurrent assets........................................... $2,956,042 180,194,830
---------- ------------
Total assets...................................... 2,956,042 203,211,831
---------- ------------
Current liabilities......................................... -- 8,344,163
Noncurrent liabilities...................................... -- 1,576,467
---------- ------------
Total liabilities................................. -- 9,920,630
---------- ------------
Total net assets............................................ $2,956,042 $193,291,201
========== ============
</TABLE>
3. INVESTMENT IN CABLE NETWORK
On July 11, 1997, the Company, through a wholly-owned unconsolidated
subsidiary, acquired the assets of The Travel Channel ("Travel") from Landmark
Communications, Inc. for aggregate consideration of $75,000,000, including
$55,000,000 of the Company's Class A common stock (4,773,097 shares issued at
closing) and $20,000,000 in cash. The Company also issued 97,632 shares
($1,125,000) of its Class A common stock to Communications Equity Associates,
Inc. in connection with their role as financial advisor in the Travel Channel
transaction (see Note 5).
In November 1997, the Company completed transactions with Discovery
Communications, Inc. ("DCI") whereby the Company received a 30% ownership
interest in a newly formed entity, The Travel Channel, L.L.C. ("Travel L.L.C.")
in exchange for the assets of Travel. DCI effectively contributed $20,000,000
along with certain programming and intangible assets, including operating
services such as sales, affiliations, marketing, promotion and accounting, for a
70% ownership interest in Travel L.L.C. DCI will serve as the managing partner
of Travel L.L.C., overseeing all operations. The Company will receive an annual
consulting fee of $300,000.
The results of operations of Travel and Travel L.L.C. have been included in
the Company's December 31, 1997 consolidated statement of operations using the
equity method of accounting. The investment in cable network balance on the
Company's December 31, 1997 consolidated balance sheet reflects the Company's
issuance of common stock in connection with the Travel acquisition from Landmark
Communications, Inc. discussed above along with closing costs and advances to
Travel prior to the formation of Travel
F-12
<PAGE> 145
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
L.L.C. Goodwill of approximately $32.5 million included in the investment in
cable network amount is being amortized over 25 years. For the year ended
December 31, 1997 approximately $130,000 was amortized related to this goodwill.
4. ACQUISITIONS
Acquisitions
During 1997, the Company acquired the assets of seventeen television
stations, for total consideration of approximately $120,290,000, one
network-affiliated television station for total consideration of approximately
$19,001,000 (see Note 2), seven radio stations for total consideration of
approximately $123,014,000 and easements for three billboard locations for total
consideration of approximately $1,500,000.
During 1996, the Company acquired the assets of ten television stations and
eighteen radio stations for total consideration of approximately $165,700,000
and three billboard companies for total consideration of approximately
$21,000,000.
All of the previously described acquisitions have been accounted for using
the purchase method of accounting. Goodwill recorded in connection with the
television acquisitions (approximately $11,388,000 and $2,567,000 in 1997 and
1996, respectively) will be amortized over a period of 25 years.
Pro Forma (unaudited)
The Company's results of operations for the years ended December 31, 1997
and 1996 include the results of operations for acquisitions and investments in
television stations from their respective dates of commencement. The following
unaudited pro forma statement of operations data gives effect to the 1997 and
1996 television acquisitions as if they had occurred on January 1, 1996.
Depreciation and amortization has been increased each period to reflect the
initial purchase price allocation on all acquisitions and investments (whether
businesses or assets), and interest expense on associated debt financing as if
such transactions and debt issuance had occurred on January 1, 1996. Pro forma
results of operations for the years ended December 31, 1997 and 1996 exclude the
results of operations of the Company's Network-Affiliated Television and Radio
segment operations sold in 1997 (see Note 2).
<TABLE>
<CAPTION>
PRO FORMA
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1997 1996
---------- ----------
(IN THOUSANDS, EXCEPT
FOR SHARE AMOUNTS)
<S> <C> <C>
Revenues.................................................... $ 88,421 $ 63,738
---------- ----------
Operating loss.............................................. $ (26,602) $ (13,928)
---------- ----------
Loss from continuing operations............................. $ (43,339) $ (51,357)
---------- ----------
Basic and diluted loss per share from continuing operations,
before extraordinary item................................. $ (1.18) $ (1.36)
---------- ----------
Pro forma weighted average shares outstanding............... 58,850,806 58,710,426
---------- ----------
</TABLE>
5. CERTAIN TRANSACTIONS
The Company has entered into certain operating and financing transactions
with related parties as described below.
THE CHRISTIAN NETWORK, INC.
The Company has entered into several agreements with The Christian Network,
Inc. and certain of its for profit subsidiaries (individually and collectively
referred to herein as "CNI"). The Christian Network, Inc. is
F-13
<PAGE> 146
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
a section 501(c)(3) not-for-profit corporation to which Mr. Lowell W. Paxson,
the majority stockholder of the Company, has been a substantial contributor and
of which he was a member of the Board of Stewards through 1993.
Investment in Broadcast Properties. At December 31, 1997 and 1996 the
Company had approximately $15.4 million and $12.8 million of advances to CNI
relating to television stations recorded as investments in broadcast properties.
(See Note 9.)
During 1997 and 1996, the Company acquired television stations from CNI in
Miami, Orlando, Tampa, Denver, Milwaukee and Dayton, for total consideration of
approximately $14,000,000 and $17,200,000, respectively.
CNI Agreement. The Company and CNI entered into an agreement in May 1994
(the "CNI Agreement") under which the Company agreed that, if the tax exempt
status of CNI were jeopardized by virtue of its relationships with the Company
and its subsidiaries, the Company would take certain actions to ensure that
CNI's tax exempt status would no longer be so jeopardized. Such steps could
include, but not be limited to, rescission of one or more transactions or
payment of additional funds by the Company. The Company believes that all of its
agreements with CNI have been on terms as favorable to CNI as it would obtain in
arm's length transactions. The Company intends any future agreements with CNI to
be as favorable to CNI as CNI would obtain in arm's length transactions.
Accordingly, if the Company's activities with CNI are consistent with the terms
governing their relationship, the Company believes that it will not be required
to take any actions under the CNI Agreement. However, there can be no assurance
that the Company will not be required to take any actions under the CNI
Agreement at a material cost to the Company.
Demand Note. On December 30, 1997, the Company's advances to CNI totaling
$5,485,000 under a demand note bearing interest at the prime rate were repaid
out of the proceeds of television stations sold by CNI to the Company. At
December 31, 1996, amounts outstanding under the demand note to CNI totaled
approximately $2,993,000 and were included in investment in broadcast
properties.
Worship Channel Studio. CNI and the Company have contracted for the
Company to lease CNI's television production and distribution facility for the
purpose of producing television programming for the Company's television
network. During the years ended December 31, 1997, 1996 and 1995, the Company
incurred rental charges in connection with this agreement of $231,000, $193,000
and $174,000, respectively.
AIRCRAFT LEASE
During 1997, the Company entered into a three year aircraft lease with a
company which is owned by Mr. Paxson. The lease is for a Boeing 727 aircraft and
calls for monthly payments of $63,600. In connection with such lease, the
Company incurred rental costs of approximately $382,000 during 1997.
Additionally, the Company has recorded at December 31, 1997 leasehold
improvements of approximately $107,000 in connection with the lease.
SPORTS VENTURES
During 1996, the Company invested in various ventures which would own and
operate interests in two Arena Football League teams located in West Palm Beach
and Miami, Florida, an inactive American Hockey League franchise for Palm Beach
County, Florida and a proposed sports arena in West Palm Beach, Florida. During
1996, the Company included in other expenses, net the write-off of approximately
$1,200,000 relating to its investments in the West Palm Beach Arena Football
League team and the proposed sports arena and in connection with its acquisition
of the Arena Football League team in Miami, Florida. During 1997, in conjunction
with the decision to dispose of the Paxson Radio segment, the Company wrote-off
its investments in the remaining sports ventures, resulting in a 1997 charge to
other expenses, net of approximately $2,900,000, which is net of anticipated
proceeds on the sale of the hockey franchise which the Company has contracted to
sell for $2,000,000.
F-14
<PAGE> 147
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
HOME SHOPPING NETWORK, INC.
On August 25, 1995, the Company and Mr. Paxson agreed with Home Shopping
Network, Inc. ("HSN") to, among other things, terminate HSN's rights under a
consulting agreement between Mr. Paxson and HSN in consideration of a payment to
HSN by the Company of $1,200,000. Mr. Paxson has agreed with the Company that he
will not compete with the Company for a period ending on December 31, 1999 (the
date that the HSN consulting agreement would have otherwise terminated) or the
date of a change in control (as defined with respect thereto) of the Company. In
connection with its payment to HSN, the Company recorded an intangible asset of
$1,200,000 which is being amortized through December 1999.
TODD COMMUNICATIONS, INC.
During June 1996, the Company acquired Todd Communications, Inc. ("Todd
Communications"), a company which owned WFSJ-FM (St. Augustine, Florida) and was
beneficially owned by members of Mr. Paxson's family. The Company gave aggregate
consideration of $5,000,000, consisting of the cancellation of a note receivable
held by the Company from Todd Communications in the principal amount of
$1,822,000, the assumption and immediate repayment by the Company of a note
payable to Mr. Paxson by Todd Communications in the amount of $1,643,000 and the
issuance of shares of Class A Common Stock valued at approximately $1,535,000 to
the shareholders of Todd Communications. During 1996, the Company recognized
approximately $71,000 of interest income on its note receivable from Todd
Communications. The Todd Communications assets were sold as part of the disposal
of the Paxson Radio segment.
DP MEDIA, INC.
In connection with the acquisition by DP Media, Inc. (DP Media) of WEBZ-FM,
during September 1996, the Company agreed to loan up to $750,000 to DP Media, a
company beneficially owned by members of Mr. Paxson's family. The loan bore
interest at the rate of 10% and required monthly principal and interest
payments.
During May 1997, the Company sold WWPX-TV to DP Media in exchange for a
$2,470,000 promissory note. Upon its sale to DP Media the station became a
Company network affiliate.
During June 1997, the Company financed DP Media's purchase of WRPX-TV from
Roberts Broadcasting through a loan of approximately $10,000,000 (of which
approximately $7,500,000, which was assumed by DP Media, had been advanced to
Roberts Broadcasting through the date of closing). Upon its sale to DP Media the
station became a Company network affiliate.
During July 1997, the Company entered into contracts to sell its interest
in television stations WPXS-TV and WZPX-TV, serving the St. Louis, Missouri and
Grand Rapids, Michigan markets for $4,800,000 and $7,000,000, respectively, to
DP Media. The sale of WPXS-TV to DP Media was consummated in December 1997. The
sale of the tangible assets of WZPX-TV was transacted separately from the sale
of the FCC license. As of December 31, 1997, the Company had received
approximately $5,250,000 for the sale of the tangible assets, and received
$1,750,000 in January 1998 for the sale of the station license upon receipt of
regulatory approval to transfer the station license.
The DP Media loans for WEBZ-FM, WWPX-TV, and WRPX-TV were repaid to the
Company on July 30, 1997, using proceeds of third party financing obtained by DP
Media from Banque Paribas, an affiliate of a holder of the Company's Junior
preferred stock.
During February 1998, the Company contracted to sell WPXE-TV to DP Media
for $6,000,000. Upon its sale to DP Media the station will become a Company
network affiliate.
F-15
<PAGE> 148
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1997, the Company granted 33,000 fully vested non-qualified stock
options with a fair value of approximately $299,000 to the President and Vice
President of DP Media, members of Mr. Paxson's family, as consideration for past
services as former employees of the Company.
CONSULTING AGREEMENT
During 1996, the Company entered into a one year consulting arrangement
with the former Chairman of American Network Group to provide review,
implementation and development consulting services to the Company with respect
to its general and medical insurance programs and policies and executive
insurance, deferred compensation and benefit planning as well as general
financial consulting services. Consulting expense in 1997 and 1996 related to
this agreement totaled $600,000 for each year. This agreement expired in June
1997. The consultant was also granted 75,000 nonqualified stock options with a
fair value of $930,000 during February 1996.
BOARD OF DIRECTORS
The Company has entered into transactions with certain members of its Board
of Directors.
Communications Equity Associates, Inc. ("CEA"). The Chairman of the Board
and Chief Executive Officer of CEA had been a director of the Company since
February 1995, resigning in August 1997. The Company engaged CEA as a financial
advisor in connection with private debt and equity placements and various other
lending, acquisition and divestiture services. Fees paid to CEA for these
services totaled approximately $2,365,000, $250,000 and $1,300,000 for the years
ended December 31, 1997, 1996 and 1995, respectively, including $1,125,000 of
the Company's Class A common stock during 1997 in conjunction with The Travel
Channel acquisition.
Stockholders Agreement. Certain entities controlled by Mr. Paxson and
entities which are affiliates of a former director of the Company are parties to
a stockholders agreement whereby the parties to such agreement were granted
registration rights with respect to certain shares of common stock held by such
parties and the right of first refusal to acquire a pro rata share of any new
securities the Company may issue. Additionally, the stockholders agreement
grants certain cosale rights in the event that Mr. Paxson should sell more than
a predetermined percentage of his ownership interest in the Company.
S. William Scott. S. William Scott, a director of the Company since
February 1995, had an arrangement with the Company to provide consulting
services to the Company with respect to the development of its news programming
for its radio and television broadcast business and its radio network business.
Mr. Scott was paid approximately $10,000, $81,000 and $80,000 for such services
during the years ended December 31, 1997, 1996 and 1995, respectively.
Additionally, Mr. Scott received benefits under the Company's health and
benefits plan and was granted options to purchase 20,000 shares of stock under
the Company's stock incentive plan. During 1997 the Company hired Mr. Scott and
subsequently named him President of Network Programming, on January 1, 1998. Mr.
Scott resigned as a director of the Company on February 23, 1998.
F-16
<PAGE> 149
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Broadcasting towers and equipment......................... $105,585,397 $122,771,345
Office furniture and equipment............................ 6,619,896 12,833,246
Buildings, billboards and leasehold improvements.......... 7,594,594 21,354,005
Land and land improvements................................ 5,840,840 13,830,692
Aircraft, vehicles and other.............................. 6,910,458 9,422,324
------------ ------------
132,551,185 180,211,612
Accumulated depreciation.................................. (26,654,312) (35,796,200)
------------ ------------
Property and equipment, net............................... $105,896,873 $144,415,412
============ ============
</TABLE>
Depreciation expense aggregated $19,148,793, $15,197,945 and $10,083,135
for the years ended December 31, 1997, 1996 and 1995, respectively.
7. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
FCC licenses.............................................. $196,268,719 $191,624,748
Goodwill.................................................. 18,359,013 36,467,957
Covenants not to compete.................................. 3,777,770 17,425,145
Favorable lease and other contracts....................... 437,407 8,598,155
------------ ------------
218,842,909 254,116,005
Accumulated amortization.................................. (13,442,880) (33,706,584)
------------ ------------
Intangible assets, net.................................... $205,400,029 $220,409,421
============ ============
</TABLE>
Amortization expense related to intangible assets aggregated $15,208,244,
$10,669,065 and $7,621,848 for the years ended December 31, 1997, 1996 and 1995,
respectively.
8. OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Escrow funds for station acquisitions..................... $ 37,107,000 $ 10,510,000
Programming deposits...................................... 36,682,500 --
Loan origination costs.................................... 12,333,649 11,958,684
Other..................................................... 5,303,271 7,630,717
------------ ------------
91,426,420 30,099,401
Accumulated amortization.................................. (3,517,536) (1,949,702)
------------ ------------
$ 87,908,884 $ 28,149,699
============ ============
</TABLE>
Amortization expense related to organization costs and other assets
aggregated $1,153,963, $107,899 and $66,126 for the years ended December 31,
1997, 1996 and 1995, respectively. Additionally, during the years ended December
31, 1997, 1996 and 1995, the Company recorded amortization of loan origination
costs of $1,782,000, $1,643,000 and $948,000, respectively, and classified such
amortization as interest expense.
F-17
<PAGE> 150
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loan origination costs of $10,625,727 associated with debt extinguished
through proceeds from the senior subordinated notes are reflected in the 1995
statement of operations as an extraordinary item.
9. INVESTMENTS IN BROADCAST PROPERTIES
Investments in broadcast properties represent primarily the Company's
financing of broadcasting asset acquisitions by third party licensees, purchase
options and equity investments in entities owning broadcasting stations or
television construction permits. Interest rates on financing arrangements range
from 7% to 11.875% with loans maturing in five to seven years. In connection
with the financing of acquisitions by third parties, the Company has obtained
the right to provide programming for the related stations pursuant to TBAs and
has obtained options to purchase certain stations. Unpaid principal balances
will be applied toward the acquisition cost upon exercise of purchase options.
The Company records interest on certain investments as received. Investments in
broadcast properties consist of:
<TABLE>
<CAPTION>
ENTITY 1997 1996
- ------ ----------- -----------
<S> <C> <C>
Roberts Broadcasting........................................ $17,260,394 $ 6,459,163
CNI......................................................... 15,483,364 12,810,087
Cocola Broadcasting......................................... 12,240,934 3,213,122
Ponce-Nicasio Broadcasting.................................. 8,630,655 8,549,583
America 51, L.P............................................. 5,480,713 --
Flinn Investments........................................... 4,025,000 --
Kaleidoscope Investments.................................... 3,081,000 --
United Broadcast Group...................................... -- 3,771,672
Southern Land Investors..................................... -- 4,460,000
Fant Broadcasting........................................... -- 8,068,500
Others...................................................... 6,560,135 5,964,895
----------- -----------
$72,762,195 $53,297,022
=========== ===========
</TABLE>
During February 1997, the Company sold WHPX-TV to Roberts Broadcasting in
exchange for a $15,000,000 note receivable and entered into a five year time
brokerage agreement to operate the station. The note bears interest at LIBOR
plus 3.5% and has been included by the Company in investments in broadcast
properties. Interest is payable monthly with principal payments commencing
February 1998 and payable monthly in 84 equal installments. The Company
recognized a deferred gain on the sale of approximately $12,100,000 which will
be accreted to income using the installment method.
10. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1997 1996
------------ ----------
<S> <C> <C>
Revolving credit facility, interest at LIBOR plus 3.00%
(8.75% to 8.91% at December 31, 1997), maturing June 30,
2002...................................................... $120,000,000
Mortgage note payable, interest at 10%, repaid in September
1997...................................................... -- $ 167,778
Mortgage note payable, interest at 8.83%, principal and
interest payment of $8,284 due monthly from June 1995 to
May 2010.................................................. 754,071 784,463
Notes payable, interest at 8.25% to 9.325%, aggregate
principal and interest payments of $53,129 due monthly,
maturing at varying dates through June 2003, secured by
purchased assets.......................................... 2,041,332 3,099,956
------------ ----------
122,795,403 4,052,197
Less current portion........................................ (496,378) (644,509)
------------ ----------
$122,299,025 $3,407,688
============ ==========
</TABLE>
F-18
<PAGE> 151
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Under the terms of its revolving credit facility (the "Credit Facility"),
the Company was required to obtain approval from the lenders under such facility
for the sale of the Paxson Radio segment. Approval of the sale was obtained
under an amendment to the revolving Credit Facility in September 1997. As a
result of the sale of the Paxson Radio assets and the related loss of cash flows
from such assets, borrowings under the revolving Credit Facility were
effectively frozen due to noncompliance with certain leverage ratio covenants.
Under the amended terms of the revolving Credit Facility, amounts
outstanding under the facility at December 31, 1997 bear interest at LIBOR or a
base rate (as defined) plus a margin of 3.5% and 2.25%, respectively. Until the
revised business plan required under the revolving Credit Facility is ratified
by the lenders, the interest rate margins will increase by .5% per quarter
through December 31, 1998. The Company is also required to pay quarterly a
commitment fee of .5% per year on the unborrowed commitment ($75,000,000 at
December 31, 1997). The revolving Credit Facility is secured by substantially
all of the Company's assets.
At December 31, 1997, the Company was not in compliance with certain of the
financial covenants under the amended terms of the revolving Credit Facility. In
March 1998, the Company obtained a waiver of such noncompliance from its lenders
and executed an amendment to the terms of the revolving Credit Facility. The
amended terms adjust the covenants of the revolving Credit Facility for the sale
of the Company's Network-Affiliated Television and Paxson Radio segments in 1997
and address the Company's business plan related to the PAX NET launch. In
addition, certain financial covenants were temporarily modified to allow for
anticipated compliance by the Company throughout the remainder of 1998. The
waiver and amendment agreement also requires the Company to use its best efforts
to raise an additional $150 million of equity prior to May 31, 1998 and apply
the net proceeds therefrom to repay the revolving credit facility and requires
the Company to fund $17 million of interest into a cash collateral account for
the benefit of the lenders.
On March 11, 1998, the Company obtained a fully underwritten commitment
(the "Commitment Letter") for a $122 million senior term credit facility
maturing June 2002 (the "Senior Credit Facility") to be used to refinance the
amounts outstanding under its revolving credit facility. Under the terms of the
Commitment Letter, the outstanding debt will be secured by substantially all of
the Company's assets and bear interest at a base rate plus 1.75% or LIBOR plus
2.75%, at the Company's option. The Senior Credit Facility will require the
Company to maintain compliance with certain financial ratios subsequent to March
2000 and will contain other restrictions. Management expects to execute a Senior
Credit Facility pursuant to the terms of the Commitment Letter before May 31,
1998.
The revolving Credit Facility contains a number of covenants that restrict,
among other things, the Company's ability to incur additional indebtedness,
incur liens, make investments, pay dividends or make other restricted payments,
consummate certain asset sales, consolidate with any other person or sell,
assign, transfer, lease, convey or otherwise dispose of substantially all of the
assets of the Company.
Aggregate maturities of long-term debt at December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998....................................................... $ 496,378
1999....................................................... 578,748
2000....................................................... 35,396,461
2001....................................................... 42,808,332
2002....................................................... 42,835,083
Thereafter................................................. 680,401
------------
$122,795,403
============
</TABLE>
F-19
<PAGE> 152
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SENIOR SUBORDINATED NOTES
On September 28, 1995, the Company issued $230,000,000 of senior
subordinated notes (the "Notes") at a discount, netting proceeds of $227,309,000
to the Company. The Company accretes the original issue discount over the term
of the Notes using the effective interest method. At December 31, 1997, the
unamortized discount was $2,041,264 ($2,344,904 in 1996). Interest on the Notes
accrues at 11.625% to yield an effective rate per annum of 11.875%. Interest
payments are payable semiannually on each April 1 and October 1. The principal
balance is due at maturity on October 1, 2002.
The Notes contain certain covenants which, among other things, restrict
additional indebtedness, payment of dividends, stock issuance of subsidiaries,
certain investments and transfers or sales of assets, and provide for the
repurchase of the Notes in the event of a change in control of the Company. The
Notes are general unsecured obligations of the Company subordinate in right of
payment to all existing and future senior indebtedness of the Company and senior
in right to all future subordinated indebtedness of the Company.
The Notes are redeemable at the option of the Company on October 1, 1999,
2000 and 2001 at a redemption price of 104%, 102% and 100%, respectively, of the
outstanding principal amount, plus accrued interest. Additionally, the Company
may redeem up to 25% of the original principal amount of the Notes with proceeds
from certain sales of Company stock or assets at any time prior to October 1,
1998 at a redemption price of 110% of the outstanding principal amount, plus
accrued interest. There are no mandatory redemption requirements.
12. INCOME TAXES
As a result of tax losses incurred by the Company during previous years,
and net operating loss carryforwards available to offset taxable income in 1997,
no current tax provision has been recorded by the Company for the years 1995 to
1997. The deferred benefit (provision) for federal and state income taxes for
the three years ended December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------- ---------- ----------
<S> <C> <C> <C>
CONTINUING OPERATIONS
Federal................................... $ 19,576,180 $ -- $1,152,000
State..................................... 2,303,080 -- 128,000
------------- ---------- ----------
$ 21,879,260 $ -- $1,280,000
============= ========== ==========
DISCONTINUED OPERATIONS
Federal................................... $ 1,196,191 $ -- $ --
State..................................... 140,728 -- --
------------- ---------- ----------
$ 1,336,919 $ -- $ --
============= ========== ==========
FROM DISPOSAL OF DISCONTINUED OPERATIONS
Federal................................... $(106,440,879) $ -- $ --
State..................................... (12,522,456) -- --
------------- ---------- ----------
$(118,963,335) $ -- $ --
============= ========== ==========
</TABLE>
F-20
<PAGE> 153
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax assets and deferred tax liabilities reflect the tax effect of
differences between financial statement carrying amounts and tax bases of assets
and liabilities as follows:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards...................... $ 17,505,309 $ 24,338,000
Deferred compensation................................. 7,231,812 6,359,000
Allowance for doubtful accounts....................... 346,538 599,000
Alternative minimum tax payments...................... 975,000 --
------------- -------------
26,058,659 31,296,000
Deferred tax asset valuation allowance................ (3,070,754) (23,615,000)
------------- -------------
22,987,905 7,681,000
Deferred tax liabilities:
Tax over book depreciation and amortization........... (13,904,824) (7,681,000)
Deferred gain on disposal of discontinued
operations......................................... (104,830,237) --
------------- -------------
Net deferred tax liabilities.................. $ (95,747,156) $ --
============= =============
</TABLE>
The Company and its subsidiaries have filed consolidated tax returns for
all periods subsequent to December 15, 1993.
The reconciliation of income tax benefit attributable to continuing
operations, computed at the U.S. federal statutory tax rate, to the provision
for income taxes is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Tax benefit at U.S. federal statutory tax
rate........................................ $(19,849,954) $(8,914,000) $(11,417,000)
State income tax benefit, net of federal
tax......................................... (2,335,289) (1,038,000) (1,343,000)
Non deductible items.......................... 305,983 1,346,000 597,000
Valuation allowance........................... -- 8,606,000 10,883,000
------------ ----------- ------------
Benefit for income taxes...................... $(21,879,260) $ -- $ (1,280,000)
============ =========== ============
</TABLE>
During 1997, the Company reversed approximately $20,544,000 of its deferred
tax asset valuation allowance in connection with the disposition of discontinued
operations. Accordingly, the benefit of the reversal of this allowance has been
included within the gain on disposal of discontinued operations.
As a result of the deferred tax liability created by the tax deferred treatment
of the gain on the sale of the Paxson Radio assets during the fourth quarter of
1997, management believes it is more likely than not that the Company's deferred
tax assets created by such losses will be realized. Accordingly, the Company
recognized a deferred tax benefit from continuing operations in the amount of
approximately $21,879,260 during the fourth quarter of 1997.
The Company has net operating loss carryforwards for income tax purposes
subject to certain carryforward limitations of approximately $46,067,000 at
December 31, 1997 expiring through 2012. A portion of the net operating losses,
amounting to approximately $7,900,000, are limited to annual utilization as a
result of a change in ownership. Additionally, further limitations on the
utilization of the Company's net operating tax loss carryforwards could result
in the event of certain changes in the Company's ownership.
The tax deferral of the gain upon the sale of Paxson Radio, of
approximately $305 million before deferred taxes of approximately $119 million,
could be contested by the Internal Revenue Service ("IRS"). Based on the advise
of counsel, management believes that, in the event of a challenge by the IRS of
these tax positions, it is more likely than not that the Company would prevail.
Should the IRS successfully challenge the Company on these matters, the Company
could be subject to a material current tax liability.
F-21
<PAGE> 154
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
SAVINGS AND PROFIT SHARING PLAN
The Company has retirement savings and cafeteria plans pursuant to Sections
401(k) and 125 of the Internal Revenue Code which cover substantially all of the
Company's employees. Employer contributions to the retirement savings plan are
discretionary. For the plan years ended December 31, 1997, 1996 and 1995, the
Company made retirement savings contributions of approximately $68,000, $175,000
and $0, respectively. Under the cafeteria plan, employees may elect to
participate in health, dental, life and disability insurance benefit plans
funded through employee payroll deductions.
DEFERRED COMPENSATION PLAN
During 1996, the Company established a supplemental deferred compensation
plan for certain key executives. Under this program, participants may defer
certain amounts of their base compensation and receive a corresponding match by
the Company. Participants vest 100% in the company match after five years of
service. Upon retirement, participants shall be eligible to receive from the
Company certain amounts based on the initial deferral and the Company match.
Certain amounts are also due if a participant terminates employment (other than
by his voluntary action or discharge for cause) before attaining retirement age.
The participants in this plan are general creditors of the Company with respect
to the benefits under the plan. The expense associated with this program was
approximately $131,200 and $66,000 for 1997 and 1996, respectively. The cash
surrender value of the insurance policies under this program at December 31,
1997 is approximately $366,000 and the total liability under this program at
December 31, 1997 is approximately $370,000.
LIFE INSURANCE
The Company maintains a life insurance agreement for the benefit of Mr.
Paxson and his spouse (the "Insureds") whereby the Company contributes to the
payment of premiums on the policy. Upon the death of the survivor of the
Insureds, the Company will be repaid its premium advance. The policy owner will
retain all remaining proceeds. Premiums paid with respect to this policy were
approximately $176,000 and $220,000 for 1997 and 1996, respectively.
STOCK INCENTIVE PLANS
In November 1994 and October 1996, the Company established the Stock
Incentive Plan (the "1994 Plan") and the 1996 Stock Incentive Plan (the "1996
Plan"), respectively, to provide incentives to officers, employees and others
who perform services for the Company through awards of options and shares of
restricted stock. Awards granted under each plan are at the discretion of the
Company's Compensation Committee and may be in the form of either incentive or
nonqualified stock options or awards of restricted stock. At December 31, 1997,
27,936 options for shares of Class A common stock were available for additional
awards under the plans.
When options are granted, a non-cash charge representing the difference
between the exercise price and the fair market value of the common stock
underlying the vested options on the date of grant is recorded as option plan
compensation expense with the balance deferred and amortized over the remaining
vesting period. For the years ended December 31, 1997, 1996 and 1995, the
Company recognized approximately $6,500,000, $7,900,000 and $10,800,000,
respectively, of option plan compensation expense and expects to recognize
additional expense of approximately $2,200,000 over the next five years as such
options vest. To date, no awards of shares of restricted stock have been made
under the plans.
Options granted under the 1994 Plan are pursuant to a five year vesting
cycle commencing retroactively to the participant's date of employment or are
exercisable in full at the date of grant. Options granted under the 1996 Plan
are pursuant to a five year vesting cycle commencing January 1, 1996, if the
participant was
F-22
<PAGE> 155
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
employed by the Company at January 1, 1996 and January 1, 1997, if the
participant commenced employment with the Company subsequent to January 1, 1996,
or, in certain instances, are exercisable in full at the date of grant. All
options granted expire ten years after the date of grant.
A summary of the Company's 1994 and 1996 stock option plans as of December
31, 1997 and 1996 and changes during the years ending on those dates is
presented below:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year............. 3,590,693 $3.41 1,752,405 $3.42 -- $ --
Granted.................................... 348,018 2.07 2,030,216 3.38 1,847,005 3.42
Forfeited.................................. (65,800) 3.42 (39,000) 3.42 (4,800) 3.42
Exercised.................................. (267,450) 3.42 (152,928) 3.22 (89,800) 3.42
--------- ----- --------- ----- --------- -----
Outstanding, end of year................... 3,605,461 $3.28 3,590,693 $3.41 1,752,405 $3.42
========= ===== ========= ===== ========= =====
Weighted average fair value of options
granted during the year.................. $8.39 $8.23 $8.66
===== ===== =====
</TABLE>
The majority of the Company's option grants have been at exercise prices of
$3.42, a price which has historically been below the fair market value of the
underlying common stock at the date of grant.
FAIR VALUE DISCLOSURES
Had compensation expense for the Company's option plans been determined
using the fair value method the Company's net income (loss) and net income
(loss) per share would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net income (loss):
As reported............................ $188,412,901 $(48,127,485) $(46,770,496)
Pro forma.............................. 187,297,693 (50,444,441) (49,974,777)
Basic and diluted net income (loss) per
share:
As reported............................ $ 3.50 $ (1.10) $ (1.36)
Pro forma.............................. 3.48 (1.15) (1.45)
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model assuming a dividend yield of 0.0%,
expected volatility range of 54% to 73%, and risk free interest rates of 6% to
6.9% and weighted average expected option terms of 7.5 years for both periods.
The following tables summarize information about employee and director
stock options at December 31, 1997:
OPTIONS OUTSTANDING AND EXERCISABLE
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE NUMBER
OUTSTANDING AT REMAINING EXERCISABLE AT
DECEMBER 31, CONTRACTUAL DECEMBER 31,
EXERCISE PRICES 1997 LIFE 1997
- --------------- -------------- ----------- --------------
<S> <C> <C> <C>
$0.01...................................... 151,071 2 151,071
$3.42...................................... 3,454,390 6 2,591,390
</TABLE>
F-23
<PAGE> 156
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EMPLOYMENT AGREEMENTS
Mr. Paxson is employed under an employment agreement for a term expiring
December 31, 1999, unless sooner terminated. The agreement provides that Mr.
Paxson's base salary will be $465,850 in 1998 and $500,000 in 1999. In addition
to his base salary, Mr. Paxson may receive an annual bonus at the discretion of,
and in an amount set by, those members of the Compensation Committee who are not
employees of the Company.
NOTES RECEIVABLE FROM THE SALE OF STOCK
During December 1996, the Company approved a program under which it would
extend loans to certain members of management for the purchase, in the open
market, of Company common stock by those individuals. The notes are full
recourse promissory notes bearing interest at 5.75% per annum and are
collateralized by the stock purchased with the loan proceeds. Principal and
interest is payable at maturity, March 31, 1999. The outstanding balance on such
loans aggregated $2,813,250 and $1,873,139 at December 31, 1997 and 1996,
respectively, and is reflected as stock subscription notes receivable in the
accompanying balance sheet.
14. REDEEMABLE PREFERRED STOCK
The following represents a summary of the changes in the Company's
preferred stock during the three years ended December 31, 1997:
<TABLE>
<CAPTION>
REDEEMABLE REDEEMABLE REDEEMABLE REDEEMABLE
EXCHANGEABLE JUNIOR SENIOR SERIES B
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1994...... $ -- $26,808,053 $ 14,060,054 $ 1,274,671
Issuance of shares................ -- -- -- --
Accretion......................... -- 634,988 332,156 325,208
Accrual of cumulative dividends... -- 4,090,869 2,431,872 752,775
------------ ----------- ------------ -----------
Balance at December 31, 1995...... -- 31,533,910 16,824,082 2,352,654
Issuances......................... 143,197,254 -- -- --
Accretion......................... 159,977 650,084 1,805,599 3,418,615
Accrual of cumulative dividends... 4,571,919 4,596,502 2,374,740 730,066
Redemption premium................ -- -- 700,000 250,000
Redemptions....................... -- -- (21,704,421) (6,751,335)
------------ ----------- ------------ -----------
Balance at December 31, 1996...... 147,929,150 36,780,496 -- --
Accretion......................... 668,726 665,540 -- --
Accrual of cumulative dividends... 19,778,114 5,164,626 -- --
------------ ----------- ------------ -----------
Balance at December 31, 1997...... $168,375,990 $42,610,662 $ -- $ --
============ =========== ============ ===========
</TABLE>
REDEEMABLE EXCHANGEABLE PREFERRED STOCK
The Company issued the Redeemable Exchangeable preferred stock on October
4, 1996 for gross proceeds of $150,000,000. Holders of Redeemable Exchangeable
preferred stock are entitled to cumulative dividends at an annual rate of 12.5%
of the liquidation price, per annum, payable semi-annually beginning April 30,
1997. The Company, at its option, may pay dividends on or before October 31,
2002 either in cash or by the issuance of additional shares of Redeemable
Exchangeable preferred stock.
F-24
<PAGE> 157
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company is required, subject to certain conditions, to redeem all of
the Redeemable Exchangeable preferred stock outstanding on October 31, 2006 plus
accumulated and unpaid dividends to the date of redemption. Additionally, the
Redeemable Exchangeable preferred stock is redeemable, subject to certain
restrictions, at the option of the Company on or after October 31, 2001 at the
redemption prices set forth below (expressed as a percentage of liquidation
price):
<TABLE>
<CAPTION>
TWELVE MONTH PERIOD
BEGINNING OCTOBER 31,
- ---------------------
<S> <C>
2001........................................................ 106.250%
2002........................................................ 104.167%
2003........................................................ 102.083%
2004 and thereafter......................................... 100.000%
</TABLE>
The Redeemable Exchangeable preferred stock requires the Company to offer
to purchase all outstanding shares of such stock in the event of certain changes
in ownership control of the Company.
On or before October 31, 1999, subject to certain restrictions, the Company
may use the proceeds of a Public Equity Offering or a Major Asset Sale, as
defined, to redeem for cash up to an aggregate of 35% of the shares of
Redeemable Exchangeable preferred stock at a redemption price of 112.500% of the
liquidation price of such shares plus accumulated and unpaid dividends.
Subject to certain limitations, the Company may, at its option and provided
it is not contractually prohibited from doing so, exchange the outstanding
Redeemable Exchangeable preferred stock for Exchange Debentures as defined.
Additionally, the Company has agreed to exchange all outstanding Redeemable
Exchangeable preferred stock for Exchange Debentures within 60 days from the
date on which the Company is no longer contractually prohibited from effecting
such exchange.
The Exchange Debentures bear interest at 12.5% per annum and are due
October 31, 2006. The Exchange Debentures have redemption features similar to
those of the Redeemable Exchangeable preferred stock.
During 1997, the Company paid dividends of $20,782,320 by the issuance of
additional shares of Redeemable Exchangeable preferred stock. Cumulative
Redeemable Exchangeable preferred stock dividends in arrears aggregated
$3,567,713 and $4,571,919 at December 31, 1997 and 1996, respectively.
REDEEMABLE JUNIOR PREFERRED STOCK
The Company issued the Redeemable Junior preferred stock with 4,853,628
detachable Class C common stock warrants (after giving effect to the stock
dividend during January 1995) on December 22, 1994 for gross proceeds of
$33,000,000. Holders of Redeemable Junior preferred stock are entitled to
cumulative dividends at an annual rate of 12% prior to the seventh anniversary
of the issue date (December 22, 2001), 13% per annum from the seventh through
the eighth anniversary of the issue date (December 22, 2002), and 14% per annum
thereafter. Semi-annual dividend payments are required commencing December 31,
1999.
The Redeemable Junior preferred shares are redeemable, at the option of the
Company, at a 2% premium over the liquidation price thereof, plus unpaid,
deferred, and accrued dividends after the third and prior to the fourth
anniversary of the issue date (December 22, 1998), and at par plus unpaid,
deferred, and accrued dividends on or after the fourth anniversary of the issue
date. The shares are subject to mandatory redemption on the ninth anniversary of
the issue date (December 22, 2003).
Cumulative Redeemable Junior preferred stock dividends in arrears
aggregated $13,949,641 and $8,785,015 at December 31, 1997 and 1996,
respectively.
F-25
<PAGE> 158
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
REDEEMABLE SENIOR PREFERRED STOCK
On October 4, 1996, the Company redeemed all of the outstanding shares of
Redeemable Senior preferred stock for an aggregate of $21,704,421. Of this
amount, $700,000 was considered a redemption premium over book value and
accounted for as a preferred stock dividend.
REDEEMABLE SERIES B PREFERRED STOCK
On October 4, 1996, the Company redeemed all of the outstanding shares of
Redeemable Series B preferred stock for an aggregate of $6,751,335. Of this
amount, $250,000 was considered a redemption premium over book value and
accounted for as a preferred stock dividend.
REDEMPTION FEATURES OF PREFERRED STOCK
The following table presents the redemption value of the two classes of
preferred stock outstanding at December 31, 1997 should each be redeemed in the
indicated year, assuming no cash dividends are paid prior to redemption, unless
required:
<TABLE>
<CAPTION>
JUNIOR EXCHANGEABLE
PREFERRED(1) PREFERRED(2)
------------ ------------
<S> <C> <C>
1998........................................................ $53,412,616 --
1999........................................................ 59,102,420 --
2000........................................................ 59,102,420 --
2001........................................................ 59,102,420 300,494,498
2002........................................................ 59,102,420 332,707,505
</TABLE>
- ---------------
(1) Mandatorily redeemable on December 22, 2003; redeemable by the Company prior
to that date.
(2) Redeemable at the option of the Company on or after October 31, 2001. See
previous discussion for earlier redemption features on up to 35% of the
shares.
15. COMMON STOCK WARRANTS
CLASS A AND B COMMON STOCK WARRANTS
In connection with the 1993 Redeemable Senior preferred stock issuance, the
Company issued 225 detachable redeemable common stock purchase warrants. During
April 1996, in connection with the Company's offering of 10.3 million previously
unissued shares of Class A common stock, the holders of the then outstanding
Class A and B warrants surrendered their put provision requiring the Company to
repurchase the warrants. The holders of the warrants are entitled to demand
registration rights and piggyback registration rights following certain
offerings of shares to the public. Additionally, the holders of the warrants
have rights to convert shares of Class B common stock acquired in connection
with the exercise of the warrants to shares of Class A common stock. On April 3,
1996, 32.2319 warrants were exercised for 893,000 shares of Class A common
stock. In July 1997, the holders of the Company's Class A and B common stock
warrants exercised 32.5083 warrants for 900,000 shares of Class A common stock
and in September 1997, exercised 32.5121 warrants for 900,000 shares of Class A
common stock. At December 31, 1997, the Company had 33.1252 Class A and B common
stock warrants still outstanding which entitle the holders to purchase 688,312
Class A common shares and 229,437 Class B common shares.
CLASS C COMMON STOCK WARRANTS
In connection with the Redeemable Junior preferred stock issuance on
December 22, 1994, the Company issued 4,853,628 detachable Class C common stock
purchase warrants, entitling the holder to purchase one Class C common share per
warrant at an exercise price of $0.001 per share. Certain holders of these
purchase
F-26
<PAGE> 159
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
warrants are entitled to demand registration rights subsequent to the third
anniversary of the issuance date and piggyback registration rights six months
following certain offerings of shares to the public. During 1996, the terms of
the Class C common stock purchase warrants were modified to allow the issuance
of Class A common stock upon exercise of the warrants. Subsequent to such
modification, 2,730,385 Class C common stock warrants were exercised for
2,730,173 shares of Class A common stock. During the quarter ended June 30,
1997, 2,123,243 Class C common stock warrants were exercised for approximately
2,123,047 shares of Class A common stock. At December 31, 1997, no class C
common stock warrants were outstanding.
16. COMMON STOCK
The Company has authorized 12,500,000 shares of Class C common stock with a
par value of $0.001 per share. No shares of the Company's Class C common stock
were issued or outstanding at December 31, 1997 or 1996.
On April 3, 1996, the Company sold 10,300,000 previously unissued shares of
its Class A common stock for net proceeds of approximately $154,800,000.
Class A common stock and Class B common stock will vote as a single class
in all matters submitted to a vote of the stockholders, with each share of Class
A common stock entitled to one vote and each share of Class B common stock
entitled to ten votes; Class C common stock is non-voting. Each share of Class B
common stock is convertible, at the option of its holder, into one share of
Class A common stock at any time. Under certain circumstances, Class C common
stock may be converted, at the option of the holder, into Class A common stock.
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting data
to develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The fair value estimates presented herein
are based on pertinent information available to management as of December 31,
1997. Although management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date and current estimates of fair value may differ significantly from the
amounts presented herein. The following methods and assumptions were used to
estimate the fair value of each class of financial instruments for which it is
practicable to estimate such value:
Cash and cash equivalents, accounts receivable, cash held by qualified
intermediary, accounts payable and accrued expenses. The fair values
approximate the carrying values due to their short term nature.
Investments in broadcast properties. The fair value of investments in
broadcast properties is estimated based on recent market sale prices for
comparable stations and/or markets. The fair value approximates the carrying
value.
Long-term debt and Senior subordinated notes. The fair values of long-term
debt and senior subordinated notes are estimated based on current market rates
and instruments with the same risk and maturities. The fair values approximate
the carrying value.
Mandatorily redeemable securities. Redeemable preferred stock (Junior and
Exchangeable) is being accreted to its respective redemption values.
F-27
<PAGE> 160
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
18. COMMITMENTS AND CONTINGENCIES
The Company incurred total operating expenses of approximately $4,689,000,
$2,876,000 and $1,531,000 for the years ended December 31, 1997, 1996 and 1995,
respectively, under operating leases for broadcasting facilities and equipment,
employment agreements and on-air talent agreements. Future minimum annual
payments under these non-cancelable operating leases and agreements, as of
December 31, 1997, are as follows:
<TABLE>
<S> <C>
1998........................................................ $ 6,236,000
1999........................................................ 5,062,000
2000........................................................ 3,501,000
2001........................................................ 2,962,000
2002........................................................ 2,815,000
Thereafter.................................................. 10,585,000
-----------
$31,161,000
-----------
</TABLE>
As of December 31, 1997 the Company had entered into TBAs with 11 licensees
which require monthly TBA payments ranging from $2,500 to $1,250,000 and have
effective terms ranging from one to ten years. The Company expects to acquire
four of these TBA stations during the first quarter of 1998, including WPXN-TV
which currently requires a monthly payment of $1,250,000.
PROGRAMMING COMMITMENTS
In conjunction with its announced launch of a new broadcast television
network the Company has entered into commitments for broadcast rights related to
programs that are not currently available for broadcast and therefore not
included in the consolidated financial statements. Future minimum annual
payments (including deposits) under these agreements are as follows.
<TABLE>
<S> <C>
1998....................................................... $ 46,114,015
1999....................................................... 75,202,626
2000....................................................... 71,015,115
2001....................................................... 62,155,787
2002....................................................... 31,723,792
Thereafter................................................. 39,418,667
------------
$325,630,002
============
</TABLE>
As of December 31, 1997, the Company had $36,682,500 of broadcast rights
deposits recorded in Other Assets.
The Company has also committed to purchase at similar terms additional
future episodes of these programs should they be made available.
F-28
<PAGE> 161
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INVESTMENT COMMITMENTS
The completion of each of the investments discussed below is subject to a
variety of factors and to the satisfaction of various conditions, and there can
be no assurance that any such investments will be completed. The Company has
agreements to purchase significant assets of, or to enter into time brokerage
and financing arrangements with respect to, the following properties, which are
subject to various conditions, including the receipt of regulatory approvals:
<TABLE>
<CAPTION>
STATION MARKET SERVED(*) COMMITMENT AMOUNT
- ------- ---------------- -----------------
<S> <C> <C>
WPXN-TV............................ New York, NY(1) $257,500,000
WCFC-TV............................ Chicago, IL(2) 135,000,000
WFBI/WCCL.......................... Memphis, TN/New Orleans, LA 40,000,000
WPXD-TV............................ Detroit, MI(10) 35,000,000
Channel 40......................... Pittsburgh, PA 35,000,000
KWPX-TV............................ Seattle, WA(3)(11) 35,000,000
KBSP-TV............................ Portland, OR(13) 30,000,000
KSPX-TV............................ Sacramento, CA(4) 17,000,000
WPXP-TV............................ West Palm Beach, FL(6) 16,635,000
WPXV-TV............................ Norfolk, VA(11) 14,750,000
WFHL-TV............................ Champaign, IL 9,250,000
WKRP-TV............................ Charleston, WV(7) 8,070,000
KPXF-TV............................ Fresno, CA(5)(10) 7,960,000
WAUP-TV............................ Syracuse, NY(7) 6,750,000
KAJW-TV............................ Phoenix, AZ(7) 6,600,000
WQPX-TV............................ Wilkes-Barre, PA 6,160,000
Channel 34......................... Spokane, WA(12) 5,676,667
Channel 61......................... Mobile, AL(12) 5,150,000
KAPA-TV............................ Honolulu, HI 5,000,000
KPXR-TV............................ Cedar Rapids, IA(8)(10) 5,000,000
WPXK-TV............................ Knoxville, TN 5,000,000
Channel 14......................... Albuquerque, NM(12) 4,650,000
WFPX-TV............................ Raleigh, NC(10) 4,500,000
WNPX-TV............................ Nashville, TN(10) 4,200,000
Channel 21......................... Shreveport, LA(12) 3,939,000
Channel 67......................... Davenport, IA(12) 3,800,000
Channel 39......................... Des Moines, IA(12) 3,750,000
Channel 23......................... Portland, ME(12) 3,550,000
Channel 38......................... Greenville, NC 3,550,000
WAQF-TV............................ Buffalo, NY(9) 3,000,000
WLWG-LP............................ Columbus, OH 2,500,000
Channel 51......................... Jackson, MS(12) 2,250,000
KWOK-TV............................ San Francisco, CA(2)(6) 2,215,000
Channel 30......................... Odessa, TX(12) 1,306,000
KVUT-TV............................ Little Rock, AR(7) 1,250,000
WDVL-LP............................ Jacksonville, FL 600,000
K59ER-LP........................... Las Vegas, NV(11) 500,000
Channel 15......................... Christiansted, Virgin Islands(12) 200,000
</TABLE>
- ---------------
In connection with the above commitments, the Company has made deposits or
advances totaling approximately $74 million at December 31, 1997, recorded
as escrow deposits or investments in broadcast properties. The Company has
additional commitments of approximately $13.9 million in connection with a
pending television station acquisition. The commitment amounts do not
include capital expenditures required to upgrade or construct the above
properties.
* Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(1) The Company began operating the station pursuant to a time brokerage
agreement on June 30, 1997. The Company completed the purchase of this
station in March 1998.
F-29
<PAGE> 162
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) The Company is acquiring the station for consideration of $120 million
cash, the Company's interests in KWOK-TV and up to $15 million of
contingent payments to be determined based upon the seller's ability to
deliver its programming to the Chicago market via cable carriage post
closing.
(3) The station purchase price of $35 million includes $10 million of
consideration which is contingent upon the subsequent improvement of the
station's broadcast signal, if feasible.
(4) The Company has loaned an aggregate of $8,500,000 to KCMY-TV and began
operating the station pursuant to a time brokerage agreement on October 1,
1996, pending completion of the acquisition of the station. The loan will
be applied to the purchase price at the date of closing.
(5) The Company began operating the station pursuant to a time brokerage
agreement on June 1, 1997 pending completion of the acquisition of the
station.
(6) The Company has entered into various agreements with Cocola Broadcasting,
its subsidiaries and other parties, whereby, the Company will acquire 100%
and 90% of the ownership of KWOK-TV and WHBI-TV, respectively.
(7) The Company has acquired a 49% interest in this property.
(8) On May 3, 1997, the Company began operating the station pursuant to a time
brokerage agreement. The purchase price reflects the cash portion only and
does not include additional consideration of 600,000 shares of Class A
common stock of the Company.
(9) Includes the purchase of two low power television stations, W69CS and
W63BM.
(10) The Company completed the purchase of this station in January 1998.
(11) The Company completed the purchase of this station in February 1998.
(12) The Company participated in FCC settlements and thereby acquired a
construction permit for this property.
(13) Presently under a letter of intent.
GUTHY-RENKER
During 1997, the Company entered into an agreement with Guthy-Renker
Corporation to create transactional, entertainment and direct response
programming. The Company has committed to provide the venture with funding of at
least $3,000,000, of which $600,000 had been advanced as of December 31, 1997.
The parties will share in the revenues generated by this programming.
LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, the ultimate resolution of
these matters will not have a material effect on the Company's consolidated
financial position or results of operations and cash flows.
F-30
<PAGE> 163
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 1997 QUARTERS ENDED
-----------------------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Total revenue...................... $ 27,168,270 $ 23,778,844 $18,536,999 $ 18,937,340
Operating expenses, less
depreciation, amortization,
compensation associated with
Paxson Radio asset sales and
option plan compensation......... 26,113,720 20,365,043 14,169,937 14,593,207
Compensation associated with Paxson
Radio asset sales................ 9,700,000 -- -- --
Depreciation and amortization...... 7,256,111 5,854,249 4,854,019 4,079,730
Option plan compensation........... 1,215,809 722,166 717,832 714,005
------------ ------------ ----------- ------------
Operating loss..................... $(17,117,370) $ (3,162,614) $(1,204,789) $ (449,602)
============ ============ =========== ============
Loss from continuing operations.... $ (4,178,923) $(14,810,071) $(9,790,548) $ (7,723,420)
Discontinued operations............ 185,065,802 14,553,473 52,309,170 (735,576)
------------ ------------ ----------- ------------
Net income (loss).................. $180,886,879 $ (256,598) $42,518,622 $ (8,458,996)
============ ============ =========== ============
Net income (loss) attributable to
common stock..................... $174,033,528 $ (6,982,630) $36,092,638 (14,730,635)
============ ============ =========== ============
Basic and diluted earnings per
share:
Loss from continuing
operations.................... $ (0.19) $ (0.38) $ (0.33) $ (0.28)
Discontinued operations.......... $ 3.14 $ 0.26 $ 1.04 $ (0.02)
Net income (loss)................ $ 2.95 $ (0.12) $ 0.71 $ (0.30)
Weighted average common shares
outstanding...................... 58,980,015 56,835,119 50,495,490 48,777,893
============ ============ =========== ============
Stock price(1)
High.......................... $ 12 1/16 $ 14 3/8 $ 13 1/8 $ 10 1/4
Low........................... $ 7 3/16 $ 10 15/16 $ 9 3/4 $ 7 15/16
</TABLE>
- ---------------
(1) The Company's Class A common stock is listed on the American Stock Exchange
under the symbol PAX.
F-31
<PAGE> 164
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE 1996 QUARTERS ENDED
-----------------------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Total revenue....................... $ 19,335,060 $14,950,507 $14,994,642 $ 13,052,409
Operating expenses, less
depreciation, amortization and
option plan compensation.......... 16,076,043 11,740,206 10,061,577 8,486,622
Depreciation and amortization....... 4,339,268 3,576,510 2,636,273 2,335,725
Option plan compensation............ 4,629,964 308,200 312,702 1,724,964
------------ ----------- ----------- ------------
Operating income (loss)............. $ (5,710,215) $ (674,409) $ 1,984,090 $ 505,098
============ =========== =========== ============
Loss from continuing operations..... $(14,597,739) $(6,698,736) $(2,769,195) $ (6,369,801)
Discontinued operations............. 2,087,784 995,119 1,382,526 (248,859)
------------ ----------- ----------- ------------
Net (loss).......................... $(12,509,955) $(5,703,617) $(1,386,669) $ (6,618,660)
============ =========== =========== ============
Net (loss) attributable to common
stock............................. $(24,541,413) $(8,166,709) $(3,852,754) $(11,566,609)
============ =========== =========== ============
Basic and diluted earnings per
share:
Loss from continuing operations... $ (0.56) $ (0.19) $ (0.11) $ (0.32)
Discontinued operations........... $ 0.04 $ 0.02 $ 0.03 $ (0.01)
Net loss.......................... $ (0.52) $ (0.17) $ (0.08) $ (0.33)
Weighted average common shares
outstanding....................... 47,158,019 46,983,274 46,570,794 34,556,861
============ =========== =========== ============
Stock price(1)
High........................... $ 11 1/8 $ 13 $ 15 3/8 $ 21 1/4
Low............................ $ 6 5/8 $ 9 11/16 $ 10 5/8 $ 13 7/8
</TABLE>
- ---------------
(1) The Company's Class A common stock is listed on the American Stock Exchange
under the symbol PAX.
F-32
<PAGE> 165
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
-------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 137,286,453 $ 82,641,444
Restricted cash........................................... 17,000,000 17,000,000
Accounts receivable, less allowance for doubtful accounts
of $823,254 and $911,941 respectively................... 4,924,414 4,813,524
Prepaid expenses and other current assets................. 3,342,301 2,765,984
-------------- --------------
Total current assets............................... 162,553,168 107,220,952
Cash held by qualified intermediary......................... -- 418,949,550
Property and equipment, net................................. 141,143,502 105,896,873
Intangible assets, net...................................... 536,789,337 205,400,029
Investments in broadcast properties......................... 106,848,464 72,762,195
Investment in cable network................................. 55,551,260 58,974,491
Other assets, net........................................... 71,711,490 87,908,884
-------------- --------------
Total assets....................................... $1,074,597,221 $1,057,112,974
============== ==============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 13,358,699 $ 11,305,782
Accrued interest.......................................... 13,873,176 8,475,686
Current portion of long-term debt......................... 504,029 496,378
-------------- --------------
Total current liabilities.......................... 27,735,904 20,277,846
Deferred gain............................................... 12,100,000 12,100,000
Deferred income taxes....................................... 97,303,556 95,747,156
Long-term debt.............................................. 122,166,752 122,299,025
Senior subordinated notes, net.............................. 228,041,639 227,958,736
Redeemable Cumulative Compounding Junior preferred stock,
$0.001 par value; 12% dividend rate per annum, 33,000
shares authorized, issued and outstanding................. 44,189,493 42,610,662
Redeemable Exchangeable Preferred stock, $0.001 par value;
12.5% dividend rate per annum, 440,000 shares authorized,
170,782 shares issued and outstanding..................... 173,879,479 168,375,990
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 51,868,800 and 50,701,600
shares issued and outstanding............................. 51,869 50,702
Class B common stock, $0.001 par value; ten votes per share,
35,000,000 shares authorized, 8,311,639 shares issued and
outstanding............................................... 8,312 8,312
Class A & B common stock warrants........................... 1,153,987 2,316,225
Stock subscription notes receivable......................... (2,813,250) (2,813,250)
Additional paid-in capital.................................. 292,526,935 285,795,787
Deferred option plan compensation........................... (1,898,619) (2,205,240)
Retained earnings........................................... 80,151,164 84,591,023
Commitments and contingencies............................... -- --
-------------- --------------
Total liabilities, redeemable securities and common
stockholders' equity............................. $1,074,597,221 $1,057,112,974
============== ==============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-33
<PAGE> 166
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------
1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Local and national advertising............................ $ 31,401,579 $ 18,498,815
Other..................................................... 206,721 412,685
Trade and barter.......................................... 56,584 25,840
------------ ------------
Total revenues.............................................. 31,664,884 18,937,340
Operating expenses:
Direct.................................................... 5,146,368 3,337,759
Programming............................................... 1,542,514 981,880
Sales..................................................... 1,467,544 723,513
Promotion................................................. 989,675 121,832
Technical................................................. 2,973,139 2,036,166
General and administrative................................ 8,913,945 6,354,393
Trade and barter.......................................... 56,584 12,160
Time brokerage and affiliation agreement fees............. 6,588,140 1,025,504
Option plan compensation.................................. 306,621 714,005
Depreciation and amortization............................. 7,949,978 4,079,730
------------ ------------
Total operating expenses.................................... 35,934,508 19,386,942
------------ ------------
Operating loss.............................................. (4,269,624) (449,602)
Other income (expense):
Interest expense.......................................... (10,505,642) (8,735,442)
Interest income........................................... 6,180,260 1,315,882
Other expenses, net....................................... (246,540) 145,742
Gain on sale of television station........................ 14,330,406 --
Equity in loss of unconsolidated investment............... (1,290,000) --
------------ ------------
Income (loss) from continuing operations before income tax
provision................................................. 4,198,860 (7,723,420)
Income tax provision........................................ (1,556,400) --
------------ ------------
Income (loss) from continuing operations before
extraordinary item........................................ 2,642,460 (7,723,420)
------------ ------------
Loss from discontinued operations, net of applicable income
taxes..................................................... -- (735,576)
------------ ------------
Net income (loss)........................................... 2,642,460 (8,458,996)
Dividends and accretion on redeemable preferred stock....... (7,082,319) (6,271,639)
------------ ------------
Net loss attributable to common stock....................... $ (4,439,859) $(14,730,635)
============ ============
Basic and diluted loss per common share:
Loss from continuing operations............................. $ (0.07) $ (0.28)
Loss from discontinued operations........................... -- (0.02)
------------ ------------
Net loss.................................................... $ (0.07) $ (0.30)
============ ============
Weighted average shares outstanding......................... 59,588,768 48,777,893
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-34
<PAGE> 167
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK CLASS A&B CLASS C STOCK
---------------- COMMON COMMON SUBSCRIPTION ADDITIONAL DEFERRED OPTION
CLASS CLASS STOCK STOCK NOTES PAID-IN PLAN
A B WARRANTS WARRANTS RECEIVABLE CAPITAL COMPENSATION
------- ------ ----------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996... $40,442 $8,312 $ 6,862,647 $ 2,335,528 $(1,873,139) $209,621,241 $(6,397,916)
Stock issued for acquisition... 6,069 66,118,931
Exercise of Class A, B and C
common stock warrants......... 3,923 (4,546,422) (2,335,528) 6,878,028
Deferred option plan
compensation.................. 2,263,167 (2,263,167)
Option plan compensation....... 6,455,843
Stock options exercised........ 268 914,420
Increase in stock subscription
notes receivable.............. (940,111)
Dividends on redeemable
preferred stock...............
Accretion on Junior preferred
stock.........................
Accretion on Redeemable
Exchangeable preferred
stock.........................
Net income.....................
------- ------ ----------- ----------- ----------- ------------ -----------
Balance at December 31, 1997... 50,702 8,312 2,316,225 -- (2,813,250) 285,795,787 (2,205,240)
Stock issued for acquisitions
(unaudited)................... 600 5,249,400
Exercise of Class A and B
common stock warrants
(unaudited)................... 460 (1,162,238) 1,161,778
Option plan compensation
(unaudited)................... 306,621
Stock options exercised
(unaudited)................... 107 319,970
Dividends on redeemable
preferred stock (unaudited)...
Accretion on Junior preferred
stock (unaudited).............
Accretion on Redeemable
Exchangeable preferred stock
(unaudited)...................
Net income (unaudited).........
------- ------ ----------- ----------- ----------- ------------ -----------
Balance at March 31, 1998
(unaudited)................... $51,869 $8,312 $ 1,153,987 $ -- $(2,813,250) $292,526,935 $(1,898,619)
======= ====== =========== =========== =========== ============ ===========
<CAPTION>
RETAINED EARNINGS
(ACCUMULATED
DEFICIT)
-----------------
<S> <C>
Balance at December 31, 1996... $(103,821,878)
Stock issued for acquisition...
Exercise of Class A, B and C
common stock warrants.........
Deferred option plan
compensation..................
Option plan compensation.......
Stock options exercised........
Increase in stock subscription
notes receivable..............
Dividends on redeemable
preferred stock............... (24,942,740)
Accretion on Junior preferred
stock......................... (665,540)
Accretion on Redeemable
Exchangeable preferred
stock......................... (668,726)
Net income..................... 214,689,907
-------------
Balance at December 31, 1997... 84,591,023
Stock issued for acquisitions
(unaudited)...................
Exercise of Class A and B
common stock warrants
(unaudited)...................
Option plan compensation
(unaudited)...................
Stock options exercised
(unaudited)...................
Dividends on redeemable
preferred stock (unaudited)... (6,744,549)
Accretion on Junior preferred
stock (unaudited)............. (170,340)
Accretion on Redeemable
Exchangeable preferred stock
(unaudited)................... (167,430)
Net income (unaudited)......... 2,642,460
-------------
Balance at March 31, 1998
(unaudited)................... $ 80,151,164
=============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-35
<PAGE> 168
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------------
1998 1997
------------- -------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ 2,642,460 $ (8,458,996)
Adjustments to reconcile net income (loss) to net cash
(used in)
provided by operating activities:
Depreciation and amortization........................... 7,949,978 8,738,098
Option plan compensation................................ 306,621 1,036,231
Program rights amortization............................. -- 302,825
Provision for doubtful accounts......................... 575,660 356,485
Deferred income tax provision........................... 1,556,400 --
Loss (gain) on sale or disposal of assets............... 82,027 (153,577)
Equity in loss of unconsolidated investment............. 1,290,000 --
Gain on sale of television station...................... (14,330,406) --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable............ (686,550) 3,005,161
Increase in prepaid expenses and other current
assets............................................... (576,317) (1,450,604)
Increase in programming deposits...................... (7,013,750) --
Decrease (increase) in other assets................... 373,829 (2,399,573)
Increase (decrease) in accounts payable and accrued
liabilities.......................................... 2,052,917 (373,334)
Increase in accrued interest.......................... 5,397,490 8,008,697
Payments for program rights........................... -- (338,898)
------------- -------------
Net cash (used in) provided by operating
activities....................................... (379,641) 8,272,515
------------- -------------
Cash flows from investing activities:
Acquisitions of broadcasting properties................... (358,669,960) (94,184,131)
Increase in investments in broadcast properties........... (34,552,839) (4,862,838)
Refunds of deposits on broadcast properties............... 22,853,732 4,200,000
Refund of cash held by qualified intermediary............. 418,949,550 --
Purchases of property and equipment....................... (14,147,177) (12,106,406)
Distribution received from unconsolidated investment...... 2,133,231 --
Proceeds from sales of broadcast properties............... 18,262,658 751,050
------------- -------------
Net cash provided by (used in) investing
activities....................................... 54,829,195 (106,202,325)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. -- 80,000,000
Repayments of long-term debt.............................. (124,622) (193,915)
Proceeds from exercise of common stock options, net....... 320,077 129,960
Increase in stock subscription notes receivable........... -- (840,111)
------------- -------------
Net cash provided by financing activities.......... 195,455 79,095,934
------------- -------------
Increase (decrease) in cash and cash equivalents............ 54,645,009 (18,833,876)
Cash and cash equivalents at beginning of period............ 82,641,444 61,748,788
------------- -------------
Cash and cash equivalents at end of period.................. $ 137,286,453 $ 42,914,912
============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest.................................... $ 4,599,246 $ 245,082
============= =============
Cash paid for income taxes................................ $ -- $ --
============= =============
Non-cash operating and financing activities:
Accretion of discount on senior subordinated notes........ $ 82,903 $ 73,103
============= =============
Issuance of common stock for acquisition.................. $ 5,250,000 $ --
============= =============
Dividends accrued on redeemable preferred stock........... $ 6,744,549 $ 5,941,050
============= =============
Accretion on redeemable securities........................ $ 337,770 $ 330,589
============= =============
Trade and barter revenue.................................. $ 56,584 $ 1,012,528
============= =============
Trade and barter expense.................................. $ 56,584 $ 983,841
============= =============
Sale of broadcast property for note receivable............ $ -- $ 15,000,000
============= =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-36
<PAGE> 169
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of March 31, 1998 and
for the three month periods ended March 31, 1998 and 1997, is unaudited. In the
opinion of management, all adjustments necessary for the fair presentation of
such financial information have been included. These adjustments are of a normal
recurring nature. There have been no changes in accounting policies since the
period ended December 31, 1997. The composition of accounts has changed since
December 31, 1997 to reflect the operations of acquisitions discussed elsewhere
herein.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Certain reclassifications have been made to the
prior year's financial statements to conform with the 1998 presentation. These
financial statements, footnotes, and discussions should be read in conjunction
with the December 31, 1997 financial statements and related footnotes and
discussions contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, and the definitive proxy statement for the annual
meeting of stockholders held April 17, 1998, and Form 8-K dated March 6, 1998,
all of which were filed with the United States Securities and Exchange
Commission.
2. DISCONTINUED OPERATIONS
During 1997, the Company sold its interests in WTVX-TV and WPBF-TV and
substantially all of its Paxson Radio segment assets and thus discontinued the
operations of the Paxson Network-Affiliated Television and Paxson Radio
segments. The results of operations for the Paxson Network-Affiliated Television
and Paxson Radio segments for the three months ended March 31, 1997, net of
applicable income taxes, have been presented as discontinued operations in the
accompanying Consolidated Statements of Operations. The Paxson Network
Affiliated Television operations generated revenues of approximately $5,284,000
for the three months ended March 31, 1997. The Paxson Radio operations generated
revenues of approximately $24,139,000 for the three months ended March 31, 1997.
The net assets of discontinued operations, totaling approximately $3
million at March 31, 1998 and December 31, 1997 consist of the assets of two
remaining radio stations which are under contract to be sold for aggregate
consideration of $3 million.
3. CASH HELD BY QUALIFIED INTERMEDIARY
At December 31, 1997, the Company had placed a portion of the proceeds
received from the Paxson Radio segment sale with a qualified intermediary in
order to reinvest such proceeds and, to the extent reinvested, qualify for tax
deferred exchange treatment in connection with such sale. All but approximately
$66 million of these funds were reinvested in broadcast properties acquisitions
during the first quarter of 1998. The funds not reinvested in like kind
broadcasting properties were returned to the Company and placed in its operating
cash accounts. The Company does not anticipate paying current income taxes on
the non-deferred gain as it has sufficient net operating loss carryforwards to
offset such gain.
4. INVESTMENT IN CABLE NETWORK
The Company's investment in cable network represents a 30% interest in The
Travel Channel, L.L.C., a joint venture with Discovery Communications, Inc. The
results of operations of The Travel Channel, L.L.C. have been included in the
Company's March 31, 1998 consolidated statement of operations using the equity
method of accounting.
F-37
<PAGE> 170
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LONG-TERM DEBT
In order to address the Company's business plan related to the PAX NET
launch, the Company refinanced, in May 1998, substantially all of its long-term
debt with a $122 million senior credit facility maturing June 2002 (the "Senior
Credit Facility"). Under the terms of the Senior Credit Facility, the
outstanding debt will be secured by substantially all of the Company's assets
and bear interest at a base rate plus 1.75% or LIBOR plus 2.75%, at the
Company's option. The Senior Credit Facility requires the Company to maintain
compliance with certain financial ratios subsequent to March 2000 and also
contains other restrictions. The Senior Credit Facility requires quarterly
principal payments commencing December 31, 2000.
6. COMMON STOCK WARRANTS
In March 1998, the holders of the Company's Class A and B common stock
warrants exercised 16.6217 warrants for 460,000 shares of Class A common stock.
The Company has 16.5036 common stock warrants outstanding which entitle the
holders to purchase 342,929 Class A common shares and 114,309 Class B common
shares.
7. PER SHARE DATA
Basic and diluted loss per share from continuing operations was computed by
dividing the loss from continuing operations before extraordinary item less
dividends and accretion on redeemable preferred stock by the weighted average
number of common shares outstanding during the period. Because of losses from
continuing operations, the effect of stock options and warrants is antidilutive.
Potentially dilutive common shares in the amount of 4,044,149 and 8,433,108 for
the three months ended March 31, 1998 and 1997, respectively, have been excluded
from the computation of diluted earnings per share as the effect of their
inclusion is antidilutive. Accordingly, the Company's presentation of diluted
earnings per share is the same as that of basic earnings per share.
F-38
<PAGE> 171
=================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SECURITY OFFERED BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 18
The Exchange Offer......................... 28
The Transactions........................... 37
Use of Proceeds............................ 39
Capitalization............................. 40
Unaudited Pro Forma Balance Sheet Data..... 41
Selected Historical and Pro Forma Financial
Data..................................... 44
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 47
Business................................... 53
Management................................. 68
Ownership of Common Stock.................. 75
Certain Relationships and Related
Transactions............................. 75
Description of New Junior Preferred Stock
and New Exchange Debentures.............. 80
Description of Convertible Preferred
Stock.................................... 114
Description of Indebtedness................ 115
Description of Capital Stock............... 117
Certain Federal Income Tax
Considerations........................... 121
Plan of Distribution....................... 122
Legal Matters.............................. 122
Experts.................................... 123
Index of Financial Statements.............. F-1
</TABLE>
=================================================================
=================================================================
$200,000,000
(PAXSON LOGO)
PAXSON
COMMUNICATIONS
CORPORATION
OFFER TO EXCHANGE SHARES OF ITS 13 1/4% CUMULATIVE JUNIOR EXCHANGEABLE PREFERRED
STOCK, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING SHARES OF ITS 13 1/4% CUMULATIVE JUNIOR EXCHANGEABLE
PREFERRED STOCK
------------------
PROSPECTUS
------------------
____________, 1998
=================================================================
<PAGE> 172
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and Bylaws contain provisions
limiting the personal liability of its directors for monetary damages resulting
from breaches of their duty of care to the extent permitted by Section 102(b)(7)
of the Delaware General Corporation Law. The Company's Certificate of
Incorporation and Bylaws also contain provisions making indemnification of the
Company's directors and officers mandatory to the fullest extent permitted by
the Delaware General Corporation Law, including circumstances in which
indemnification is otherwise discretionary.
The Delaware General Corporation Law permits the indemnification by a
Delaware corporation of its directors, officers, employees and other agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than derivative
actions which are by or in the right of the corporation) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and require
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.1.1 -- Certificate of Incorporation of the Company(2)
3.1.2 -- Bylaws of the Company(5)
3.2.1 -- Certificate of Designation of the Company's Junior
Cumulative Compounding Redeemable Preferred Stock(2)
3.2.2 -- Certificate of Designation of the Company's 12 1/2%
Cumulative Exchangeable Preferred Stock(5)
3.2.3 -- Certificate of Designation of the Company's original 13 1/4%
Cumulative Junior Exchangeable Preferred Stock
3.2.4 -- Certificate of Designation of the Company's 9 3/4% Series A
Convertible Preferred Stock
3.2.5 -- Certificate of Designation of the Company's new 13 1/4%
Cumulative Junior Exchangeable Preferred Stock+
3.3.1 -- Articles of Incorporation of Paxson Communications
Management Company(4)
3.3.2 -- Bylaws of Paxson Communications Management Company(4)
3.4.1 -- Articles of Incorporation of Excel Marketing Enterprises,
Inc.(4)
3.4.2 -- Bylaws of Excel Marketing Enterprises, Inc.(4)
3.5.1 -- Articles of Incorporation of Paxson Communications
Television, Inc.(4)
3.5.2 -- Bylaws of Paxson Communications Television, Inc.(4)
3.6.1 -- Articles of Incorporation of Paxson Communications of
Atlanta-14, Inc.(4)
3.6.2 -- Bylaws of Paxson Communications of Atlanta-14, Inc.(4)
3.7.1 -- Articles of Incorporation of Paxson Atlanta License, Inc.(4)
3.7.2 -- Bylaws of Paxson Atlanta License, Inc.(4)
3.8.1 -- Articles of Incorporation of Paxson Communications of
Boston-60, Inc.(4)
3.8.2 -- Bylaws of Paxson Communications of Boston-60, Inc.(4)
3.9.1 -- Articles of Incorporation of Paxson Boston License, Inc.(4)
3.9.1 -- Bylaws of Paxson Boston License, Inc.(4)
3.10.1 -- Articles of Incorporation of Paxson Communications of
Dallas-68, Inc.(4)
3.10.2 -- Bylaws of Paxson Communications of Dallas-68, Inc.(4)
3.11.1 -- Articles of Incorporation of Paxson Dallas License, Inc.(4)
</TABLE>
II-1
<PAGE> 173
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.11.2 -- Bylaws of Paxson Dallas License, Inc.(4)
3.12.1 -- Articles of Incorporation of Paxson Communications of New
London-26, Inc.(4)
3.12.2 -- Bylaws of Paxson Communications of New London-26, Inc.(4)
3.13.1 -- Articles of Incorporation of Paxson Communications of
Philadelphia-61, Inc.(4)
3.13.2 -- Bylaws of Paxson Communications of Philadelphia-61, Inc.(4)
3.14.1 -- Articles of Incorporation of Paxson Philadelphia License,
Inc.(4)
3.14.2 -- Bylaws of Paxson Philadelphia License, Inc.(4)
3.15.1 -- Articles of Incorporation of Paxson Communications of
Miami-35, Inc.(4)
3.15.2 -- Bylaws of Paxson Communications of Miami-35, Inc.(4)
3.16.1 -- Articles of Incorporation of Paxson Communications of San
Jose-65, Inc.(4)
3.16.2 -- Bylaws of Paxson Communications of San Jose-65, Inc.(4)
3.17.1 -- Articles of Incorporation of Paxson San Jose License,
Inc.(4)
3.17.2 -- Bylaws of Paxson San Jose License, Inc.(4)
3.18.1 -- Articles of Incorporation of Paxson Communications of
Tampa-66, Inc.(4)
3.18.2 -- Bylaws of Paxson Communications of Tampa-66, Inc.(4)
3.19.1 -- Articles of Incorporation of Paxson Communications of Los
Angeles-30, Inc.(4)
3.19.2 -- Bylaws of Paxson Communications of Los Angeles-30, Inc.(4)
3.20.1 -- Articles of Incorporation of Paxson Los Angeles License,
Inc.(4)
3.20.2 -- Bylaws of Paxson Los Angeles License, Inc.(4)
3.21.1 -- Articles of Incorporation of Paxson Communications of
Minneapolis-41, Inc.(4)
3.21.2 -- Bylaws of Paxson Communications of Minneapolis-41, Inc.(4)
3.22.1 -- Articles of Incorporation of Paxson Communications of St.
Louis-13, Inc.(4)
3.22.2 -- Bylaws of Paxson Communications of St. Louis-13, Inc.(4)
3.23.1 -- Articles of Incorporation of Paxson Minneapolis License,
Inc.(4)
3.23.2 -- Bylaws of Paxson Minneapolis License, Inc.(4)
3.24.1 -- Articles of Incorporation of Paxson Communications of
Orlando-56, Inc.(4)
3.24.2 -- Bylaws of Paxson Communications of Orlando-56, Inc.(4)
3.25.1 -- Articles of Incorporation of Paxson Communications of
Houston-49, Inc.(4)
3.25.2 -- Bylaws of Paxson Communications of Houston-49, Inc.(4)
3.26.1 -- Articles of Incorporation of Paxson Houston License, Inc.(4)
3.26.2 -- Bylaws of Paxson Houston License, Inc.(4)
3.27.1 -- Certificate of Incorporation of Infomall TV Network, Inc.(4)
3.27.2 -- Bylaws of Infomall TV Network, Inc.(4)
3.28.1 -- Articles of Incorporation of Paxson Communications of
Cleveland-67, Inc.(4)
3.28.2 -- Bylaws of Paxson Communications of Cleveland-67, Inc.(4)
3.29.1 -- Articles of Incorporation of Paxson Communications of
Washington-60, Inc.(4)
3.29.2 -- Bylaws of Paxson Communications of Washington-60, Inc.(4)
3.30.1 -- Articles of Incorporation of Paxson Washington License,
Inc.(4)
3.30.2 -- Bylaws of Paxson Washington License, Inc.(4)
3.31.1 -- Articles of Incorporation of Paxson Communications of
Phoenix-13, Inc.(4)
3.31.2 -- Bylaws of Paxson Communications of Phoenix-13, Inc.(4)
3.32.1 -- Articles of Incorporation of Paxson Phoenix License, Inc.(4)
3.32.2 -- Bylaws of Paxson Phoenix License, Inc.(4)
3.33.1 -- Articles of Incorporation of Infomall Los Angeles, Inc.(4)
3.33.2 -- Bylaws of Infomall Los Angeles, Inc.(4)
3.34.1 -- Articles of Incorporation of Paxson Communications of
Milwaukee-55, Inc.(4)
3.34.2 -- Bylaws of Paxson Communications of Milwaukee-55, Inc.(4)
3.35.1 -- Articles of Incorporation of Paxson Communications of
Denver-59, Inc.(4)
3.35.2 -- Bylaws of Paxson Communications of Denver-59, Inc.(4)
3.36.1 -- Articles of Incorporation of Paxson Communications of New
York-43, Inc.(4)
3.36.2 -- Bylaws of Paxson Communications of New York-43, Inc.(4)
3.37.1 -- Articles of Incorporation of Paxson New York License,
Inc.(4)
</TABLE>
II-2
<PAGE> 174
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.37.2 -- Bylaws of Paxson New York License, Inc.(4)
3.38.1 -- Articles of Incorporation of Paxson Communications of
Akron-23, Inc.(4)
3.38.2 -- Bylaws of Paxson Communications of Akron-23, Inc.(4)
3.39.1 -- Articles of Incorporation of Paxson Akron License, Inc.(4)
3.39.2 -- Bylaws of Paxson Akron License, Inc.(4)
3.40.1 -- Articles of Incorporation of Paxson Communications of
Dayton-26, Inc.(4)
3.40.2 -- Bylaws of Paxson Communications of Dayton-26, Inc.(4)
3.41.1 -- Articles of Incorporation of Paxson Communications of San
Juan, Inc.(7)
3.41.2 -- Bylaws of Paxson Communications of San Juan, Inc.(7)
3.42.1 -- Articles of Incorporation of Paxson Communications of Battle
Creek-43, Inc.(7)
3.42.2 -- Bylaws of Paxson Communications of Battle Creek-43, Inc.(7)
3.43.1 -- Articles of Incorporation of Paxson Communications of
Albany-55, Inc.(7)
3.43.2 -- Bylaws of Paxson Communications of Albany-55, Inc.(7)
3.44.1 -- Articles of Incorporation of Paxson Albany License, Inc.(7)
3.44.2 -- Bylaws of Paxson Albany License, Inc.(7)
3.45.1 -- Articles of Incorporation of Paxson Communications of
Raleigh Durham-47, Inc.(7)
3.45.2 -- Bylaws of Paxson Communications of Raleigh Durham-47,
Inc.(7)
3.46.1 -- Articles of Incorporation of Paxson Communications L.P.T.V.,
Inc.(7)
3.46.2 -- Bylaws of Paxson Communications L.P.T.V., Inc.(7)
3.47.1 -- Articles of Incorporation of Paxson Dayton License, Inc.(7)
3.47.2 -- Bylaws of Paxson Dayton License, Inc.(7)
3.48.1 -- Articles of Incorporation of Paxson Denver License, Inc.(7)
3.48.2 -- Bylaws of Paxson Denver License, Inc.(7)
3.49.1 -- Articles of Incorporation of Paxson Communications of
Providence-69, Inc.(7)
3.49.2 -- Bylaws of Paxson Communications of Providence-69, Inc.(7)
3.50.1 -- Articles of Incorporation of Paxson Communications of
Greensboro-16, Inc.(7)
3.50.2 -- Bylaws of Paxson Communications of Greensboro-16, Inc.(7)
3.51.1 -- Articles of Incorporation of Paxson Greensboro License,
Inc.(7)
3.51.2 -- Bylaws of Paxson Greensboro License, Inc.(7)
3.52.1 -- Articles of Incorporation of Paxson Communications of
Tulsa-44, Inc.(7)
3.52.2 -- Bylaws of Paxson Communications of Tulsa-44, Inc.(7)
3.53.1 -- Articles of Incorporation of Paxson Sports Ventures
Company(7)
3.53.2 -- Bylaws of Paxson Sports Ventures Company(7)
3.54.1 -- Articles of Incorporation of PCC Direct, Inc.(7)
3.54.2 -- Bylaws of PCC Direct, Inc.(7)
3.55.1 -- Articles of Incorporation of Paxson Communications of
Oklahoma City-62, Inc.(7)
3.55.2 -- Bylaws of Paxson Communications of Oklahoma City-62, Inc.(7)
3.56.1 -- Articles of Incorporation of Paxson Communications of
Sacramento-29, Inc.(7)
3.56.2 -- Bylaws of Paxson Communications of Sacramento-29, Inc.(7)
3.57.1 -- Articles of Incorporation of Paxson Sacramento License,
Inc.(7)
3.57.2 -- Bylaws of Paxson Sacramento License, Inc.(7)
3.58.1 -- Articles of Incorporation of Paxson Communications of
Seattle-33, Inc.(7)
3.58.2 -- Bylaws of Paxson Communications of Seattle-33, Inc.(7)
3.59.1 -- Articles of Incorporation of Paxson Seattle License, Inc.(7)
3.59.2 -- Bylaws of Paxson Seattle License, Inc.(7)
3.60.1 -- Articles of Incorporation of Paxson Communications of
Boston-46, Inc.(7)
3.60.2 -- Bylaws of Paxson Communications of Boston-46, Inc.(7)
3.61.1 -- Articles of Incorporation of Paxson Communications of Little
Rock-42, Inc.(7)
3.61.2 -- Bylaws of Paxson Communications of Little Rock-42, Inc.(7)
3.62.1 -- Articles of Incorporation of Paxson Little Rock License,
Inc.(7)
3.62.2 -- Bylaws of Paxson Little Rock License, Inc.(7)
3.63.1 -- Articles of Incorporation of Paxson Communications of
Phoenix-51, Inc.(7)
</TABLE>
II-3
<PAGE> 175
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.63.2 -- Bylaws of Paxson Communications of Phoenix-51, Inc.(7)
3.64.1 -- Articles of Incorporation of Paxson Communications of
Birmingham-44, Inc.(7)
3.64.2 -- Bylaws of Paxson Communications of Birmingham-44, Inc.(7)
3.65.1 -- Articles of Incorporation of Paxson Birmingham License,
Inc.(7)
3.65.2 -- Bylaws of Paxson Birmingham License, Inc.(7)
3.66.1 -- Articles of Incorporation of Paxson Sports of Miami, Inc.(7)
3.66.2 -- Bylaws of Paxson Sports of Miami, Inc.(7)
3.67.1 -- Articles of Incorporation of Paxson Communications of Salt
Lake City-30, Inc.+
3.67.2 -- Bylaws of Paxson Communications of Salt Lake City-30, Inc.+
3.68.1 -- Articles of Incorporation of Paxson Salt Lake City License,
Inc.+
3.68.2 -- Bylaws of Paxson Salt Lake City License, Inc.+
3.69.1 -- Articles of Incorporation of Paxson Oklahoma City License,
Inc.+
3.69.2 -- Bylaws of Paxson Oklahoma City License, Inc.+
3.70.1 -- Articles of Incorporation of Paxson Communications of
Washington-66, Inc.+
3.70.2 -- Bylaws of Paxson Communications of Washington-66, Inc.+
3.71.1 -- Articles of Incorporation of Paxson Communications of
Scranton-64, Inc.+
3.71.2 -- Bylaws of Paxson Communications of Scranton-64, Inc.+
3.72.1 -- Articles of Incorporation of Paxson Scranton License, Inc.+
3.72.2 -- Bylaws of Paxson Scranton License, Inc.+
3.73.1 -- Articles of Incorporation of Paxson Communications of Kansas
City-50, Inc.+
3.73.2 -- Bylaws of Paxson Communications of Kansas City-50, Inc.+
3.74.1 -- Articles of Incorporation of Paxson Milwaukee License, Inc.+
3.74.2 -- Bylaws of Paxson Milwaukee License, Inc.+
3.75.1 -- Articles of Incorporation of Paxson Communications of
Hartford-18, Inc.+
3.75.2 -- Bylaws of Paxson Communications of Hartford-18, Inc.+
3.76.1 -- Articles of Incorporation of Paxson Communications of
Pittsburgh-40, Inc.+
3.76.2 -- Bylaws of Paxson Communications of Pittsburgh-40, Inc.+
3.77.1 -- Articles of Incorporation of Paxson Communications of
Detroit-31, Inc.+
3.77.2 -- Bylaws of Paxson Communications of Detroit-31, Inc.+
3.78.1 -- Articles of Incorporation of Paxson Detroit License, Inc.+
3.78.2 -- Bylaws of Paxson Detroit License, Inc.+
3.79.1 -- Articles of Incorporation of Paxson Pittsburgh License,
Inc.+
3.79.2 -- Bylaws of Paxson Pittsburgh License, Inc.+
3.80.1 -- Articles of Incorporation of Paxson Communications of
Roanoke-38, Inc.+
3.80.2 -- Bylaws of Paxson Communications of Roanoke-38, Inc.+
3.81.1 -- Articles of Incorporation of Paxson Roanoke License, Inc.+
3.81.2 -- Bylaws of Paxson Roanoke License, Inc.+
3.82.1 -- Articles of Incorporation of Paxson Communications of
Fresno-61, Inc.+
3.82.2 -- Bylaws of Paxson Communications of Fresno-61, Inc.+
3.83.1 -- Articles of Incorporation of Paxson Fresno License, Inc.+
3.83.2 -- Bylaws of Paxson Fresno License, Inc.+
3.84.1 -- Articles of Incorporation of Paxson Communications of
Nashville-28, Inc.+
3.84.2 -- Bylaws of Paxson Communications of Nashville-28, Inc.+
3.85.1 -- Articles of Incorporation of Paxson Tennessee License, Inc.+
3.85.2 -- Bylaws of Paxson Tennessee License, Inc.+
3.86.1 -- Articles of Incorporation of Paxson Communications of Cedar
Rapids-48, Inc.+
3.86.2 -- Bylaws of Paxson Communications of Cedar Rapids-48, Inc.+
3.87.1 -- Articles of Incorporation of Paxson Cedar Rapids License,
Inc.+
3.87.2 -- Bylaws of Paxson Cedar Rapids License, Inc.+
3.88.1 -- Articles of Incorporation of Paxson Communications of
Buffalo-51, Inc.+
3.88.2 -- Bylaws of Paxson Communications of Buffalo-51, Inc.+
3.89.1 -- Articles of Incorporation of Paxson Buffalo License, Inc.+
</TABLE>
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EXHIBIT NO. DESCRIPTION
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<C> <S> <C>
3.89.2 -- Bylaws of Paxson Buffalo License, Inc.+
3.90 1 -- Articles of Incorporation of Paxson Communications of Green
Bay-14, Inc.+
3.90.2 -- Bylaws of Paxson Communications of Green Bay-14, Inc.+
3.91.1 -- Articles of Incorporation of Paxson Green Bay License, Inc.+
3.91.2 -- Bylaws of Paxson Green Bay License, Inc.+
3.92.1 -- Articles of Incorporation of Paxson Communications of
Tucson-46, Inc.+
3.92.2 -- Bylaws of Paxson Communications of Tucson-46, Inc.+
3.93.1 -- Articles of Incorporation of Paxson Tucson License, Inc.+
3.93.2 -- Bylaws of Paxson Tucson License, Inc.+
3.94.1 -- Articles of Incorporation of Paxson Communications of New
York-31, Inc.+
3.94.2 -- Bylaws of Paxson Communications of New York-31, Inc.+
3.95.1 -- Articles of Incorporation of Paxson Miami-35 License, Inc.+
3.95.2 -- Bylaws of Paxson Miami-35 License, Inc.+
3.96.1 -- Articles of Incorporation of Paxson Tampa-66 License, Inc.+
3.96.2 -- Bylaws of Paxson Tampa-66 License, Inc.+
3.97.1 -- Articles of Incorporation of Paxson Communications of
Hawaii-66, Inc.+
3.97.2 -- Bylaws of Paxson Communications of Hawaii-66, Inc.+
3.98.1 -- Articles of Incorporation of Paxson Hawaii License, Inc.+
3.98.2 -- Bylaws of Paxson Hawaii License, Inc.+
3.99.1 -- Articles of Incorporation of Paxson Communications of Los
Angeles-63, Inc.+
3.99.2 -- Bylaws of Paxson Communications of Los Angeles-63, Inc.+
3.100.1 -- Articles of Incorporation of Paxson Communications of
Albuquerque-14, Inc.+
3.100.2 -- Bylaws of Paxson Communications of Albuquerque-14, Inc.+
3.101.1 -- Articles of Incorporation of Paxson Communications of
Fayetteville-62, Inc.+
3.101.2 -- Bylaws of Paxson Communications of Fayetteville-62, Inc.+
3.102.1 -- Articles of Incorporation of Paxson Fayetteville License,
Inc.+
3.102.2 -- Bylaws of Paxson Fayetteville License, Inc.+
3.103.1 -- Operating Agreement of Ocean State Television L.L.C.+
3.103.2 -- Certificate of Organization of Ocean State Television
L.L.C.+
3.104.1 -- Articles of Incorporation of United Broadcast Group II,
Inc.+
3.104.2 -- Bylaws of United Broadcast Group II, Inc.+
3.105.1 -- Articles of Incorporation of Paxson Communications of
Charleston-29, Inc.+
3.105.2 -- Bylaws of Paxson Communications of Charleston-29, Inc.+
3.106.1 -- Articles of Incorporation of Paxson Charleston License,
Inc.+
3.106.2 -- Bylaws of Paxson Charleston License, Inc.+
3.107.1 -- Articles of Incorporation of Jetstar Development, Inc.+
3.107.2 -- Bylaws of Jetstar Development, Inc.+
3.108.1 -- Certificate of Incorporation of Pax Net, Inc.+
3.108.2 -- Bylaws of Pax Net, Inc.+
3.109.1 -- Articles of Incorporation of Paxson Television Productions,
Inc.+
3.109.2 -- Bylaws of Paxson Television Productions, Inc.+
3.110.1 -- Articles of Incorporation of Paxson Communications of
Syracuse-56, Inc.+
3.110.2 -- Bylaws of Paxson Communications of Syracuse-56, Inc.+
3.111.1 -- Articles of Incorporation of Paxson Syracuse License, Inc.+
3.111.2 -- Bylaws of Paxson Syracuse License, Inc.+
3.112.1 -- Articles of Incorporation of Paxson Communications of
Decatur-23, Inc.+
3.112.2 -- Bylaws of Paxson Communications of Decatur-23, Inc.+
3.113.1 -- Articles of Incorporation of Paxson Decatur License, Inc.+
3.113.2 -- Bylaws of Paxson Decatur License, Inc.+
3.114.1 -- Articles of Incorporation of Paxson Communications of
Memphis-50, Inc.+
3.114.2 -- Bylaws of Paxson Communications of Memphis-50, Inc.+
</TABLE>
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EXHIBIT NO. DESCRIPTION
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<C> <S> <C>
3.115.1 -- Articles of Incorporation of Paxson Communications of
Knoxville-54, Inc.+
3.115.2 -- Bylaws of Paxson Communications of Knoxville-54, Inc.+
3.116.1 -- Articles of Incorporation of Paxson Communications of New
Orleans-49, Inc.+
3.116.2 -- Bylaws of Paxson Communications of New Orleans-49, Inc.+
3.117.1 -- Articles of Incorporation of Paxson Communications of
Portland-23, Inc.+
3.117.2 -- Bylaws of Paxson Communications of Portland-23, Inc.+
3.118.1 -- Articles of Incorporation of Paxson Orlando License, Inc.+
3.118.2 -- Bylaws of Paxson Orlando License, Inc.+
3.119.1 -- Articles of Incorporation of Paxson Communications of
Chicago-38, Inc.+
3.119.2 -- Bylaws of Paxson Communications of Chicago-38, Inc.+
3.120.1 -- Articles of Incorporation of Paxson Chicago License, Inc.+
3.120.2 -- Bylaws of Paxson Chicago License, Inc.+
3.121.1 -- Articles of Incorporation of Paxson Communications of
Norfolk-49, Inc.+
3.121.2 -- Bylaws of Paxson Communications of Norfolk-49, Inc.+
3.122.1 -- Articles of Incorporation of Paxson Albuquerque License,
Inc.+
3.122.2 -- Bylaws of Paxson Albuquerque License, Inc.+
3.123.1 -- Articles of Incorporation of Paxson Communications of
Davenport-67, Inc.+
3.123.2 -- Bylaws of Paxson Communications of Davenport-67, Inc.+
3.124.1 -- Articles of Incorporation of Paxson Davenport License, Inc.+
3.124.2 -- Bylaws of Paxson Davenport License, Inc.+
3.125.1 -- Articles of Incorporation of Paxson Communications of Des
Moines-39, Inc.+
3.125.2 -- Bylaws of Paxson Communications of Des Moines-39, Inc.+
3.126.1 -- Articles of Incorporation of Paxson Des Moines License,
Inc.+
3.126.2 -- Bylaws of Paxson Des Moines License, Inc.+
3.127.1 -- Articles of Incorporation of Paxson Communications of
Greenville-38, Inc.+
3.127.2 -- Bylaws of Paxson Communications of Greenville-38, Inc.+
3.128.1 -- Articles of Incorporation of Paxson Greenville License,
Inc.+
3.128.2 -- Bylaws of Paxson Greenville License, Inc.+
3.129.1 -- Articles of Incorporation of Paxson Communications of
Jackson-51, Inc.+
3.129.2 -- Bylaws of Paxson Communications of Jackson-51, Inc.+
3.130.1 -- Articles of Incorporation of Paxson Jackson License, Inc.+
3.130.2 -- Bylaws of Paxson Jackson License, Inc.+
3.131.1 -- Articles of Incorporation of Paxson Communications of
Mobile-61, Inc.+
3.131.2 -- Bylaws of Paxson Communications of Mobile-61, Inc.+
3.132.1 -- Articles of Incorporation of Paxson Mobile License, Inc.+
3.132.2 -- Bylaws of Paxson Mobile License, Inc.+
3.133.1 -- Articles of Incorporation of Paxson Communications of
Odessa-30, Inc.+
3.133.2 -- Bylaws of Paxson Communications of Odessa-30, Inc.+
3.134.1 -- Articles of Incorporation of Paxson Odessa License, Inc.+
3.134.2 -- Bylaws of Paxson Odessa License, Inc.+
3.135.1 -- Articles of Incorporation of Paxson Portland License, Inc.+
3.135.2 -- Bylaws of Paxson Portland License, Inc.+
3.136.1 -- Articles of Incorporation of Paxson Communications of
Shreveport-21, Inc.+
3.136.2 -- Bylaws of Paxson Communications of Shreveport-21, Inc.+
3.137.1 -- Articles of Incorporation of Paxson Shreveport License,
Inc.+
3.137.2 -- Bylaws of Paxson Shreveport License, Inc.+
3.138.1 -- Articles of Incorporation of Paxson Communications of
Spokane-34, Inc.+
3.138.2 -- Bylaws of Paxson Communications of Spokane-34, Inc.+
3.139.1 -- Articles of Incorporation of Paxson Spokane License, Inc.+
3.139.2 -- Bylaws of Paxson Spokane License, Inc.+
3.140.1 -- Articles of Incorporation of Paxson Communications of St.
Croix-15, Inc.+
3.140.2 -- Bylaws of Paxson Communications of St. Croix-15, Inc.+
</TABLE>
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<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.141.1 -- Articles of Incorporation of Paxson St. Croix License, Inc.+
3.141.2 -- Bylaws of Paxson St. Croix License, Inc.+
3.142.1 -- Articles of Incorporation of Paxson Communications of
Springfield-34, Inc.+
3.142.2 -- Bylaws of Paxson Communications of Springfield-34, Inc.+
3.143.1 -- Articles of Incorporation of Paxson Springfield License,
Inc.+
3.143.2 -- Bylaws of Paxson Springfield License, Inc.+
3.144.1 -- Articles of Incorporation of S&E Network, Inc.+
3.144.2 -- Bylaws of S&E Network, Inc.+
3.145.1 -- Articles of Incorporation of Channel 56 of Orlando, Inc.+
3.145.2 -- Bylaws of Channel 56 of Orlando, Inc.+
3.146.1 -- Certificate of Incorporation of Travel Channel Acquisition
Corporation+
3.146.2 -- Bylaws of Travel Channel Acquisition Corporation+
3.147.1 -- Articles of Incorporation of Paxson Communications of West
Palm Beach-67, Inc.+
3.147.2 -- Bylaws of Paxson Communications of West Palm Beach-67, Inc.+
3.148.1 -- Articles of Incorporation of Paxson Communications of
Lexington-67, Inc.+
3.148.2 -- Bylaws of Paxson Communications of Lexington-67, Inc.+
3.149.1 -- Articles of Incorporation of Paxson Lexington License, Inc.+
3.149.2 -- Bylaws of Paxson Lexington License, Inc.+
3.150.1 -- Articles of Incorporation of Paxson Communications of
Portland-22, Inc.+
3.150.2 -- Bylaws of Paxson Communications of Portland-22, Inc.+
3.151.1 -- Articles of Incorporation of Paxson Salem License, Inc.+
3.151.2 -- Bylaws of Paxson Salem License, Inc.+
3.152.1 -- Articles of Incorporation of Paxson Communications of San
Antonio-26, Inc.+
3.152.2 -- Bylaws of Paxson Communications of San Antonio-26, Inc.+
3.153.1 -- Articles of Incorporation of Paxson Communications of
Fargo-27, Inc.+
3.153.2 -- Bylaws of Paxson Communications of Fargo-27, Inc.+
3.154.1 -- Articles of Incorporation of Paxson Tulsa License, Inc.+
3.154.2 -- Bylaws of Paxson Tulsa License, Inc.+
3.155.1 -- Articles of Incorporation of Paxson Knoxville License, Inc.+
3.155.2 -- Bylaws of Paxson Knoxville License, Inc.+
3.156.1 -- Articles of Incorporation of Pax Net Television Productions,
Inc.+
3.156.2 -- Bylaws of Pax Net Television Productions, Inc.+
3.157.1 -- Articles of Incorporation of Paxson Communications of
Wausau-46, Inc.+
3.157.2 -- Bylaws of Paxson Communications of Wausau-46, Inc.+
3.158.1 -- Articles of Incorporation of Paxson Wausau License, Inc.+
3.158.2 -- Bylaws of Paxson Wausau License, Inc.+
3.159.1 -- Articles of Incorporation of Paxson Fargo License, Inc.+
3.159.2 -- Bylaws of Paxson Fargo License, Inc.+
3.160.1 -- Operating Agreement of Paxson Communications License
Company, LLC+
3.160.2 -- Certificate of Organization of Paxson Communications License
Company, LLC+
3.161.1 -- Articles of Incorporation of Cocola Media Corporation of San
Francisco+
3.161.2 -- Bylaws of Cocola Media Corporation of San Francisco+
3.162.1 -- Articles of Incorporation of Channel 44 of Tulsa, Inc.+
3.162.2 -- Bylaws of Channel 44 of Tulsa, Inc.+
3.163.1 -- Certificate of Incorporation of Cocola Media Corporation of
Florida+
3.163.2 -- Bylaws of Cocola Media Corporation of Florida +
3.164.1 -- Articles of Incorporation of Paxson Kansas City License,
Inc.+
3.164.2 -- Bylaws of Paxson Kansas City License, Inc.+
4.1 -- Indenture dated as of September 28, 1995 by and between the
Company, the guarantors named therein and The Bank of New
York, as Trustee, with respect to the Senior Subordinated
Notes(4)
4.2 -- Form of Senior Subordinated Note with Form of Guarantee(4)
</TABLE>
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<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
4.3 -- Indenture dated as of October 4, 1996 by and between the
Company, the Guarantors named therein and the Bank of New
York, as Trustee, with respect to the Exchange Debentures(7)
4.4 -- Indenture dated as of June 10, 1998 by and between the
Company, the Guarantors named therein and the Bank of New
York, as Trustee, with respect to the New Exchange
Debentures
4.5 -- Second Amended and Restated Credit Agreement, dated as of
April 28, 1998, among Paxson Communications Corporation, the
several lenders from time to time parties thereto and Union
Bank of California, N.A., as the Agent
4.6 -- Form of Stock Certificate of the 13 1/4% Cumulative Junior
Exchangeable Preferred Stock
5.1 -- Opinion of Holland & Knight LLP regarding the legality of
the New Junior Preferred Stock, including consent+
9.1 -- Amended and Restated Stockholders Agreement, dated as of
December 22, 1994, by and among the Company and certain
stockholders thereof(2)
9.2 -- Agreement, dated March 26, 1996, amending the Amended and
Restated Stockholders Agreement, dated as of December 22,
1994, by and among the Company and certain stockholders
thereof and certain related agreements(5)
10.1 -- Securities Purchase Agreement, dated as of September 22,
1995, by and among the Company, the Guarantors named therein
and the Initial Purchasers named therein(4)
10.3 -- Stock Purchase Agreement, dated as of December 22, 1994, by
and among the Company and certain purchasers of Company
securities(2)
10.4 -- Amended and Restated Stockholders Agreement, dated as of
December 22, 1994, by and among the Company and certain
stockholders thereof (incorporated by reference to Exhibit
9.1)(2)
10.4.1 -- Agreement, dated March 26, 1996 amending the Amended and
Restated Stockholders Agreement, by and among the Company
and certain stockholders thereof and certain related
agreements (incorporated by reference to Exhibit 9.2)
10.5 -- Exchange and Consent Agreement, dated as of December 22,
1994 by and among the Company and certain stockholders
thereof(2)
10.26 -- Employment Agreement, dated as of June 30, 1994, by and
between the Company and Lowell W. Paxson(1)
10.27 -- Paxson Communications Corp. Profit Sharing Plan(1)
10.28 -- Paxson Communications Corp. Stock Incentive Plan(1)
10.36 -- Real Estate Sale and Purchase Agreement, dated as of May 18,
1995, by and between F&M Bank--Martinsburg and Paxson
Communications of Washington-60, Inc.(3)
10.46 -- Non-compete Agreement, dated August 18, 1995, between the
Company and Lowell W. Paxson(4)
10.54 -- Indenture, dated as of September 28, 1995, among the
Company, the Guarantors named therein and The Bank of New
York, as Trustee with respect to the Senior Subordinated
Notes(4)
10.83 -- Lease Agreement, dated June 14, 1994, between Paxson
Communications of Tampa-66, Inc. and The Christian Network,
Inc. for lease of production and distribution facilities at
WFCT-TV(5)
10.89 -- Amended and Restated Promissory Note dated August 5, 1996
between Roberts Broadcasting of Salt Lake City, L.L.C. and
Paxson Communications of Salt Lake City-16, Inc.(6)
10.90 -- First Amendment to Loan Agreement dated August 5, 1996
between Roberts Broadcasting of Salt Lake City, L.L.C. and
Paxson Communications of Salt Lake City-16, Inc.(6)
10.103 -- Construction Agreement, dated April 16, 1996, by and among
Offshore Broadcasting Corporation, Ocean State Television,
L.L.C. and Paxson Communications of Providence-69, Inc.(6)
</TABLE>
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<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.104 -- Loan Agreement, dated April 16, 1996, by and among Paxson
Communications of Providence-69, Inc., Offshore Broadcasting
Corporation and Ocean State Television, L.L.C.(6)
10.110 -- Subordinated Note between MacDonald Communications
Corporation and the Company for $3,000,000 dated June 7,
1996.(6)
10.116 -- Asset Purchase Agreement, dated July 1, 1996, by and among
Paxson Communications of New London-26, Inc., Paxson New
London License, Inc., and Roberts Broadcasting of Hartford,
L.L.C.(6)
10.123 -- Asset Exchange Agreement, dated August 7, 1996, by and
between Paxson Broadcasting of Birmingham-44, Inc. and
WNAL-TV Inc.(6)
10.124 -- Loan Agreement, dated August 7, 1996, by and between Paxson
Broadcasting of Birmingham-44 Inc. and WNAL-TV Inc.(6)
10.125 -- Time Brokerage Agreement, dated August 7, 1996, by and
between Paxson Broadcasting of Birmingham-44 Inc. and
WNAL-TV Inc.(6)
10.126 -- Option Agreement by and among Paxson Communications of Salt
Lake City-16, Inc. and Roberts Broadcasting of Salt Lake
City L.L.C., dated August 5, 1996(6)
10.127 -- Asset Purchase Agreement, dated July 31, 1996, by and
between Paxson Communications of Oklahoma City-62, Inc. and
Aracelis Ortiz for Television Station KMNZ-TV, Oklahoma
City, Oklahoma(8)
10.128 -- Purchase Agreement, dated July 31, 1996, by and among
America 51, L.P., Paxson Communications of Phoenix-51, Inc.,
and Hector Garcia Salvatierra for Television Station Channel
51, Tolleson, Arizona(8)
10.129 -- Loan, Option and Related Transactions, dated August 19,
1996, between Paxson Communications of Seattle-24, Inc. and
World Television of Washington, L.L.C. for Television
Station KBCB(TV), Bellingham, Washington(8)
10.130 -- Stock Purchase and Related Transactions, dated August 21,
1996, between Paxson Communications of Little Rock-42, Inc.,
Leininger-Geddes Partnership and Channel 42 of Little Rock,
Inc. for Television Station KVUT(TV), Little Rock,
Arkansas(8)
10.131 -- Asset Purchase and Sale Agreement, dated August 27, 1996,
between Intermart Broadcasting First Coast, Inc., and Paxson
Broadcasting of Jacksonville, Limited Partnership for Radio
Station WPVJ-FM of Ponte Verda Beach, Florida(8)
10.132 -- Purchase Agreement, dated August 29, 1996, by and between
Boardworks Outdoor Advertising Company, Inc., and Paxson
Outdoor, Inc.(8)
10.133 -- Asset Purchase Agreement, dated August 30, 1996, by and
between Paxson Communications Television, Inc. and Alpha &
Omega Communications, L.L.C. for Television Station KOOG-TV,
Ogden, Utah(8)
10.134 -- Loan Agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento-29, Inc. for Television Station
KCMY-TV, Sacramento, California(8)
10.135 -- Option Agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento for Television Station KCMY-TV,
Sacramento, California(8)
10.136 -- Asset Purchase Agreement, dated September 12, 1996, by and
between The Moody Bible Institute of Chicago and Paxson
Broadcasting of Tampa, Limited Partnership for Radio Station
WKES-FM, St., Petersburg, Florida(8)
10.137 -- Asset Purchase Agreement, dated September 27, 1996, by and
between Channel 46 of Boston, Inc. and Massachusetts
Redevelopment Limited Liability Company for Television
Station WHRC(TV), Norwell, Massachusetts(8)
10.138 -- Easement Agreement, dated October 9, 1996, by and between
Kartworlds of Central Florida L.C. and Paxson Outdoor,
Inc.(8)
10.139 -- Contract for Sale and Purchase, dated October 22, 1996,
between Southern Land Investors, LTD., and Paxson Outdoor,
Inc.(8)
</TABLE>
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<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.139.1 -- Promissory Note, dated October 22, 1996, between Southern
Land Investors, LTD. and Paxson Outdoor, Inc.(8)
10.139.2 -- Real Estate Mortgage, dated October 22, 1996, Southern Land
Investors, Ltd. and Paxson Outdoor, Inc.(8)
10.139.3 -- Assignment of Rights Under Pre-annexation Agreement, dated
October 22, 1996, by and between Michael J. Grinstaff and
Southern Land Investors, Ltd.(8)
10.140 -- Stock Purchase Agreement, dated November 12, 1996, by and
between Housing Development Associates S.E. and Paxson
Communications of San Juan, Inc.(10)
10.141 -- Asset Purchase Agreement, dated November 21, 1996, by and
among Value Vision International, Inc., VVI Manassas, Inc.,
WVVI(TV), Inc., Paxson Communications of Washington-66,
Inc., and the Company(10)
10.142 -- Asset Purchase Agreement, dated November 21, 1996, by and
between Paxson Communications of Milwaukee-55, Inc. and
Channel 55 of Milwaukee, Inc.(10)
10.143 -- Asset Purchase Agreement, dated December 13, 1996, by and
between Paxson Communications of the Keys, Inc., and Key
Chain, Inc. for Radio Stations WFKZ-FM, Plantation Key,
Florida, WAVK-FM, Marathon, Florida, and WKRY-FM, Key West,
Florida(10)
10.144 -- Asset Purchase Agreement, dated December 10, 1996, by and
between Paxson Communications of Kansas City-50, Inc. and
Kansas City Youth for Christ, Inc. for Television Station
KYFC-TV, Kansas City, Missouri(10)
10.145 -- Stock Purchase Agreement, dated December 11, 1996, by and
among Channel 64 of Scranton, Inc., Paxson Communication of
Scranton-64, Inc. and Ted Ehrhardt D/B/A Ehrhardt
Broadcasting(10)
10.146 -- Asset Purchase Agreement, dated February 19, 1997, by and
between Paxson Communications of Ft. Pierce-34, Inc., and
Paramount Stations Group, Inc. for Television Station
WTVX(TV), Ft. Pierce, Florida(10)
10.147 -- Promissory Note, dated February 12, 1997, by and between
Roberts Broadcasting of Hartford, L.L.C. and Paxson
Communications of New London-26, Inc. for Television Station
WTWS (TV), New London, Connecticut(10)
10.147.1 -- Time Brokerage Agreement, dated February 12, 1997, by and
between Roberts Broadcasting of Hartford, L. L. C. and
Paxson Communications of New London-26, Inc. for Television
Station WTWS(TV), New London, Connecticut(10)
10.147.2 -- Amendment to Asset Purchase Agreement, dated December 16,
1996, by and among Roberts Broadcasting of Hartford, L.L.P.,
Paxson Communications of New London-26, Inc., and Paxson New
London License, Inc.(10)
10.148 -- Amended and Restated Promissory Note, dated April 16, 1996,
by and between Ocean State Television, L. L. C. and Paxson
Communications of Providence-69, Inc.(10)
10.149 -- Second Amendment to Stock Purchase and Option Agreement,
dated September 27, 1996, by and among Paxson Communications
of Battle Creek-43, Inc., Western Michigan Christian
Broadcasting, Inc., Western Michigan Family Broadcasting,
Inc., Horizon Broadcasting Corporation, and William B.
Popjes.(10)
10.150 -- Partnership Interest Purchase Agreement, dated February 14,
1997, by and among DP Media, Inc., Roberts Broadcasting,
L.L.C., and Roberts Broadcasting company of Raleigh-Durham,
L.P.(10)
10.151 -- Option Purchase Agreement, dated February 14, 1997, by and
between Paxson Communications of Raleigh-Durham-47, Inc.,
and D P. Media, Inc.(10)
10.153 -- Asset Purchase Agreement, dated March 13, 1997 by and among
Paxson Communications of Detroit-31, Inc. and Blackstar
Communications, Inc. for Television Stations WBSX(TV) and
W48AV(10)
10.154 -- Asset Purchase Agreement, dated March 25, 1997, by and
between Paxson Communications of West Palm Beach-25, Inc.
and The Hearst Corporation, for Television Station WPBF(TV),
West Palm Beach, Florida(10)
</TABLE>
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<PAGE> 182
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.155 -- Purchase and Sale of Option, dated March 26, 1997, by and
between Paxson Communications of Cleveland-67, Inc., and
Global Broadcasting Systems, Inc. for Television Station
WOAC(TV), Cleveland, Ohio(10)
10.155.1 -- Purchase and Sale of Option, dated March 26, 1997, by and
between Paxson Communications of Atlanta-14, Inc., and
Global Broadcasting Systems, Inc. for Television Station
WNGM(TV), Atlanta, Georgia(10)
10.156 -- Asset purchase agreement, dated March 21, 1997, by and
between Whitehead Media of Florida, Inc., Whitehead
Broadcasting of Florida, Inc. and Paxson Communications of
Ft. Pierce-34, Inc. for Television Station WTVX(TV), Ft.
Pierce, Florida(10)
10.157 -- Paxson Communications Corporation 1996 Stock Incentive
Plan(9)
10.158 -- Loan agreement, dated March 26, 1996, by and between Paxson
Communications Corporation and Cocola Media Corporation of
San Francisco for television station KWOK-TV, Novato,
California(12)
10.159 -- Asset purchase agreement, dated April 1, 1997, by and
between Paxson Communications Corporation and The Kralowec
Children's Family Trust and KKAK-TV, Inc. for television
station KKAG(TV), Porterville, California(12)
10.160 -- Asset purchase agreement, dated May 5, 1997, by and among
Paxson Communications of Cedar Rapids-48, Inc., Fant
Broadcasting Company of Iowa, Inc. and Paxson Communications
Corporation for television station KTVC-TV, Cedar Rapids,
Iowa(12)
10.161 -- Asset purchase agreement, dated April 15, 1997, by and among
Paxson Communications of Buffalo-51, Inc., Fant Broadcasting
of New York, L.L.C., Anthony Fant and Paxson Communications
Corporation for television station WAQF-TV(12)
10.162 -- Assignment and acceptance agreement, dated April 18, 1997,
among WQED Pittsburgh and Paxson Communications of
Pittsburgh-40, Inc.(12)
10.163 -- Merger agreement, dated April 29, 1997, among WPBF Merger,
Inc. and WPBF License, Inc. and Paxson Communications of
West Palm Beach-25, Inc. and Paxson West Palm Beach License,
Inc.(11)
10.163.1 -- Paxson Communications of West Palm Beach-25, Inc. and Paxson
West Palm Beach License, Inc. Subordinated Promissory Note,
dated April 29, 1997(11)
10.163.2 -- Time brokerage agreement, dated April 29, 1997, by and
between Paxson Communications of West Palm Beach-25, Inc.,
and Paxson West Palm Beach License, Inc., and Paxson
Communications of Florida, Inc.(11)
10.164 -- Asset purchase agreement, dated April 22, 1997, by and
between Paxson Communications of Miami-35, Inc. and Channel
35 of Miami, Inc.(12)
10.165 -- Asset purchase agreement, dated April 22, 1997, by and
between Paxson Communications of Tampa-66, Inc. and Channel
66 of Tampa, Inc.(12)
10.166 -- Asset purchase agreement, dated April 30, 1997, by and
between Paxson Communications of Green Bay-14, Inc and VCY
America, Inc. for television station WSCO(TV), Green Bay,
Wisconsin(12)
10.167 -- Asset purchase agreement, dated May 12, 1997, by and between
the Company, Paxson communications of New York City, ITT-Dow
Jones Television, ITT Corporation and Dow Jones & Company
for Television Station WBIS(TV), New York City, New York(12)
10.167.1 -- Time brokerage agreement, dated May 1997, by and between
ITT-Dow Jones Television and Paxson Communications of New
York-31, Inc. for Television Station WBIS(TV), New York
City, New York(12)
10.168 -- Construction Agreement, dated December 23, 1996, between
WHCT Broadcasting, Inc., and Paxson Communications of
Hartford-18, Inc. for WHCT(TV), Channel 18, Hartford,
Connecticut(13)
10.169 -- Asset Purchase Agreement, dated April 11, 1997, by and
between Roberts Broadcasting of Cookeville, L.L.C. and
Paxson Communications of Nashville-28, Inc. (13)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.170 -- Amended and Restated Asset Purchase Agreement, dated April
15, 1997, by and among Paxson Communications of Buffalo-51,
Inc., Fant Broadcasting Company of New York, L.L.C., Anthony
Fant and Paxson Communications Corporation(13)
10.171 -- Asset Purchase Agreement, dated May 14, 1997, by and between
Paxson Communications of West Palm Beach, Inc. and American
Radio Systems Corporation(13)
10.172 -- Option Agreement, dated May 20, 1997, by and between Paxson
Communications of Honolulu-66, Inc. and Dove Broadcasting
Company of Hawaii, Inc. for television station KAPA(TV),
Kaneohe, Hawaii(13)
10.172.1 -- Loan Agreement, dated May 20, 1997, by and among Paxson
Communications of Honolulu-66, Inc., and Dove Broadcasting
Company of Hawaii(13)
10.173 -- Asset Purchase Agreement, dated May 28, 1997, by and among
Paxson Communications of Roanoke-38, Inc., Vine and Branch,
Inc. and Evangel Foursquare Church for television station
WEFC, Roanoke, Virginia(13)
10.174 -- Loan Agreement, dated June 10, 1997, by and between Paxson
Communications of Boston-46, Inc. and Channel 46 of Boston,
Inc. for television station WHRC(TV), Norwell,
Massachusetts(13)
10.175 -- Asset Acquisition Agreement, dated June 13, 1997, by and
among Landmark Communications, Inc., The Travel Channel,
Inc., and Paxson Communications(13)
10.176 -- Asset Purchase Agreement, dated June 23, 1997, by and
between Paxson Communications of Orlando-56, Inc. and
Channel 56 of Orlando, Inc.(13)
10.177 -- Loan Agreement, dated June 30, 1997, by and between Roberts
Broadcasting Company of Albuquerque and Paxson
Communications of Albuqurque-14, Inc. relating to television
station (Channel 14), Albuquerque, New Mexico(13)
10.178 -- Asset Purchase Agreement, dated June 25, 1997, by and
between John W. Hyde, as Chapter 11 Trustee of the Chapter
11 Debtor Estate of Riklis Broadcasting Corporation, AKA
KADY-TV, AKA Pacific Rim Video and Paxson Communications of
Los Angeles-63, Inc.(13)
10.179 -- Asset Purchase Agreement, dated August 25, 1997, by and
among Paxson Communications Corporation, Clear Channel
Metroplex, Inc., Clear Channel Metroplex Licenses, Inc. and
Clear Channel Communications, Inc. (filed as exhibit 2.1
with the Company's Form 8-K, dated October 1, 1997 and
incorporated herein by reference)
10.180 -- Asset Purchase Agreement, dated August 25, 1997, by and
among Paxson Communications Corporation, L. Paxson, Inc.,
Clear Channel Metroplex, Inc., Clear Channel Metroplex
Licenses, Inc. and Clear Channel Communications, Inc. (filed
as exhibit 2.2 with the Company's Form 8-K, dated October 1,
1997 and incorporated herein by reference)
10.181 -- Asset Purchase Agreement, dated August 29, 1997, by and
among Paxson Communications of Fayetteville-62, Inc.,
Fayetteville-Cumberland Telecasters, Inc.,
Fayetteville-Cumberland Telecasters Inc.,
Debtor-in-Possession, and Poplar Apartments Limited
Partnership for Television station WFAY, Fayetteville, North
Carolina(14)
10.182 -- Stock Purchase Agreement, dated September 2, 1997, by and
among Channel 29 of Charleston, Inc., Paxson Communications
of Charleston-29, Inc. and Mountaineer Broadcasting
Corporation and William L. Kepper(14)
10.183 -- Stock Purchase Agreement, dated September 9, 1997, by and
among Channel 46 of Tucson, Inc., Paxson Communications of
Tucson-46, Inc. and Sungilt Corporation, Inc. (14)
10.184 -- Asset Purchase Agreement, dated October 16, 1997, by and
between Paxson Communications Corporation and Channel 49
Acquisition Corporation for television station WJCB-TV,
Norfolk, Virginia(14)
10.185 -- Asset Purchase Agreement, dated October 24, 1997, between
Universal Outdoor, Inc. and Paxson Communications
Corporation(14)
10.186 -- Option Agreement, dated November 14, 1997, by and between
Paxson Communications Corporation and Flinn Broadcasting
Corporation for Television station WCCL-TV, New Orleans,
Louisiana(15)
</TABLE>
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<PAGE> 184
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.187 -- Option Agreement, dated November 14, 1997, by and between
Paxson Communications Corporation and Flinn Broadcasting
Corporation for Television station WFBI-TV, Memphis,
Tennessee(15)
10.188 -- Asset Purchase Agreement, dated January 26, 1998, by and
among DP Media of Milwaukee, Inc., Paxson Communications of
Milwaukee-55, Inc. and Paxson Milwaukee License, Inc. for
Television station WPXE(TV), Kenosha, Wisconsin(15)
10.189 -- Asset and Stock Purchase and Option Grant Agreement, dated
as of November 14, 1997, by and among ValueVision
International, Inc., VVI Seattle, Inc., VVI LPTV, Inc., VVI
Spokane, Inc., VVI Tallahassee, Inc. and Paxson
Communications Corporation(15)
10.190 -- Limited Liability Company Agreement of The Travel Channel,
L.L.C. dated as of November 24, 1997(15)
10.191 -- Asset Purchase Agreement, dated as of November 24, 1997, by
and among Travel Channel Acquisition Corporation, Project
Discovery, Inc., Paxson Communications Corporation and
Discovery Communications, Inc.(15)
10.192 -- Guaranty Agreement, dated as of November 24, 1997, made by
Discovery Communications, Inc., in favor of Travel Channel
Acquisition Corporation(15)
10.193 -- Asset Exchange Agreement, dated January 26, 1998, by and
among Paxson Communications of Chicago-38, Inc., Christian
Communications of Chicagoland, Inc., and Paxson
Communications Corporation(15)
10.193.1 -- Programming Agreement by and between Paxson Communications
of Chicago-38, Inc. and Christian Communications of
Chicagoland Inc.(15)
10.194 -- Asset Purchase Agreement, dated March 19, 1998, by and
between Paxson Communications of Atlanta-14, Inc. and SKMD
Broadcasting Partnership and USA Station Group of Maryland,
Inc.(16)
10.195 -- Asset Purchase Agreement, dated March 19, 1998, by and among
Paxson Communications of Portland-22, Inc.; Paxson
Communications Corporation; Blackstar Communications of
Oregon, Inc.; and Blackstar of Salem, Inc.(16)
10.196 -- Membership Purchase Agreement, dated January 14, 1998, by
and among Dr. Joseph A. Zavaletta, South Texas Vision,
L.L.C., Paxson Communications of San Antonio-26, Inc., and
Paxson Communications Corporation for television station
Channel 26, Uvalde, Texas(16)
10.197 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and Jeffrey Sagansky
10.198 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and James B. Bocock
10.199 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and Dean M. Goodman
10.200 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and J. Jay Hoker
10.201 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and Arthur D. Tek
10.202 -- Paxson Communications Corporation 1998 Stock Incentive Plan+
12 -- Computation of Ratio of Earnings to Fixed Charges
21 -- List of Subsidiaries+
23.1 -- Consent of Holland & Knight LLP (contained in Exhibit 5.1)
23.2 -- Consent of PricewaterhouseCoopers LLP, independent certified
public accountants
24 -- Powers of Attorney (included on signature pages of
Registration Statement)
25 -- Statement of Eligibility of Trustee, The Bank of New York,
on Form T-1
99.1 -- Form of Letter of Transmittal+
99.2 -- Form of Notice of Guaranteed Delivery+
</TABLE>
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<PAGE> 185
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
99.3 -- Exchange Agent Agreement+
</TABLE>
- ---------------
(1) Filed with the Company's Registration Statement on Form S-4, filed
September 26, 1994, Registration No. 33-84416 and incorporated herein by
reference.
(2) Filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference.
(3) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 and incorporated herein by reference.
(4) Filed with the Company's Registration Statement on Form S-4, as amended,
filed January 23, 1996, Registration No. 33-63765 and incorporated herein
by reference.
(5) Filed with the Company's Registration Statement on Form S-1, as amended,
filed January 26, 1996, Registration No. 333-473 and incorporated herein by
reference.
(6) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, and incorporated herein by reference.
(7) Filed with the Company's Registration Statement on Form S-3, as amended,
filed August 15, 1996, Registration No. 333-10267 and incorporated herein
by reference.
(8) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by reference.
(9) Filed with the Company's Registration Statement on Form S-8, filed January
22, 1997, Registration No. 333-20163 and incorporated herein by reference.
(10) Filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference.
(11) Filed with the Company's Report on Form 8-K, dated April 29, 1997, under
Item 7. Financial Statements and Exhibits and incorporated herein by
reference.
(12) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, and incorporated herein by reference.
(13) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, and incorporated herein by reference.
(14) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, and incorporated herein by reference.
(15) Filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated herein by reference.
(16) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998, and incorporated herein by reference.
+ To be filed by amendment.
(b) Financial Statement Schedules
All required financial statement schedules have been filed with the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.
(c) Not Applicable.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(b)(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by
II-14
<PAGE> 186
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not subject of and included in the Registration Statement when it
became effective.
II-15
<PAGE> 187
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation, has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of West Palm Beach, State of Florida, on July 20,
1998.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ JEFFREY SAGANSKY
-------------------------------------
Jeffrey Sagansky
President and Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned officers and directors of PAXSON COMMUNICATIONS
CORPORATION (the "Company"), a Delaware corporation, for himself and not for one
another, does hereby constitute and appoint ANTHONY L. MORRISON and ARTHUR D.
TEK, and each and either of them and his substitutes, a true and lawful attorney
in his name, place and stead, in any and all capacities, to sign his name to any
and all amendments to this registration statement, including post-effective
amendments, and to cause the same to be filed with the Securities and Exchange
Commission, granting unto said attorneys and each of them full power of
substitution and full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ JEFFREY SAGANSKY Chief Executive Officer, President and July 20, 1998
- --------------------------------------------- Director (Principal Executive Officer)
Jeffrey Sagansky
/s/ ARTHUR D. TEK Vice President, Chief Financial Officer July 20, 1998
- --------------------------------------------- and Director (Principal Financial
Arthur D. Tek Officer)
/s/ KENNETH M. GAMACHE Vice President and Controller (Principal July 20, 1998
- --------------------------------------------- Accounting Officer)
Kenneth M. Gamache
/s/ LOWELL W. PAXSON Chairman of the Board, Director July 20, 1998
- ---------------------------------------------
Lowell W. Paxson
/s/ WILLIAM E. SIMON, JR. Vice Chairman, Director July 20, 1998
- ---------------------------------------------
William E. Simon, Jr.
/s/ JAMES B. BOCOCK Co-President, Director July 20, 1998
- ---------------------------------------------
James B. Bocock
</TABLE>
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<PAGE> 188
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ BRUCE L. BURNHAM Director July 20, 1998
- ---------------------------------------------
Bruce L. Burnham
/s/ JAMES L. GREENWALD Director July 20, 1998
- ---------------------------------------------
James L. Greenwald
</TABLE>
II-17
<PAGE> 189
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Registrants listed directly below has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of West Palm Beach, State of Florida, on July 20, 1998.
GUARANTORS:
PAXSON COMMUNICATIONS MANAGEMENT COMPANY, a Florida corporation
EXCEL MARKETING ENTERPRISES, 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
INFOMALL TV NETWORK, INC., a Delaware corporation
PAXSON COMMUNICATIONS OF CLEVELAND-67, 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., 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 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
II-18
<PAGE> 190
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 SEATTLE-33, INC., a Florida corporation
PAXSON SEATTLE LICENSE, INC., a Florida corporation
PAXSON COMMUNICATIONS OF SAN JUAN, INC., a Florida corporation
PAXSON COMMUNICATIONS OF BOSTON-46, INC., a Florida corporation
PAXSON COMMUNICATIONS OF PHOENIX-51, 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 SPORTS OF MIAMI, 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 COMMUNICATIONS OF CEDAR 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 HAWAII LICENSE, INC., a Florida corporation
PAXSON COMMUNICATIONS OF LOS ANGELES-63, INC., a Florida corporation
PAXSON COMMUNICATIONS OF ALBUQUERQUE-14, INC., a Florida corporation
II-19
<PAGE> 191
PAXSON COMMUNICATIONS OF FAYETTEVILLE-62, INC., a Florida corporation
PAXSON FAYETTEVILLE LICENSE, INC., a Florida corporation
UNITED BROADCAST GROUP II, INC., a Texas corporation
PAXSON COMMUNICATIONS OF CHARLESTON-29, INC., a Florida corporation
PAXSON CHARLESTON LICENSE, INC., a Florida corporation
JETSTAR DEVELOPMENT, INC., a Florida corporation
PAX NET, INC., a Delaware 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 MEMPHIS-50, INC., a Florida corporation
PAXSON COMMUNICATIONS OF KNOXVILLE-54, INC., a Florida corporation
PAXSON COMMUNICATIONS OF NEW ORLEANS-49, 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
CHANNEL 56 OF ORLANDO, INC., a Florida corporation
TRAVEL CHANNEL ACQUISITION CORPORATION, a Delaware corporation
PAXSON COMMUNICATIONS OF WEST PALM BEACH-67, INC., a Florida corporation
PAXSON COMMUNICATIONS OF LEXINGTON-67, INC., a Florida corporation
PAXSON 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
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<PAGE> 192
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 SAN FRANCISCO, a California corporation
CHANNEL 44 OF TULSA, INC., a Delaware corporation
COCOLA MEDIA CORPORATION OF FLORIDA, a Delaware corporation
By: /s/ LOWELL W. PAXSON
--------------------------------
Lowell W. Paxson
Chairman and Director
POWER OF ATTORNEY
Each of the undersigned officers and directors of the Registrants listed
directly above for himself and not for one another, does hereby constitute and
appoint ANTHONY L. MORRISON and ARTHUR D. TEK, and each and either of them and
his substitutes, a true and lawful attorney in his name, place and stead, in any
and all capacities, to sign his name to any and all amendments to this
registration statement, including post-effective amendments, and to cause the
same to be filed with the Securities and Exchange Commission, granting unto said
attorneys and each of them full power of substitution and full power and
authority to do and perform any act and thing necessary and proper to be done in
the premises, as fully to all intents and purposes as the undersigned could do
if personally present, and each of the undersigned for himself hereby ratifies
and confirms all that said attorneys or any one of them shall lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ LOWELL W. PAXSON Chairman and Director (Principal July 20, 1998
- ----------------------------------------------------- Executive Officer)
Lowell W. Paxson
/s/ ARTHUR D. TEK Vice President and Treasurer July 20, 1998
- ----------------------------------------------------- (Principal Financial and
Arthur D. Tek Accounting Officer)
</TABLE>
II-21
<PAGE> 193
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Registrants listed directly below has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of West Palm Beach, State of Florida, on July 20, 1998.
GUARANTORS:
S & E NETWORK, INC., a Puerto Rico corporation
By: /s/ JAMES B. BOCOCK
--------------------------------
James B. Bocock
President and Director
POWER OF ATTORNEY
Each of the undersigned officers and directors of the Registrant listed
directly above for himself and not for one another, does hereby constitute and
appoint ANTHONY L. MORRISON and ARTHUR D. TEK, and each and either of them and
his substitutes, a true and lawful attorney in his name, place and stead, in any
and all capacities, to sign his name to any and all amendments to this
registration statement, including post-effective amendments, and to cause the
same to be filed with the Securities and Exchange Commission, granting unto said
attorneys and each of them full power of substitution and full power and
authority to do and perform any act and thing necessary and proper to be done in
the premises, as fully to all intents and purposes as the undersigned could do
if personally present, and each of the undersigned for himself hereby ratifies
and confirms all that said attorneys or any one of them shall lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ LOWELL W. PAXSON Chairman and Director (Principal July 20, 1998
- ----------------------------------------------------- Executive Officer)
Lowell W. Paxson
/s/ ARTHUR D. TEK Vice President and Treasurer July 20, 1998
- ----------------------------------------------------- (Principal Financial and
Arthur D. Tek Accounting Officer)
/s/ JAMES B. BOCOCK President and Director July 20, 1998
- -----------------------------------------------------
James B. Bocock
</TABLE>
II-22
<PAGE> 194
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Registrants listed directly below has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of West Palm Beach, State of Florida, on July 20, 1998.
GUARANTORS:
OCEAN STATE TELEVISION, L.L.C., a Delaware limited liability company
PAXSON COMMUNICATIONS LICENSE COMPANY, LLC, A Delaware limited liability company
By: /s/ LOWELL W. PAXSON
--------------------------------
Lowell W. Paxson
Manager
POWER OF ATTORNEY
Each of the undersigned officers and directors of the Registrants listed
directly above (the "Company"), for himself and not for one another, does hereby
constitute and appoint ANTHONY L. MORRISON and ARTHUR D. TEK, and each and
either of them and his substitutes, a true and lawful attorney in his name,
place and stead, in any and all capacities, to sign his name to any and all
amendments to this registration statement, including post-effective amendments,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power of substitution and
full power and authority to do and perform any act and thing necessary and
proper to be done in the premises, as fully to all intents and purposes as the
undersigned could do if personally present, and each of the undersigned for
himself hereby ratifies and confirms all that said attorneys or any one of them
shall lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ LOWELL W. PAXSON Chairman and Manager (Principal July 20, 1998
- ----------------------------------------------------- Executive Officer)
Lowell W. Paxson
/s/ ARTHUR D. TEK Vice President and Treasurer July 20, 1998
- ----------------------------------------------------- (Principal Financial and
Arthur D. Tek Accounting Officer)
</TABLE>
II-23
<PAGE> 195
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.1.1 -- Certificate of Incorporation of the Company(2)
3.1.2 -- Bylaws of the Company(5)
3.2.1 -- Certificate of Designation of the Company's Junior
Cumulative Compounding Redeemable Preferred Stock(2)
3.2.2 -- Certificate of Designation of the Company's 12 1/2%
Cumulative Exchangeable Preferred Stock(5)
3.2.3 -- Certificate of Designation of the Company's original 13 1/4%
Cumulative Junior Exchangeable Preferred Stock
3.2.4 -- Certificate of Designation of the Company's 9 3/4% Series A
Convertible Preferred Stock
3.2.5 -- Certificate of Designation of the Company's new 13 1/4%
Cumulative Junior Exchangeable Preferred Stock+
3.3.1 -- Articles of Incorporation of Paxson Communications
Management Company(4)
3.3.2 -- Bylaws of Paxson Communications Management Company(4)
3.4.1 -- Articles of Incorporation of Excel Marketing Enterprises,
Inc.(4)
3.4.2 -- Bylaws of Excel Marketing Enterprises, Inc.(4)
3.5.1 -- Articles of Incorporation of Paxson Communications
Television, Inc.(4)
3.5.2 -- Bylaws of Paxson Communications Television, Inc.(4)
3.6.1 -- Articles of Incorporation of Paxson Communications of
Atlanta-14, Inc.(4)
3.6.2 -- Bylaws of Paxson Communications of Atlanta-14, Inc.(4)
3.7.1 -- Articles of Incorporation of Paxson Atlanta License, Inc.(4)
3.7.2 -- Bylaws of Paxson Atlanta License, Inc.(4)
3.8.1 -- Articles of Incorporation of Paxson Communications of
Boston-60, Inc.(4)
3.8.2 -- Bylaws of Paxson Communications of Boston-60, Inc.(4)
3.9.1 -- Articles of Incorporation of Paxson Boston License, Inc.(4)
3.9.1 -- Bylaws of Paxson Boston License, Inc.(4)
3.10.1 -- Articles of Incorporation of Paxson Communications of
Dallas-68, Inc.(4)
3.10.2 -- Bylaws of Paxson Communications of Dallas-68, Inc.(4)
3.11.1 -- Articles of Incorporation of Paxson Dallas License, Inc.(4)
3.11.2 -- Bylaws of Paxson Dallas License, Inc.(4)
3.12.1 -- Articles of Incorporation of Paxson Communications of New
London-26, Inc.(4)
3.12.2 -- Bylaws of Paxson Communications of New London-26, Inc.(4)
3.13.1 -- Articles of Incorporation of Paxson Communications of
Philadelphia-61, Inc.(4)
3.13.2 -- Bylaws of Paxson Communications of Philadelphia-61, Inc.(4)
3.14.1 -- Articles of Incorporation of Paxson Philadelphia License,
Inc.(4)
3.14.2 -- Bylaws of Paxson Philadelphia License, Inc.(4)
3.15.1 -- Articles of Incorporation of Paxson Communications of
Miami-35, Inc.(4)
3.15.2 -- Bylaws of Paxson Communications of Miami-35, Inc.(4)
3.16.1 -- Articles of Incorporation of Paxson Communications of San
Jose-65, Inc.(4)
3.16.2 -- Bylaws of Paxson Communications of San Jose-65, Inc.(4)
3.17.1 -- Articles of Incorporation of Paxson San Jose License,
Inc.(4)
3.17.2 -- Bylaws of Paxson San Jose License, Inc.(4)
3.18.1 -- Articles of Incorporation of Paxson Communications of
Tampa-66, Inc.(4)
3.18.2 -- Bylaws of Paxson Communications of Tampa-66, Inc.(4)
3.19.1 -- Articles of Incorporation of Paxson Communications of Los
Angeles-30, Inc.(4)
3.19.2 -- Bylaws of Paxson Communications of Los Angeles-30, Inc.(4)
3.20.1 -- Articles of Incorporation of Paxson Los Angeles License,
Inc.(4)
3.20.2 -- Bylaws of Paxson Los Angeles License, Inc.(4)
3.21.1 -- Articles of Incorporation of Paxson Communications of
Minneapolis-41, Inc.(4)
3.21.2 -- Bylaws of Paxson Communications of Minneapolis-41, Inc.(4)
3.22.1 -- Articles of Incorporation of Paxson Communications of St.
Louis-13, Inc.(4)
3.22.2 -- Bylaws of Paxson Communications of St. Louis-13, Inc.(4)
</TABLE>
<PAGE> 196
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.23.1 -- Articles of Incorporation of Paxson Minneapolis License,
Inc.(4)
3.23.2 -- Bylaws of Paxson Minneapolis License, Inc.(4)
3.24.1 -- Articles of Incorporation of Paxson Communications of
Orlando-56, Inc.(4)
3.24.2 -- Bylaws of Paxson Communications of Orlando-56, Inc.(4)
3.25.1 -- Articles of Incorporation of Paxson Communications of
Houston-49, Inc.(4)
3.25.2 -- Bylaws of Paxson Communications of Houston-49, Inc.(4)
3.26.1 -- Articles of Incorporation of Paxson Houston License, Inc.(4)
3.26.2 -- Bylaws of Paxson Houston License, Inc.(4)
3.27.1 -- Certificate of Incorporation of Infomall TV Network, Inc.(4)
3.27.2 -- Bylaws of Infomall TV Network, Inc.(4)
3.28.1 -- Articles of Incorporation of Paxson Communications of
Cleveland-67, Inc.(4)
3.28.2 -- Bylaws of Paxson Communications of Cleveland-67, Inc.(4)
3.29.1 -- Articles of Incorporation of Paxson Communications of
Washington-60, Inc.(4)
3.29.2 -- Bylaws of Paxson Communications of Washington-60, Inc.(4)
3.30.1 -- Articles of Incorporation of Paxson Washington License,
Inc.(4)
3.30.2 -- Bylaws of Paxson Washington License, Inc.(4)
3.31.1 -- Articles of Incorporation of Paxson Communications of
Phoenix-13, Inc.(4)
3.31.2 -- Bylaws of Paxson Communications of Phoenix-13, Inc.(4)
3.32.1 -- Articles of Incorporation of Paxson Phoenix License, Inc.(4)
3.32.2 -- Bylaws of Paxson Phoenix License, Inc.(4)
3.33.1 -- Articles of Incorporation of Infomall Los Angeles, Inc.(4)
3.33.2 -- Bylaws of Infomall Los Angeles, Inc.(4)
3.34.1 -- Articles of Incorporation of Paxson Communications of
Milwaukee-55, Inc.(4)
3.34.2 -- Bylaws of Paxson Communications of Milwaukee-55, Inc.(4)
3.35.1 -- Articles of Incorporation of Paxson Communications of
Denver-59, Inc.(4)
3.35.2 -- Bylaws of Paxson Communications of Denver-59, Inc.(4)
3.36.1 -- Articles of Incorporation of Paxson Communications of New
York-43, Inc.(4)
3.36.2 -- Bylaws of Paxson Communications of New York-43, Inc.(4)
3.37.1 -- Articles of Incorporation of Paxson New York License,
Inc.(4)
3.37.2 -- Bylaws of Paxson New York License, Inc.(4)
3.38.1 -- Articles of Incorporation of Paxson Communications of
Akron-23, Inc.(4)
3.38.2 -- Bylaws of Paxson Communications of Akron-23, Inc.(4)
3.39.1 -- Articles of Incorporation of Paxson Akron License, Inc.(4)
3.39.2 -- Bylaws of Paxson Akron License, Inc.(4)
3.40.1 -- Articles of Incorporation of Paxson Communications of
Dayton-26, Inc.(4)
3.40.2 -- Bylaws of Paxson Communications of Dayton-26, Inc.(4)
3.41.1 -- Articles of Incorporation of Paxson Communications of San
Juan, Inc.(7)
3.41.2 -- Bylaws of Paxson Communications of San Juan, Inc.(7)
3.42.1 -- Articles of Incorporation of Paxson Communications of Battle
Creek-43, Inc.(7)
3.42.2 -- Bylaws of Paxson Communications of Battle Creek-43, Inc.(7)
3.43.1 -- Articles of Incorporation of Paxson Communications of
Albany-55, Inc.(7)
3.43.2 -- Bylaws of Paxson Communications of Albany-55, Inc.(7)
3.44.1 -- Articles of Incorporation of Paxson Albany License, Inc.(7)
3.44.2 -- Bylaws of Paxson Albany License, Inc.(7)
3.45.1 -- Articles of Incorporation of Paxson Communications of
Raleigh Durham-47, Inc.(7)
3.45.2 -- Bylaws of Paxson Communications of Raleigh Durham-47,
Inc.(7)
3.46.1 -- Articles of Incorporation of Paxson Communications L.P.T.V.,
Inc.(7)
3.46.2 -- Bylaws of Paxson Communications L.P.T.V., Inc.(7)
3.47.1 -- Articles of Incorporation of Paxson Dayton License, Inc.(7)
3.47.2 -- Bylaws of Paxson Dayton License, Inc.(7)
3.48.1 -- Articles of Incorporation of Paxson Denver License, Inc.(7)
3.48.2 -- Bylaws of Paxson Denver License, Inc.(7)
3.49.1 -- Articles of Incorporation of Paxson Communications of
Providence-69, Inc.(7)
</TABLE>
<PAGE> 197
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.49.2 -- Bylaws of Paxson Communications of Providence-69, Inc.(7)
3.50.1 -- Articles of Incorporation of Paxson Communications of
Greensboro-16, Inc.(7)
3.50.2 -- Bylaws of Paxson Communications of Greensboro-16, Inc.(7)
3.51.1 -- Articles of Incorporation of Paxson Greensboro License,
Inc.(7)
3.51.2 -- Bylaws of Paxson Greensboro License, Inc.(7)
3.52.1 -- Articles of Incorporation of Paxson Communications of
Tulsa-44, Inc.(7)
3.52.2 -- Bylaws of Paxson Communications of Tulsa-44, Inc.(7)
3.53.1 -- Articles of Incorporation of Paxson Sports Ventures
Company(7)
3.53.2 -- Bylaws of Paxson Sports Ventures Company(7)
3.54.1 -- Articles of Incorporation of PCC Direct, Inc.(7)
3.54.2 -- Bylaws of PCC Direct, Inc.(7)
3.55.1 -- Articles of Incorporation of Paxson Communications of
Oklahoma City-62, Inc.(7)
3.55.2 -- Bylaws of Paxson Communications of Oklahoma City-62, Inc.(7)
3.56.1 -- Articles of Incorporation of Paxson Communications of
Sacramento-29, Inc.(7)
3.56.2 -- Bylaws of Paxson Communications of Sacramento-29, Inc.(7)
3.57.1 -- Articles of Incorporation of Paxson Sacramento License,
Inc.(7)
3.57.2 -- Bylaws of Paxson Sacramento License, Inc.(7)
3.58.1 -- Articles of Incorporation of Paxson Communications of
Seattle-33, Inc.(7)
3.58.2 -- Bylaws of Paxson Communications of Seattle-33, Inc.(7)
3.59.1 -- Articles of Incorporation of Paxson Seattle License, Inc.(7)
3.59.2 -- Bylaws of Paxson Seattle License, Inc.(7)
3.60.1 -- Articles of Incorporation of Paxson Communications of
Boston-46, Inc.(7)
3.60.2 -- Bylaws of Paxson Communications of Boston-46, Inc.(7)
3.61.1 -- Articles of Incorporation of Paxson Communications of Little
Rock-42, Inc.(7)
3.61.2 -- Bylaws of Paxson Communications of Little Rock-42, Inc.(7)
3.62.1 -- Articles of Incorporation of Paxson Little Rock License,
Inc.(7)
3.62.2 -- Bylaws of Paxson Little Rock License, Inc.(7)
3.63.1 -- Articles of Incorporation of Paxson Communications of
Phoenix-51, Inc.(7)
3.63.2 -- Bylaws of Paxson Communications of Phoenix-51, Inc.(7)
3.64.1 -- Articles of Incorporation of Paxson Communications of
Birmingham-44, Inc.(7)
3.64.2 -- Bylaws of Paxson Communications of Birmingham-44, Inc.(7)
3.65.1 -- Articles of Incorporation of Paxson Birmingham License,
Inc.(7)
3.65.2 -- Bylaws of Paxson Birmingham License, Inc.(7)
3.66.1 -- Articles of Incorporation of Paxson Sports of Miami, Inc.(7)
3.66.2 -- Bylaws of Paxson Sports of Miami, Inc.(7)
3.67.1 -- Articles of Incorporation of Paxson Communications of Salt
Lake City-30, Inc.+
3.67.2 -- Bylaws of Paxson Communications of Salt Lake City-30, Inc.+
3.68.1 -- Articles of Incorporation of Paxson Salt Lake City License,
Inc.+
3.68.2 -- Bylaws of Paxson Salt Lake City License, Inc.+
3.69.1 -- Articles of Incorporation of Paxson Oklahoma City License,
Inc.+
3.69.2 -- Bylaws of Paxson Oklahoma City License, Inc.+
3.70.1 -- Articles of Incorporation of Paxson Communications of
Washington-66, Inc.+
3.70.2 -- Bylaws of Paxson Communications of Washington-66, Inc.+
3.71.1 -- Articles of Incorporation of Paxson Communications of
Scranton-64, Inc.+
3.71.2 -- Bylaws of Paxson Communications of Scranton-64, Inc.+
3.72.1 -- Articles of Incorporation of Paxson Scranton License, Inc.+
3.72.2 -- Bylaws of Paxson Scranton License, Inc.+
3.73.1 -- Articles of Incorporation of Paxson Communications of Kansas
City-50, Inc.+
3.73.2 -- Bylaws of Paxson Communications of Kansas City-50, Inc.+
3.74.1 -- Articles of Incorporation of Paxson Milwaukee License, Inc.+
3.74.2 -- Bylaws of Paxson Milwaukee License, Inc.+
3.75.1 -- Articles of Incorporation of Paxson Communications of
Hartford-18, Inc.+
3.75.2 -- Bylaws of Paxson Communications of Hartford-18, Inc.+
</TABLE>
<PAGE> 198
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.76.1 -- Articles of Incorporation of Paxson Communications of
Pittsburgh-40, Inc.+
3.76.2 -- Bylaws of Paxson Communications of Pittsburgh-40, Inc.+
3.77.1 -- Articles of Incorporation of Paxson Communications of
Detroit-31, Inc.+
3.77.2 -- Bylaws of Paxson Communications of Detroit-31, Inc.+
3.78.1 -- Articles of Incorporation of Paxson Detroit License, Inc.+
3.78.2 -- Bylaws of Paxson Detroit License, Inc.+
3.79.1 -- Articles of Incorporation of Paxson Pittsburgh License,
Inc.+
3.79.2 -- Bylaws of Paxson Pittsburgh License, Inc.+
3.80.1 -- Articles of Incorporation of Paxson Communications of
Roanoke-38, Inc.+
3.80.2 -- Bylaws of Paxson Communications of Roanoke-38, Inc.+
3.81.1 -- Articles of Incorporation of Paxson Roanoke License, Inc.+
3.81.2 -- Bylaws of Paxson Roanoke License, Inc.+
3.82.1 -- Articles of Incorporation of Paxson Communications of
Fresno-61, Inc.+
3.82.2 -- Bylaws of Paxson Communications of Fresno-61, Inc.+
3.83.1 -- Articles of Incorporation of Paxson Fresno License, Inc.+
3.83.2 -- Bylaws of Paxson Fresno License, Inc.+
3.84.1 -- Articles of Incorporation of Paxson Communications of
Nashville-28, Inc.+
3.84.2 -- Bylaws of Paxson Communications of Nashville-28, Inc.+
3.85.1 -- Articles of Incorporation of Paxson Tennessee License, Inc.+
3.85.2 -- Bylaws of Paxson Tennessee License, Inc.+
3.86.1 -- Articles of Incorporation of Paxson Communications of Cedar
Rapids-48, Inc.+
3.86.2 -- Bylaws of Paxson Communications of Cedar Rapids-48, Inc.+
3.87.1 -- Articles of Incorporation of Paxson Cedar Rapids License,
Inc.+
3.87.2 -- Bylaws of Paxson Cedar Rapids License, Inc.+
3.88.1 -- Articles of Incorporation of Paxson Communications of
Buffalo-51, Inc.+
3.88.2 -- Bylaws of Paxson Communications of Buffalo-51, Inc.+
3.89.1 -- Articles of Incorporation of Paxson Buffalo License, Inc.+
3.89.2 -- Bylaws of Paxson Buffalo License, Inc.+
3.90 1 -- Articles of Incorporation of Paxson Communications of Green
Bay-14, Inc.+
3.90.2 -- Bylaws of Paxson Communications of Green Bay-14, Inc.+
3.91.1 -- Articles of Incorporation of Paxson Green Bay License, Inc.+
3.91.2 -- Bylaws of Paxson Green Bay License, Inc.+
3.92.1 -- Articles of Incorporation of Paxson Communications of
Tucson-46, Inc.+
3.92.2 -- Bylaws of Paxson Communications of Tucson-46, Inc.+
3.93.1 -- Articles of Incorporation of Paxson Tucson License, Inc.+
3.93.2 -- Bylaws of Paxson Tucson License, Inc.+
3.94.1 -- Articles of Incorporation of Paxson Communications of New
York-31, Inc.+
3.94.2 -- Bylaws of Paxson Communications of New York-31, Inc.+
3.95.1 -- Articles of Incorporation of Paxson Miami-35 License, Inc.+
3.95.2 -- Bylaws of Paxson Miami-35 License, Inc.+
3.96.1 -- Articles of Incorporation of Paxson Tampa-66 License, Inc.+
3.96.2 -- Bylaws of Paxson Tampa-66 License, Inc.+
3.97.1 -- Articles of Incorporation of Paxson Communications of
Hawaii-66, Inc.+
3.97.2 -- Bylaws of Paxson Communications of Hawaii-66, Inc.+
3.98.1 -- Articles of Incorporation of Paxson Hawaii License, Inc.+
3.98.2 -- Bylaws of Paxson Hawaii License, Inc.+
3.99.1 -- Articles of Incorporation of Paxson Communications of Los
Angeles-63, Inc.+
3.99.2 -- Bylaws of Paxson Communications of Los Angeles-63, Inc.+
3.100.1 -- Articles of Incorporation of Paxson Communications of
Albuquerque-14, Inc.+
3.100.2 -- Bylaws of Paxson Communications of Albuquerque-14, Inc.+
3.101.1 -- Articles of Incorporation of Paxson Communications of
Fayetteville-62, Inc.+
3.101.2 -- Bylaws of Paxson Communications of Fayetteville-62, Inc.+
3.102.1 -- Articles of Incorporation of Paxson Fayetteville License,
Inc.+
</TABLE>
<PAGE> 199
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
3.102.2 -- Bylaws of Paxson Fayetteville License, Inc.+
3.103.1 -- Operating Agreement of Ocean State Television L.L.C.+
3.103.2 -- Certificate of Organization of Ocean State Television
L.L.C.+
3.104.1 -- Articles of Incorporation of United Broadcast Group II,
Inc.+
3.104.2 -- Bylaws of United Broadcast Group II, Inc.+
3.105.1 -- Articles of Incorporation of Paxson Communications of
Charleston-29, Inc.+
3.105.2 -- Bylaws of Paxson Communications of Charleston-29, Inc.+
3.106.1 -- Articles of Incorporation of Paxson Charleston License,
Inc.+
3.106.2 -- Bylaws of Paxson Charleston License, Inc.+
3.107.1 -- Articles of Incorporation of Jetstar Development, Inc.+
3.107.2 -- Bylaws of Jetstar Development, Inc.+
3.108.1 -- Certificate of Incorporation of Pax Net, Inc.+
3.108.2 -- Bylaws of Pax Net, Inc.+
3.109.1 -- Articles of Incorporation of Paxson Television Productions,
Inc.+
3.109.2 -- Bylaws of Paxson Television Productions, Inc.+
3.110.1 -- Articles of Incorporation of Paxson Communications of
Syracuse-56, Inc.+
3.110.2 -- Bylaws of Paxson Communications of Syracuse-56, Inc.+
3.111.1 -- Articles of Incorporation of Paxson Syracuse License, Inc.+
3.111.2 -- Bylaws of Paxson Syracuse License, Inc.+
3.112.1 -- Articles of Incorporation of Paxson Communications of
Decatur-23, Inc.+
3.112.2 -- Bylaws of Paxson Communications of Decatur-23, Inc.+
3.113.1 -- Articles of Incorporation of Paxson Decatur License, Inc.+
3.113.2 -- Bylaws of Paxson Decatur License, Inc.+
3.114.1 -- Articles of Incorporation of Paxson Communications of
Memphis-50, Inc.+
3.114.2 -- Bylaws of Paxson Communications of Memphis-50, Inc.+
3.115.1 -- Articles of Incorporation of Paxson Communications of
Knoxville-54, Inc.+
3.115.2 -- Bylaws of Paxson Communications of Knoxville-54, Inc.+
3.116.1 -- Articles of Incorporation of Paxson Communications of New
Orleans-49, Inc.+
3.116.2 -- Bylaws of Paxson Communications of New Orleans-49, Inc.+
3.117.1 -- Articles of Incorporation of Paxson Communications of
Portland-23, Inc.+
3.117.2 -- Bylaws of Paxson Communications of Portland-23, Inc.+
3.118.1 -- Articles of Incorporation of Paxson Orlando License, Inc.+
3.118.2 -- Bylaws of Paxson Orlando License, Inc.+
3.119.1 -- Articles of Incorporation of Paxson Communications of
Chicago-38, Inc.+
3.119.2 -- Bylaws of Paxson Communications of Chicago-38, Inc.+
3.120.1 -- Articles of Incorporation of Paxson Chicago License, Inc.+
3.120.2 -- Bylaws of Paxson Chicago License, Inc.+
3.121.1 -- Articles of Incorporation of Paxson Communications of
Norfolk-49, Inc.+
3.121.2 -- Bylaws of Paxson Communications of Norfolk-49, Inc.+
3.122.1 -- Articles of Incorporation of Paxson Albuquerque License,
Inc.+
3.122.2 -- Bylaws of Paxson Albuquerque License, Inc.+
3.123.1 -- Articles of Incorporation of Paxson Communications of
Davenport-67, Inc.+
3.123.2 -- Bylaws of Paxson Communications of Davenport-67, Inc.+
3.124.1 -- Articles of Incorporation of Paxson Davenport License, Inc.+
3.124.2 -- Bylaws of Paxson Davenport License, Inc.+
3.125.1 -- Articles of Incorporation of Paxson Communications of Des
Moines-39, Inc.+
3.125.2 -- Bylaws of Paxson Communications of Des Moines-39, Inc.+
3.126.1 -- Articles of Incorporation of Paxson Des Moines License,
Inc.+
3.126.2 -- Bylaws of Paxson Des Moines License, Inc.+
3.127.1 -- Articles of Incorporation of Paxson Communications of
Greenville-38, Inc.+
3.127.2 -- Bylaws of Paxson Communications of Greenville-38, Inc.+
3.128.1 -- Articles of Incorporation of Paxson Greenville License,
Inc.+
3.128.2 -- Bylaws of Paxson Greenville License, Inc.+
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3.129.1 -- Articles of Incorporation of Paxson Communications of
Jackson-51, Inc.+
3.129.2 -- Bylaws of Paxson Communications of Jackson-51, Inc.+
3.130.1 -- Articles of Incorporation of Paxson Jackson License, Inc.+
3.130.2 -- Bylaws of Paxson Jackson License, Inc.+
3.131.1 -- Articles of Incorporation of Paxson Communications of
Mobile-61, Inc.+
3.131.2 -- Bylaws of Paxson Communications of Mobile-61, Inc.+
3.132.1 -- Articles of Incorporation of Paxson Mobile License, Inc.+
3.132.2 -- Bylaws of Paxson Mobile License, Inc.+
3.133.1 -- Articles of Incorporation of Paxson Communications of
Odessa-30, Inc.+
3.133.2 -- Bylaws of Paxson Communications of Odessa-30, Inc.+
3.134.1 -- Articles of Incorporation of Paxson Odessa License, Inc.+
3.134.2 -- Bylaws of Paxson Odessa License, Inc.+
3.135.1 -- Articles of Incorporation of Paxson Portland License, Inc.+
3.135.2 -- Bylaws of Paxson Portland License, Inc.+
3.136.1 -- Articles of Incorporation of Paxson Communications of
Shreveport-21, Inc.+
3.136.2 -- Bylaws of Paxson Communications of Shreveport-21, Inc.+
3.137.1 -- Articles of Incorporation of Paxson Shreveport License,
Inc.+
3.137.2 -- Bylaws of Paxson Shreveport License, Inc.+
3.138.1 -- Articles of Incorporation of Paxson Communications of
Spokane-34, Inc.+
3.138.2 -- Bylaws of Paxson Communications of Spokane-34, Inc.+
3.139.1 -- Articles of Incorporation of Paxson Spokane License, Inc.+
3.139.2 -- Bylaws of Paxson Spokane License, Inc.+
3.140.1 -- Articles of Incorporation of Paxson Communications of St.
Croix-15, Inc.+
3.140.2 -- Bylaws of Paxson Communications of St. Croix-15, Inc.+
3.141.1 -- Articles of Incorporation of Paxson St. Croix License, Inc.+
3.141.2 -- Bylaws of Paxson St. Croix License, Inc.+
3.142.1 -- Articles of Incorporation of Paxson Communications of
Springfield-34, Inc.+
3.142.2 -- Bylaws of Paxson Communications of Springfield-34, Inc.+
3.143.1 -- Articles of Incorporation of Paxson Springfield License,
Inc.+
3.143.2 -- Bylaws of Paxson Springfield License, Inc.+
3.144.1 -- Articles of Incorporation of S&E Network, Inc.+
3.144.2 -- Bylaws of S&E Network, Inc.+
3.145.1 -- Articles of Incorporation of Channel 56 of Orlando, Inc.+
3.145.2 -- Bylaws of Channel 56 of Orlando, Inc.+
3.146.1 -- Certificate of Incorporation of Travel Channel Acquisition
Corporation+
3.146.2 -- Bylaws of Travel Channel Acquisition Corporation+
3.147.1 -- Articles of Incorporation of Paxson Communications of West
Palm Beach-67, Inc.+
3.147.2 -- Bylaws of Paxson Communications of West Palm Beach-67, Inc.+
3.148.1 -- Articles of Incorporation of Paxson Communications of
Lexington-67, Inc.+
3.148.2 -- Bylaws of Paxson Communications of Lexington-67, Inc.+
3.149.1 -- Articles of Incorporation of Paxson Lexington License, Inc.+
3.149.2 -- Bylaws of Paxson Lexington License, Inc.+
3.150.1 -- Articles of Incorporation of Paxson Communications of
Portland-22, Inc.+
3.150.2 -- Bylaws of Paxson Communications of Portland-22, Inc.+
3.151.1 -- Articles of Incorporation of Paxson Salem License, Inc.+
3.151.2 -- Bylaws of Paxson Salem License, Inc.+
3.152.1 -- Articles of Incorporation of Paxson Communications of San
Antonio-26, Inc.+
3.152.2 -- Bylaws of Paxson Communications of San Antonio-26, Inc.+
3.153.1 -- Articles of Incorporation of Paxson Communications of
Fargo-27, Inc.+
3.153.2 -- Bylaws of Paxson Communications of Fargo-27, Inc.+
3.154.1 -- Articles of Incorporation of Paxson Tulsa License, Inc.+
3.154.2 -- Bylaws of Paxson Tulsa License, Inc.+
3.155.1 -- Articles of Incorporation of Paxson Knoxville License, Inc.+
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3.155.2 -- Bylaws of Paxson Knoxville License, Inc.+
3.156.1 -- Articles of Incorporation of Pax Net Television Productions,
Inc.+
3.156.2 -- Bylaws of Pax Net Television Productions, Inc.+
3.157.1 -- Articles of Incorporation of Paxson Communications of
Wausau-46, Inc.+
3.157.2 -- Bylaws of Paxson Communications of Wausau-46, Inc.+
3.158.1 -- Articles of Incorporation of Paxson Wausau License, Inc.+
3.158.2 -- Bylaws of Paxson Wausau License, Inc.+
3.159.1 -- Articles of Incorporation of Paxson Fargo License, Inc.+
3.159.2 -- Bylaws of Paxson Fargo License, Inc.+
3.160.1 -- Operating Agreement of Paxson Communications License
Company, LLC+
3.160.2 -- Certificate of Organization of Paxson Communications License
Company, LLC+
3.161.1 -- Articles of Incorporation of Cocola Media Corporation of San
Francisco+
3.161.2 -- Bylaws of Cocola Media Corporation of San Francisco+
3.162.1 -- Articles of Incorporation of Channel 44 of Tulsa, Inc.+
3.162.2 -- Bylaws of Channel 44 of Tulsa, Inc.+
3.163.1 -- Certificate of Incorporation of Cocola Media Corporation of
Florida+
3.163.2 -- Bylaws of Cocola Media Corporation of Florida +
3.164.1 -- Articles of Incorporation of Paxson Kansas City License,
Inc.+
3.164.2 -- Bylaws of Paxson Kansas City License, Inc.+
4.1 -- Indenture dated as of September 28, 1995 by and between the
Company, the guarantors named therein and The Bank of New
York, as Trustee, with respect to the Senior Subordinated
Notes(4)
4.2 -- Form of Senior Subordinated Note with Form of Guarantee(4)
4.3 -- Indenture dated as of October 4, 1996 by and between the
Company, the Guarantors named therein and the Bank of New
York, as Trustee, with respect to the Exchange Debentures(7)
4.4 -- Indenture dated as of June 10, 1998 by and between the
Company, the Guarantors named therein and the Bank of New
York, as Trustee, with respect to the New Exchange
Debentures
4.5 -- Second Amended and Restated Credit Agreement, dated as of
April 28, 1998, among Paxson Communications Corporation, the
several lenders from time to time parties thereto and Union
Bank of California, N.A., as the Agent
4.6 -- Form of Stock Certificate of the 13 1/4% Cumulative Junior
Exchangeable Preferred Stock
5.1 -- Opinion of Holland & Knight LLP regarding the legality of
the New Junior Preferred Stock, including consent+
9.1 -- Amended and Restated Stockholders Agreement, dated as of
December 22, 1994, by and among the Company and certain
stockholders thereof(2)
9.2 -- Agreement, dated March 26, 1996, amending the Amended and
Restated Stockholders Agreement, dated as of December 22,
1994, by and among the Company and certain stockholders
thereof and certain related agreements(5)
10.1 -- Securities Purchase Agreement, dated as of September 22,
1995, by and among the Company, the Guarantors named therein
and the Initial Purchasers named therein(4)
10.3 -- Stock Purchase Agreement, dated as of December 22, 1994, by
and among the Company and certain purchasers of Company
securities(2)
10.4 -- Amended and Restated Stockholders Agreement, dated as of
December 22, 1994, by and among the Company and certain
stockholders thereof (incorporated by reference to Exhibit
9.1)(2)
10.4.1 -- Agreement, dated March 26, 1996 amending the Amended and
Restated Stockholders Agreement, by and among the Company
and certain stockholders thereof and certain related
agreements (incorporated by reference to Exhibit 9.2)
10.5 -- Exchange and Consent Agreement, dated as of December 22,
1994 by and among the Company and certain stockholders
thereof(2)
10.26 -- Employment Agreement, dated as of June 30, 1994, by and
between the Company and Lowell W. Paxson(1)
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10.27 -- Paxson Communications Corp. Profit Sharing Plan(1)
10.28 -- Paxson Communications Corp. Stock Incentive Plan(1)
10.36 -- Real Estate Sale and Purchase Agreement, dated as of May 18,
1995, by and between F&M Bank--Martinsburg and Paxson
Communications of Washington-60, Inc.(3)
10.46 -- Non-compete Agreement, dated August 18, 1995, between the
Company and Lowell W. Paxson(4)
10.54 -- Indenture, dated as of September 28, 1995, among the
Company, the Guarantors named therein and The Bank of New
York, as Trustee with respect to the Senior Subordinated
Notes(4)
10.83 -- Lease Agreement, dated June 14, 1994, between Paxson
Communications of Tampa-66, Inc. and The Christian Network,
Inc. for lease of production and distribution facilities at
WFCT-TV(5)
10.89 -- Amended and Restated Promissory Note dated August 5, 1996
between Roberts Broadcasting of Salt Lake City, L.L.C. and
Paxson Communications of Salt Lake City-16, Inc.(6)
10.90 -- First Amendment to Loan Agreement dated August 5, 1996
between Roberts Broadcasting of Salt Lake City, L.L.C. and
Paxson Communications of Salt Lake City-16, Inc.(6)
10.103 -- Construction Agreement, dated April 16, 1996, by and among
Offshore Broadcasting Corporation, Ocean State Television,
L.L.C. and Paxson Communications of Providence-69, Inc.(6)
10.104 -- Loan Agreement, dated April 16, 1996, by and among Paxson
Communications of Providence-69, Inc., Offshore Broadcasting
Corporation and Ocean State Television, L.L.C.(6)
10.110 -- Subordinated Note between MacDonald Communications
Corporation and the Company for $3,000,000 dated June 7,
1996.(6)
10.116 -- Asset Purchase Agreement, dated July 1, 1996, by and among
Paxson Communications of New London-26, Inc., Paxson New
London License, Inc., and Roberts Broadcasting of Hartford,
L.L.C.(6)
10.123 -- Asset Exchange Agreement, dated August 7, 1996, by and
between Paxson Broadcasting of Birmingham-44, Inc. and
WNAL-TV Inc.(6)
10.124 -- Loan Agreement, dated August 7, 1996, by and between Paxson
Broadcasting of Birmingham-44 Inc. and WNAL-TV Inc.(6)
10.125 -- Time Brokerage Agreement, dated August 7, 1996, by and
between Paxson Broadcasting of Birmingham-44 Inc. and
WNAL-TV Inc.(6)
10.126 -- Option Agreement by and among Paxson Communications of Salt
Lake City-16, Inc. and Roberts Broadcasting of Salt Lake
City L.L.C., dated August 5, 1996(6)
10.127 -- Asset Purchase Agreement, dated July 31, 1996, by and
between Paxson Communications of Oklahoma City-62, Inc. and
Aracelis Ortiz for Television Station KMNZ-TV, Oklahoma
City, Oklahoma(8)
10.128 -- Purchase Agreement, dated July 31, 1996, by and among
America 51, L.P., Paxson Communications of Phoenix-51, Inc.,
and Hector Garcia Salvatierra for Television Station Channel
51, Tolleson, Arizona(8)
10.129 -- Loan, Option and Related Transactions, dated August 19,
1996, between Paxson Communications of Seattle-24, Inc. and
World Television of Washington, L.L.C. for Television
Station KBCB(TV), Bellingham, Washington(8)
10.130 -- Stock Purchase and Related Transactions, dated August 21,
1996, between Paxson Communications of Little Rock-42, Inc.,
Leininger-Geddes Partnership and Channel 42 of Little Rock,
Inc. for Television Station KVUT(TV), Little Rock,
Arkansas(8)
10.131 -- Asset Purchase and Sale Agreement, dated August 27, 1996,
between Intermart Broadcasting First Coast, Inc., and Paxson
Broadcasting of Jacksonville, Limited Partnership for Radio
Station WPVJ-FM of Ponte Verda Beach, Florida(8)
10.132 -- Purchase Agreement, dated August 29, 1996, by and between
Boardworks Outdoor Advertising Company, Inc., and Paxson
Outdoor, Inc.(8)
</TABLE>
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EXHIBIT NO. DESCRIPTION
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10.133 -- Asset Purchase Agreement, dated August 30, 1996, by and
between Paxson Communications Television, Inc. and Alpha &
Omega Communications, L.L.C. for Television Station KOOG-TV,
Ogden, Utah(8)
10.134 -- Loan Agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento-29, Inc. for Television Station
KCMY-TV, Sacramento, California(8)
10.135 -- Option Agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento for Television Station KCMY-TV,
Sacramento, California(8)
10.136 -- Asset Purchase Agreement, dated September 12, 1996, by and
between The Moody Bible Institute of Chicago and Paxson
Broadcasting of Tampa, Limited Partnership for Radio Station
WKES-FM, St., Petersburg, Florida(8)
10.137 -- Asset Purchase Agreement, dated September 27, 1996, by and
between Channel 46 of Boston, Inc. and Massachusetts
Redevelopment Limited Liability Company for Television
Station WHRC(TV), Norwell, Massachusetts(8)
10.138 -- Easement Agreement, dated October 9, 1996, by and between
Kartworlds of Central Florida L.C. and Paxson Outdoor,
Inc.(8)
10.139 -- Contract for Sale and Purchase, dated October 22, 1996,
between Southern Land Investors, LTD., and Paxson Outdoor,
Inc.(8)
10.139.1 -- Promissory Note, dated October 22, 1996, between Southern
Land Investors, LTD. and Paxson Outdoor, Inc.(8)
10.139.2 -- Real Estate Mortgage, dated October 22, 1996, Southern Land
Investors, Ltd. and Paxson Outdoor, Inc.(8)
10.139.3 -- Assignment of Rights Under Pre-annexation Agreement, dated
October 22, 1996, by and between Michael J. Grinstaff and
Southern Land Investors, Ltd.(8)
10.140 -- Stock Purchase Agreement, dated November 12, 1996, by and
between Housing Development Associates S.E. and Paxson
Communications of San Juan, Inc.(10)
10.141 -- Asset Purchase Agreement, dated November 21, 1996, by and
among Value Vision International, Inc., VVI Manassas, Inc.,
WVVI(TV), Inc., Paxson Communications of Washington-66,
Inc., and the Company(10)
10.142 -- Asset Purchase Agreement, dated November 21, 1996, by and
between Paxson Communications of Milwaukee-55, Inc. and
Channel 55 of Milwaukee, Inc.(10)
10.143 -- Asset Purchase Agreement, dated December 13, 1996, by and
between Paxson Communications of the Keys, Inc., and Key
Chain, Inc. for Radio Stations WFKZ-FM, Plantation Key,
Florida, WAVK-FM, Marathon, Florida, and WKRY-FM, Key West,
Florida(10)
10.144 -- Asset Purchase Agreement, dated December 10, 1996, by and
between Paxson Communications of Kansas City-50, Inc. and
Kansas City Youth for Christ, Inc. for Television Station
KYFC-TV, Kansas City, Missouri(10)
10.145 -- Stock Purchase Agreement, dated December 11, 1996, by and
among Channel 64 of Scranton, Inc., Paxson Communication of
Scranton-64, Inc. and Ted Ehrhardt D/B/A Ehrhardt
Broadcasting(10)
10.146 -- Asset Purchase Agreement, dated February 19, 1997, by and
between Paxson Communications of Ft. Pierce-34, Inc., and
Paramount Stations Group, Inc. for Television Station
WTVX(TV), Ft. Pierce, Florida(10)
10.147 -- Promissory Note, dated February 12, 1997, by and between
Roberts Broadcasting of Hartford, L.L.C. and Paxson
Communications of New London-26, Inc. for Television Station
WTWS (TV), New London, Connecticut(10)
10.147.1 -- Time Brokerage Agreement, dated February 12, 1997, by and
between Roberts Broadcasting of Hartford, L. L. C. and
Paxson Communications of New London-26, Inc. for Television
Station WTWS(TV), New London, Connecticut(10)
</TABLE>
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10.147.2 -- Amendment to Asset Purchase Agreement, dated December 16,
1996, by and among Roberts Broadcasting of Hartford, L.L.P.,
Paxson Communications of New London-26, Inc., and Paxson New
London License, Inc.(10)
10.148 -- Amended and Restated Promissory Note, dated April 16, 1996,
by and between Ocean State Television, L. L. C. and Paxson
Communications of Providence-69, Inc.(10)
10.149 -- Second Amendment to Stock Purchase and Option Agreement,
dated September 27, 1996, by and among Paxson Communications
of Battle Creek-43, Inc., Western Michigan Christian
Broadcasting, Inc., Western Michigan Family Broadcasting,
Inc., Horizon Broadcasting Corporation, and William B.
Popjes.(10)
10.150 -- Partnership Interest Purchase Agreement, dated February 14,
1997, by and among DP Media, Inc., Roberts Broadcasting,
L.L.C., and Roberts Broadcasting company of Raleigh-Durham,
L.P.(10)
10.151 -- Option Purchase Agreement, dated February 14, 1997, by and
between Paxson Communications of Raleigh-Durham-47, Inc.,
and D P. Media, Inc.(10)
10.153 -- Asset Purchase Agreement, dated March 13, 1997 by and among
Paxson Communications of Detroit-31, Inc. and Blackstar
Communications, Inc. for Television Stations WBSX(TV) and
W48AV(10)
10.154 -- Asset Purchase Agreement, dated March 25, 1997, by and
between Paxson Communications of West Palm Beach-25, Inc.
and The Hearst Corporation, for Television Station WPBF(TV),
West Palm Beach, Florida(10)
10.155 -- Purchase and Sale of Option, dated March 26, 1997, by and
between Paxson Communications of Cleveland-67, Inc., and
Global Broadcasting Systems, Inc. for Television Station
WOAC(TV), Cleveland, Ohio(10)
10.155.1 -- Purchase and Sale of Option, dated March 26, 1997, by and
between Paxson Communications of Atlanta-14, Inc., and
Global Broadcasting Systems, Inc. for Television Station
WNGM(TV), Atlanta, Georgia(10)
10.156 -- Asset purchase agreement, dated March 21, 1997, by and
between Whitehead Media of Florida, Inc., Whitehead
Broadcasting of Florida, Inc. and Paxson Communications of
Ft. Pierce-34, Inc. for Television Station WTVX(TV), Ft.
Pierce, Florida(10)
10.157 -- Paxson Communications Corporation 1996 Stock Incentive
Plan(9)
10.158 -- Loan agreement, dated March 26, 1996, by and between Paxson
Communications Corporation and Cocola Media Corporation of
San Francisco for television station KWOK-TV, Novato,
California(12)
10.159 -- Asset purchase agreement, dated April 1, 1997, by and
between Paxson Communications Corporation and The Kralowec
Children's Family Trust and KKAK-TV, Inc. for television
station KKAG(TV), Porterville, California(12)
10.160 -- Asset purchase agreement, dated May 5, 1997, by and among
Paxson Communications of Cedar Rapids-48, Inc., Fant
Broadcasting Company of Iowa, Inc. and Paxson Communications
Corporation for television station KTVC-TV, Cedar Rapids,
Iowa(12)
10.161 -- Asset purchase agreement, dated April 15, 1997, by and among
Paxson Communications of Buffalo-51, Inc., Fant Broadcasting
of New York, L.L.C., Anthony Fant and Paxson Communications
Corporation for television station WAQF-TV(12)
10.162 -- Assignment and acceptance agreement, dated April 18, 1997,
among WQED Pittsburgh and Paxson Communications of
Pittsburgh-40, Inc.(12)
10.163 -- Merger agreement, dated April 29, 1997, among WPBF Merger,
Inc. and WPBF License, Inc. and Paxson Communications of
West Palm Beach-25, Inc. and Paxson West Palm Beach License,
Inc.(11)
10.163.1 -- Paxson Communications of West Palm Beach-25, Inc. and Paxson
West Palm Beach License, Inc. Subordinated Promissory Note,
dated April 29, 1997(11)
10.163.2 -- Time brokerage agreement, dated April 29, 1997, by and
between Paxson Communications of West Palm Beach-25, Inc.,
and Paxson West Palm Beach License, Inc., and Paxson
Communications of Florida, Inc.(11)
</TABLE>
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10.164 -- Asset purchase agreement, dated April 22, 1997, by and
between Paxson Communications of Miami-35, Inc. and Channel
35 of Miami, Inc.(12)
10.165 -- Asset purchase agreement, dated April 22, 1997, by and
between Paxson Communications of Tampa-66, Inc. and Channel
66 of Tampa, Inc.(12)
10.166 -- Asset purchase agreement, dated April 30, 1997, by and
between Paxson Communications of Green Bay-14, Inc and VCY
America, Inc. for television station WSCO(TV), Green Bay,
Wisconsin(12)
10.167 -- Asset purchase agreement, dated May 12, 1997, by and between
the Company, Paxson communications of New York City, ITT-Dow
Jones Television, ITT Corporation and Dow Jones & Company
for Television Station WBIS(TV), New York City, New York(12)
10.167.1 -- Time brokerage agreement, dated May 1997, by and between
ITT-Dow Jones Television and Paxson Communications of New
York-31, Inc. for Television Station WBIS(TV), New York
City, New York(12)
10.168 -- Construction Agreement, dated December 23, 1996, between
WHCT Broadcasting, Inc., and Paxson Communications of
Hartford-18, Inc. for WHCT(TV), Channel 18, Hartford,
Connecticut(13)
10.169 -- Asset Purchase Agreement, dated April 11, 1997, by and
between Roberts Broadcasting of Cookeville, L.L.C. and
Paxson Communications of Nashville-28, Inc. (13)
10.170 -- Amended and Restated Asset Purchase Agreement, dated April
15, 1997, by and among Paxson Communications of Buffalo-51,
Inc., Fant Broadcasting Company of New York, L.L.C., Anthony
Fant and Paxson Communications Corporation(13)
10.171 -- Asset Purchase Agreement, dated May 14, 1997, by and between
Paxson Communications of West Palm Beach, Inc. and American
Radio Systems Corporation(13)
10.172 -- Option Agreement, dated May 20, 1997, by and between Paxson
Communications of Honolulu-66, Inc. and Dove Broadcasting
Company of Hawaii, Inc. for television station KAPA(TV),
Kaneohe, Hawaii(13)
10.172.1 -- Loan Agreement, dated May 20, 1997, by and among Paxson
Communications of Honolulu-66, Inc., and Dove Broadcasting
Company of Hawaii(13)
10.173 -- Asset Purchase Agreement, dated May 28, 1997, by and among
Paxson Communications of Roanoke-38, Inc., Vine and Branch,
Inc. and Evangel Foursquare Church for television station
WEFC, Roanoke, Virginia(13)
10.174 -- Loan Agreement, dated June 10, 1997, by and between Paxson
Communications of Boston-46, Inc. and Channel 46 of Boston,
Inc. for television station WHRC(TV), Norwell,
Massachusetts(13)
10.175 -- Asset Acquisition Agreement, dated June 13, 1997, by and
among Landmark Communications, Inc., The Travel Channel,
Inc., and Paxson Communications(13)
10.176 -- Asset Purchase Agreement, dated June 23, 1997, by and
between Paxson Communications of Orlando-56, Inc. and
Channel 56 of Orlando, Inc.(13)
10.177 -- Loan Agreement, dated June 30, 1997, by and between Roberts
Broadcasting Company of Albuquerque and Paxson
Communications of Albuqurque-14, Inc. relating to television
station (Channel 14), Albuquerque, New Mexico(13)
10.178 -- Asset Purchase Agreement, dated June 25, 1997, by and
between John W. Hyde, as Chapter 11 Trustee of the Chapter
11 Debtor Estate of Riklis Broadcasting Corporation, AKA
KADY-TV, AKA Pacific Rim Video and Paxson Communications of
Los Angeles-63, Inc.(13)
10.179 -- Asset Purchase Agreement, dated August 25, 1997, by and
among Paxson Communications Corporation, Clear Channel
Metroplex, Inc., Clear Channel Metroplex Licenses, Inc. and
Clear Channel Communications, Inc. (filed as exhibit 2.1
with the Company's Form 8-K, dated October 1, 1997 and
incorporated herein by reference)
10.180 -- Asset Purchase Agreement, dated August 25, 1997, by and
among Paxson Communications Corporation, L. Paxson, Inc.,
Clear Channel Metroplex, Inc., Clear Channel Metroplex
Licenses, Inc. and Clear Channel Communications, Inc. (filed
as exhibit 2.2 with the Company's Form 8-K, dated October 1,
1997 and incorporated herein by reference)
</TABLE>
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EXHIBIT NO. DESCRIPTION
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10.181 -- Asset Purchase Agreement, dated August 29, 1997, by and
among Paxson Communications of Fayetteville-62, Inc.,
Fayetteville-Cumberland Telecasters, Inc.,
Fayetteville-Cumberland Telecasters Inc.,
Debtor-in-Possession, and Poplar Apartments Limited
Partnership for Television station WFAY, Fayetteville, North
Carolina(14)
10.182 -- Stock Purchase Agreement, dated September 2, 1997, by and
among Channel 29 of Charleston, Inc., Paxson Communications
of Charleston-29, Inc. and Mountaineer Broadcasting
Corporation and William L. Kepper(14)
10.183 -- Stock Purchase Agreement, dated September 9, 1997, by and
among Channel 46 of Tucson, Inc., Paxson Communications of
Tucson-46, Inc. and Sungilt Corporation, Inc. (14)
10.184 -- Asset Purchase Agreement, dated October 16, 1997, by and
between Paxson Communications Corporation and Channel 49
Acquisition Corporation for television station WJCB-TV,
Norfolk, Virginia(14)
10.185 -- Asset Purchase Agreement, dated October 24, 1997, between
Universal Outdoor, Inc. and Paxson Communications
Corporation(14)
10.186 -- Option Agreement, dated November 14, 1997, by and between
Paxson Communications Corporation and Flinn Broadcasting
Corporation for Television station WCCL-TV, New Orleans,
Louisiana(15)
10.187 -- Option Agreement, dated November 14, 1997, by and between
Paxson Communications Corporation and Flinn Broadcasting
Corporation for Television station WFBI-TV, Memphis,
Tennessee(15)
10.188 -- Asset Purchase Agreement, dated January 26, 1998, by and
among DP Media of Milwaukee, Inc., Paxson Communications of
Milwaukee-55, Inc. and Paxson Milwaukee License, Inc. for
Television station WPXE(TV), Kenosha, Wisconsin(15)
10.189 -- Asset and Stock Purchase and Option Grant Agreement, dated
as of November 14, 1997, by and among ValueVision
International, Inc., VVI Seattle, Inc., VVI LPTV, Inc., VVI
Spokane, Inc., VVI Tallahassee, Inc. and Paxson
Communications Corporation(15)
10.190 -- Limited Liability Company Agreement of The Travel Channel,
L.L.C. dated as of November 24, 1997(15)
10.191 -- Asset Purchase Agreement, dated as of November 24, 1997, by
and among Travel Channel Acquisition Corporation, Project
Discovery, Inc., Paxson Communications Corporation and
Discovery Communications, Inc.(15)
10.192 -- Guaranty Agreement, dated as of November 24, 1997, made by
Discovery Communications, Inc., in favor of Travel Channel
Acquisition Corporation(15)
10.193 -- Asset Exchange Agreement, dated January 26, 1998, by and
among Paxson Communications of Chicago-38, Inc., Christian
Communications of Chicagoland, Inc., and Paxson
Communications Corporation(15)
10.193.1 -- Programming Agreement by and between Paxson Communications
of Chicago-38, Inc. and Christian Communications of
Chicagoland Inc.(15)
10.194 -- Asset Purchase Agreement, dated March 19, 1998, by and
between Paxson Communications of Atlanta-14, Inc. and SKMD
Broadcasting Partnership and USA Station Group of Maryland,
Inc.(16)
10.195 -- Asset Purchase Agreement, dated March 19, 1998, by and among
Paxson Communications of Portland-22, Inc.; Paxson
Communications Corporation; Blackstar Communications of
Oregon, Inc.; and Blackstar of Salem, Inc.(16)
10.196 -- Membership Purchase Agreement, dated January 14, 1998, by
and among Dr. Joseph A. Zavaletta, South Texas Vision,
L.L.C., Paxson Communications of San Antonio-26, Inc., and
Paxson Communications Corporation for television station
Channel 26, Uvalde, Texas(16)
10.197 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and Jeffrey Sagansky
10.198 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and James B. Bocock
</TABLE>
<PAGE> 207
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.199 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and Dean M. Goodman
10.200 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and J. Jay Hoker
10.201 -- Employment Agreement, dated as of June 11, 1998, by and
between the Company and Arthur D. Tek
10.202 -- Paxson Communications Corporation 1998 Stock Incentive Plan+
12 -- Computation of Ratio of Earnings to Fixed Charges
21 -- List of Subsidiaries+
23.1 -- Consent of Holland & Knight LLP (contained in Exhibit 5.1)
23.2 -- Consent of PricewaterhouseCoopers LLP, independent certified
public accountants
24 -- Powers of Attorney (included on signature pages of
Registration Statement)
25 -- Statement of Eligibility of Trustee, The Bank of New York,
on Form T-1
99.1 -- Form of Letter of Transmittal+
99.2 -- Form of Notice of Guaranteed Delivery+
99.3 -- Exchange Agent Agreement+
</TABLE>
- ---------------
(1) Filed with the Company's Registration Statement on Form S-4, filed
September 26, 1994, Registration No. 33-84416 and incorporated herein by
reference.
(2) Filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference.
(3) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 and incorporated herein by reference.
(4) Filed with the Company's Registration Statement on Form S-4, as amended,
filed January 23, 1996, Registration No. 33-63765 and incorporated herein
by reference.
(5) Filed with the Company's Registration Statement on Form S-1, as amended,
filed January 26, 1996, Registration No. 333-473 and incorporated herein by
reference.
(6) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, and incorporated herein by reference.
(7) Filed with the Company's Registration Statement on Form S-3, as amended,
filed August 15, 1996, Registration No. 333-10267 and incorporated herein
by reference.
(8) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by reference.
(9) Filed with the Company's Registration Statement on Form S-8, filed January
22, 1997, Registration No. 333-20163 and incorporated herein by reference.
(10) Filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference.
(11) Filed with the Company's Report on Form 8-K, dated April 29, 1997, under
Item 7. Financial Statements and Exhibits and incorporated herein by
reference.
(12) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, and incorporated herein by reference.
(13) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, and incorporated herein by reference.
(14) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, and incorporated herein by reference.
(15) Filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated herein by reference.
(16) Filed with the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998, and incorporated herein by reference.
+ To be filed by amendment.
<PAGE> 1
Exhibit 3.2.3
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 13 1/4% CUMULATIVE
JUNIOR EXCHANGEABLE PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
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 June 9, 1998, 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
13 1/4% Cumulative Junior Exchangeable Preferred Stock, par value $.001
per share, with a stated value of $10,000.00 per share, consisting of
72,000 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 "13 1/4% Cumulative Junior Exchangeable Preferred
Stock". The number of shares constituting such class shall be 72,000 and are
referred to as the "Junior Preferred Stock." 20,000 shares of Junior Preferred
Stock shall be initially issued with an additional 52,000 shares reserved for
issuance in accordance with paragraph (c)(i) hereof. The liquidation preference
of the Junior Preferred Stock shall be $10,000.00 per share.
(b) Rank. The Junior Preferred Stock shall, with respect to
dividends and distributions upon liquidation, winding-up or dissolution of the
Corporation, rank (i) senior to the 9 3/4% Series A Convertible Preferred Stock,
par value $.001 per share (the "Convertible Preferred Stock"), 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 Junior 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 Junior 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)(ii)(A) hereof shall be deemed to be
Junior Securities and not Parity Securities; and (iii) junior to the Existing
Preferred Stock and to
<PAGE> 2
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 Junior 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 that were not approved by the Holders in accordance with
paragraph (f)(ii)(A) 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 Junior 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 Junior Preferred Stock, at a rate per annum
equal to 13 1/4% of the liquidation preference per share of the Junior Preferred
Stock, payable semi-annually. All dividends shall be cumulative, whether or not
earned or declared, on a daily basis from the Issue Date and shall be payable
semi-annually in arrears on each Dividend Payment Date, commencing November 15,
1998. Dividends may be paid, at the Corporation's option, on any Dividend
Payment Date either in cash or by the issuance of additional shares of Junior
Preferred Stock (including fractional shares) having an aggregate liquidation
preference equal to the amount of such dividends. In the event that dividends
are declared and paid through the issuance of additional shares of Junior
Preferred Stock, as herein provided, such dividends shall be deemed paid in full
and will not accumulate. If any dividend payable on any Dividend Payment Date
subsequent to May 15, 2003 is not paid in full in cash, the per annum dividend
rate will be increased by 1.00% per annum for such dividend payment period.
After the date of which such dividend is paid in cash, the dividend rate will
revert to the rate originally borne by the Junior Preferred Stock. Each dividend
shall be payable to the Holders of record as they appear on the stock books of
the Corporation on the Dividend Record Date immediately preceding the related
Dividend Payment Date. Dividends shall cease to accumulate in respect of shares
of the Junior Preferred Stock on the Exchange Date with respect to such shares
or on the date of the earlier redemption of such shares unless the Corporation
shall have failed to issue the appropriate aggregate principal amount of New
Exchange Debentures in respect of such shares of the Junior Preferred Stock on
such Exchange Date or 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
Junior Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to
the Holders entitled thereto.
(iii) Unpaid dividends accumulating on the Junior Preferred
Stock for any past dividend period and dividends in connection with any optional
redemption may be declared and paid at any time, without references to any
regular Dividend Payment Date, to holders of record on such date, not more than
forty-five (45) days prior to the payment thereof, as may be fixed by the Board
of Directors.
(iv) Dividends payable on the Junior 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.
(v) (A) If the Exchange Offer Registration Statement or
a Shelf Registration Statement (in the circumstances described below) is not
filed within 60 days after the Issue Date, the Exchange Offer Registration
Statement or Shelf Registration Statement is not declared effective within 150
days of the Issue Date or the Exchange Offer is not consummated within 60 days
after the date on which the Exchange Offer Registration Statement was declared
effective or if the Exchange Offer Registration Statement or a Shelf
Registration Statement ceases to be effective (in the circumstances described
below), then as liquidated damages,
<PAGE> 3
additional dividends (the "Additional Dividends") shall be come payable with
respect to the Junior Preferred Stock as set forth in paragraph (B), (C) and (D)
below, respectively.
(B) If the Exchange Offer Registration Statement or a
Shelf Registration Statement is not filed within 60 days of the Issue
Date, or notwithstanding that the Corporation has consummated or will
consummate an Exchange Offer, if (w) the Corporation is not permitted
to file the Exchange Offer Registration Statement or to consummate the
Exchange Offer because it is not permitted by any applicable law or
applicable interpretation of the staff of the Commission, (x) any
Holder notifies the Corporation that it is unable to participate in the
Exchange Offer or who may not resell the Exchange Preferred Stock
acquired in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales
by such Holder, or who owns Junior Preferred Stock acquired directly
from the Corporation or an Affiliate, (y) any Holder of Private
Exchange Preferred Stock so requests after the Private Exchange or (z)
the Corporation has not consummated the Exchange Offer within 60 days
after the Exchange Offer Registration Statement was declared effective
and the Corporation has not filed a Shelf Registration Statement within
the later of 60 days from the Issue Date or 45 days of such
notification, request or event. Additional Dividends shall be payable
on the Junior Preferred Stock by increasing the dividend rate set forth
in paragraph (c) (i) hereof by 0.5% per annum for the first 90 days
commencing on the date such Exchange Offer Registration Statement or
Shelf Registration Statement was to be filed, such Additional Dividends
increasing by an additional 0.25% per annum at the beginning of each
subsequent 90-day period.
(C) If the Exchange Offer Registration Statement or a
Shelf Registration Statement is not effective within 150 days of the
Issue Date or, if requested to be filed on behalf of Holders in the
circumstances set forth in clauses (w), (x), (y) or (z) of paragraph
(v) (B) above, the Shelf Registration Statement is not declared
effective on or prior to 90 days following the date such Shelf
Registration Statement was filed. Additional Dividends shall be payable
on the Junior Preferred Stock by increasing the dividend rate set forth
in paragraph (c) (i) hereof by 0.5% per annum for the first 90 days
commencing on the day such Exchange Offer Registration Statement or
Shelf Registration Statement was to be declared effective, such
Additional Dividends increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period.
(D) If (x) the Corporation has not exchanged all of
the shares of Junior Preferred Stock validly tendered in accordance
with the terms of the Exchange Offer on or prior to 60 days after the
date on which the Exchange Offer Registration Statement was declared
effective or (y) the Exchange Offer Registration Statement ceases to be
effective at any time prior to the time that the Exchange Offer is
consummated or (z) the Shelf Registration Statement has been declared
effective, if requested to be filed on behalf of Holders in the
circumstances set forth in clauses (w), (x), (y) or (z) of paragraph
(v) (B) above, and the Shelf Registration Statement subsequently ceases
to be effective at any time prior to the second anniversary of the
Issue Date (unless all of the Junior Preferred Stock registered
thereunder has been sold thereunder), then Additional Dividends shall
be payable on the Junior Preferred Stock by increasing the dividend
rate set forth in paragraph (c) (i) hereof by 0.5% per annum for the
first 90 days commencing on (I) the 61st day after the date on which
the Exchange Offer Registration Statement was declared effective with
respect to the Junior Preferred Stock validly tendered and not
exchanged by the Corporation, in the case of (x) above, or (II) the day
the Exchange Offer Registration Statement ceases to be effective or
usable for its intended purpose in the case of (y) above, or (III) the
day such Shelf Registration Statement ceases to be effective in the
case of (z)
<PAGE> 4
above, such Additional Dividends increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period.
(E) Notwithstanding paragraphs (A)-(D) of this
paragraph (c) (v), the aggregate amount of all Additional Dividends
payable hereunder shall not exceed in the aggregate 2.0% per annum on
the then effective liquidation preference. In addition (x) upon the
filing of the Exchange Offer Registration Statement or Shelf
Registration Statement (in the case of paragraph (B) above), (y) upon
the effectiveness of the Exchange Offer Registration Statement or Shelf
Registration Statement (in the case of paragraph (C) above), or (z)
upon the exchange of Exchange Preferred for the Junior Preferred Stock
tendered (in the case of paragraph (D) (x) above), or upon the
effectiveness of the Exchange Offer Registration Statement that had
ceased to remain effective (in the case of paragraph (D) (y) above), or
upon the effectiveness of the Shelf Registration Statement that had
ceased to remain effective (in the case of paragraph (D) (z) above),
the dividend rate on the Junior Preferred Stock shall revert to the
dividend rate set forth in paragraph (c) (i) hereof and Additional
Dividends on the Junior Preferred Stock shall cease to be 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 Junior Preferred Stock then outstanding shall initially be
entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders, an amount in cash equal to 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 (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the date fixed
for liquidation, dissolution or winding up) before any distribution shall be
made or any assets distributed to the holders of any of the Junior Securities
including, without limitation, the Convertible Preferred Stock and Common Stock
of the Corporation. Except as provided in the preceding sentence, Holders of
Junior 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 Junior Preferred
Stock and all Parity Securities, then 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.
(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) The Corporation may, at
the option of the Board of Directors, redeem at any time on or after May 15,
2003, in whole or in part, in the manner provided for in paragraph (e)(iii)
hereof, any or all of the shares of the Junior Preferred Stock, at the
redemption prices (expressed an a percentage of the liquidation preference) set
forth below, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends per share (including an amount in cash equal to
a prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to
<PAGE> 5
the Redemption Date) (the "Optional Redemption Price") if redeemed during the
12-month period beginning May 15 of each of the years set forth below:
<TABLE>
<S> <C>
2003................................. 106.625%
2004................................. 103.313%
2005 and thereafter.................. 100.000%
</TABLE>
(B) In addition to the foregoing paragraph (e)(i)(A), on or
prior to May 15, 2001, the Corporation may, at its option, use the Net
Proceeds of either or both of one or more Public Equity Offerings or
Major Asset Sales to redeem for cash up to an aggregate of 35% of the
shares of Junior Preferred Stock (whether initially issued or issued as
a dividend payment) at a redemption price equal to 113.25% of the
liquidation preference thereof, plus, without duplication, an amount in
cash equal to all accumulated and unpaid dividends (including an amount
in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the redemption date to the redemption
date) (the "Net Proceeds Redemption Price"); provided, however, that
after any such redemption, there is at least (i) $75,000,000 aggregate
liquidation preference of the Junior Preferred Stock or (ii)
$130,000,000 of combined aggregate liquidation preference of the Junior
Preferred Stock and aggregate principal amount of the New Exchange
Debentures remaining outstanding. Any such redemption pursuant to this
paragraph (e)(i)(B) will be required to occur on or prior to 90 days
after the receipt by the Corporation of the proceeds of each Public
Equity Offering or Major Asset Sale.
(C) In the event of a redemption pursuant to paragraph
(e)(i)(A) or (e)(i)(B) hereof of only a portion of the then outstanding
shares of the Junior 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 Junior 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 Junior Preferred Stock for all Dividend Periods
terminating on or prior to the Redemption Date.
(ii) Mandatory Redemption. On November 15, 2006, the
Corporation shall redeem, to the extent of funds legally available therefor, in
the manner provided for in paragraph (e)(iii) hereof, all of the shares of the
Junior Preferred Stock then outstanding at a redemption price equal to 100% of
the liquidation preference per share, plus, without duplication, an amount in
cash equal to all accumulated and unpaid dividends per share (including an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date) (the
"Mandatory Redemption Price").
(iii) Procedures for Redemption. (A) At least thirty (30)
days and not more than sixty (60) days prior to the date fixed for any
redemption of the Junior Preferred Stock, 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 Junior 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 Junior 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:
<PAGE> 6
(1) whether the redemption is pursuant to
paragraph (e)(i)(A), (e)(i)(B) or (e)(ii) hereof;
(2) the Optional Redemption Price, the Mandatory
Redemption Price or the Net Proceeds Redemption Price, as the
case may be;
(3) whether all or less than all the outstanding
shares of the Junior Preferred Stock are to be redeemed and
the total number of shares of the Junior Preferred Stock being
redeemed;
(4) the date fixed for redemption;
(5) 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 Junior Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Junior
Preferred Stock to be redeemed shall cease to accumulate on
such Redemption Date unless the Corporation defaults in the
payment of the Optional Redemption Price, the Mandatory
Redemption Price or the Net Proceeds Redemption Price, as the
case way be.
(B) Each Holder of Junior Preferred Stock shall surrender the
certificate or certificates representing such shares of Junior
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 Optional Redemption Price, Mandatory
Redemption Price or Net Proceeds Redemption Price, as the case may be,
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 applicable redemption price,
dividends on the Junior 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 Optional
Redemption Price, the Mandatory Redemption Price or the Net Proceeds
Redemption Price, as the case may be, without interest; provided,
however, that if a notice of redemption shall have been given as
provided in paragraph (iii)(A) above and the funds necessary for
redemption (including an amount in respect of all dividends that will
accrue to the Redemption Date) shall have been segregated and
irrevocably deposited in trust for the equal and ratable benefit of the
Holders of the shares to be redeemed, then, at the close of business on
the day on which such funds are segregated and set aside, the Holders
of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the Optional
Redemption Price, the Mandatory Redemption Price or the Net Proceeds
Redemption Price, as the case may be, without interest.
<PAGE> 7
(f) Voting Rights.
(i) The Holders of Junior Preferred Stock, except as
otherwise required under Delaware
law or as set forth in paragraphs (ii), (iii) and (iv) below, shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Corporation.
(ii) (A) So long as any shares of the Junior Preferred
Stock are outstanding, the Corporation may not issue any additional shares of
Junior 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 Junior
Preferred Stock then outstanding, voting or consenting, as the case may be,
together as one class; provided, however, that the Corporation may: (I) issue
additional shares of Junior Preferred Stock to pay dividends on the Junior
Preferred Stock in accordance with its terms on the Issue Date, (II) issue
additional shares of (x) Public Preferred Stock or Senior Securities, which
Senior Securities are pari passu with the Public Preferred Stock, or (y) Junior
Preferred Stock or Parity Securities, 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 the Private
Preferred Stock (as existing on the Issue Date) and which does not prevent
either the payment or cash dividends on the Junior Preferred Stock or the
exchange of the Junior Preferred Stock for the New Exchange Debentures, in an
amount sufficient to acquire the Private 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
Private Preferred Stock and issuing such additional Junior Preferred Stock,
Public 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 the Private Preferred Stock and (III)
issue additional shares of Public Preferred Stock as dividends on the Public
Preferred Stock in accordance with the certificate of designation of the Public
Preferred Stock, as in existence on the Issue Date.
(B) So long as any shares of the Junior Preferred Stock are
outstanding, the Corporation shall not amend this Resolution so as to
affect materially and adversely the specified rights, preferences,
privileges or voting rights of holders of shares of Junior Preferred
Stock without the affirmative vote or consent of Holders of at least a
majority of the issued and outstanding shares of Junior 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 Junior 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 as
executed on the Issue Date (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 Junior 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 Junior 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 Junior
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 Junior Preferred Stock and, in accordance with
the terms of the New Exchange Indenture, in the case of holders of New
Exchange Debentures).
<PAGE> 8
(D) Except as set forth in paragraphs (f)(ii)(A) above, (x)
the creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities or (y) 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
Junior Preferred Stock and shall not be deemed to affect adversely the
rights, preferences, privileges or voting rights of Holders of Junior
Preferred Stock.
(iii) Without the affirmative vote or consent of Holders
of a majority of the issued and outstanding shares of Junior 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 its
assets (as entirely 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 Junior
Preferred Stock shall be converted into or exchanged for and shall become
shares of such successor, transferee or resulting Person the same powers,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations or restrictions thereon, that the Junior
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 (1)(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 Junior 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 or 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.
(iv) (A) If (I) the Corporation fails to redeem all of the
then outstanding shares of Junior Preferred Stock on or before November 15, 2006
or otherwise fails to discharge any redemption obligation with respect to the
Junior 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 Junior 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), (1)(iii) or (1)(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 Junior Preferred Stock then outstanding, (IV) the Corporation
fails to pay at the final stated maturity (giving effect to any extensions
<PAGE> 9
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 Junior 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 Junior 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 Junior
Preferred Stock expire (other than as described in (f)(iv)(B) below). The voting
rights provided herein shall be the exclusive remedy at law or in equity of the
holders of the Junior Preferred Stock for any Voting Rights Triggering Event.
(B) The right of the Holders of Junior Preferred Stock voting
together as a separate class to elect members of the Board of Directors
as set forth in subparagraph (f)(iv)(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)(iv)(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 Junior
Preferred Stock then outstanding and entitled to vote thereon, at which
time (I) the special right of the Holders of Junior 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 Junior Preferred
Stock shall each terminate and the directors elected by the holders of
Common Stock or Capital Stock (other than the Junior 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 Junior Preferred Stock pursuant to
paragraph (f)(iv) hereof, or if vacancies shall exist in the offices of
directors elected by the Holders of Junior Preferred Stock, a proper
officer of the Corporation may, and upon the written request of the
Holders of record of at least twenty-five percent (25%) of the shares
of Junior Preferred Stock then outstanding addressed to the secretary
of the Corporation shall, call a special meeting of the Holders of
Junior 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 twenty (20) days after
personal service of said written request upon the secretary of the
Corporation, or within twenty (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 twenty-five percent (25%) of the outstanding shares
of Junior 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 Junior 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.
<PAGE> 10
(C) At any meeting held for the purpose of electing directors
at which the Holders of Junior Preferred Stock shall have the right,
voting together as a separate class, to elect directors an aforesaid,
the presence in person or by proxy of the Holders of at least a
majority of the outstanding shares of Junior Preferred Stock shall be
required to constitute a quorum of such Junior Preferred Stock.
(D) Any vacancy occurring in the office of a director elected
by the Holders of Junior Preferred Stock may be filled by the remaining
directors elected by the Holders of Junior Preferred Stock unless and
until such vacancy shall be filled by the Holders of Junior Preferred
Stock.
(v) In any case in which the Holders of Junior Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Delaware law, each Holder of Junior Preferred Stock entitled to vote with
respect to such matter shall be entitled to one vote for each share of Junior
Preferred Stock held.
(g) Exchange.
(i) Requirements. (A) Subject to subparagraph (B)
below, the outstanding shares of Junior Preferred Stock are exchangeable, in
whole or in part, on a pro rata basis, at the option of the Corporation, at any
time on any Dividend Payment Date for the New Exchange Debentures to be
substantially in the form of Exhibit A to the form of New Exchange Indenture, a
copy of which is on file with the secretary of the Corporation; provided,
however, that immediately after giving effect to any partial exchange, there
shall be shares of Junior Preferred Stock outstanding with an aggregate
liquidation preference of not less than $75,000,000 and not less than
$75,000,000 aggregate principal amount of New Exchange Debentures are then
outstanding; and provided, further, that any such exchange may only be made if
on or prior to the date of such exchange (A) the Corporation has paid (or is
deemed to have paid) all accumulated dividends on the Junior Preferred Stock
(including the dividends payable on the date of exchange) and there shall be no
contractual impediment to such exchange; (B) there shall be funds legally
available sufficient therefor; (C) such exchange would be permitted under the
terms of the Existing Preferred Stock, 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 and 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 would be caused thereby; (D) that New Exchange Indenture has been qualified
under the Trust Indenture Act of 1939, as amended, if such qualification is
required at the time of such exchange; and (E) the Corporation shall have
delivered a written opinion to the effect that all conditions to be satisfied
prior to such exchange have been satisfied. The exchange rate shall be $1.00
principal amount of New Exchange Debentures for each $1.00 of liquidation
preference of Junior 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 an New Exchange
Debenture in a denomination of less than $1,000.
(B) At the time of the Exchange, the Corporation shall deliver
Debentures which may be resold by the holder thereof to the public
without delivering a prospectus under the Securities Act.
(ii) Procedure for Exchange. (A) At least thirty (30) days
and not more than sixty (60) days prior to the date fixed for exchange, written
notice (the "Exchange Notice") shall be given by first-class mail, postage
prepaid, to each Holder of record on the record date fixed for such exchange of
the Junior Preferred Stock at such Holder's address as the same 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
exchange
<PAGE> 11
of any shares of Junior Preferred Stock to be exchanged 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 Exchange Notice shall state:
(1) the date fixed for exchange;
(2) that the Holder is to surrender to the
Corporation, in the manner and at the place or places
designated, his certificate or certificates representing the
shares of Junior Preferred Stock to be exchanged;
(3) that dividends on the shares of Junior Preferred
Stock to be exchanged shall cease to accrue on such Exchange
Date whether or not certificates for shares of Junior
Preferred Stock are surrendered for exchange on such Exchange
Date unless the Corporation shall default in the delivery of
New Exchange Debentures; and
(4) that interest on the New Exchange Debentures
shall accrue from the Exchange Date whether or not
certificates for shares of Junior Preferred Stock are
surrendered for exchange on such Exchange Date.
(B) On or before the Exchange Date, each Holder of Junior
Preferred Stock shall surrender the certificate or certificates
representing such shares of Junior Preferred Stock, in the manner and
at the place designated in the Exchange Notice. The Corporation shall
cause the New Exchange Debentures to be executed on the Exchange Date
and, upon surrender in accordance with the Exchange Notice of the
certificates for any shares of Junior 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
into New Exchange Debentures. In the event that any certificate
surrendered pursuant to this paragraph (g) represents shares in excess
of those being surrendered pursuant to the Exchange Notice, the
Corporation shall issue a new certificate representing the unexchanged
portion of shares of Junior Preferred Stock. The Corporation shall pay
interest on the New Exchange Debentures at the rate and on the dates
specified therein from the Exchange Date.
(C) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (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 Junior
Preferred Stock so exchanged as stockholders of the Corporation shall
cease (except the right to receive New Exchange Debentures, an amount
in cash equal to the amount of accrued and unpaid dividends to the
Exchange Date 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 (g), the Corporation shall not be
entitled to exchange the Junior 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
<PAGE> 12
New Exchange Debentures, shall materially 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.
(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 Junior Preferred Stock in writing of such occurrence and shall
make an offer to purchase (the "Change of Control Offer") all then outstanding
shares of Junior 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 (including an amount in cash equal to a
prorated dividend for the period from the immediately preceding Dividend Payment
Date to the Change of Control Payment Date) (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 (i) 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 (ii) send by first class mail, postage prepaid, a notice to
each Holder of Junior 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 Junior
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
Junior 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 Junior 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 Junior 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
Junior 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
<PAGE> 13
number of shares of Junior Preferred Stock the Holder delivered for
purchase and a statement that such Holder is withdrawing his election
to have such shares of Junior Preferred Stock purchased;
(G) that Holders whose shares of Junior Preferred Stock are
purchased only in part will be issued a new certificate representing
the number of shares of Junior 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 Junior 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 Junior 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 Junior Preferred Stock, (C) execute and issue a
new Junior Preferred Stock certificate equal to any unpurchased shares of Junior
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 Junior Preferred Stock tendered pursuant to the Change
of Control Offer, dividends will cease to accumulate with respect to the shares
of Junior 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 Junior 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
needed to permit such purchase of the Junior 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 certificate of designation governing the Existing Preferred
Stock required to permit the repurchase of the Junior 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 the provision of this paragraph (h)(v) shall constitute a
Voting Rights Triggering Event.
(i) Conversion or Exchange. The Holders of shares of
Junior 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 Junior Preferred Stock. Shares of
Junior 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 Junior Preferred Stock must be in compliance
with the terms hereof.
<PAGE> 14
(k) Business Day. If any payment, redemption or exchange
shall be required by the terms hereof to be made on a day that is not a Business
Day, such payment, redemption or exchange 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 of the
Corporation 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 Adjusted 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 Adjusted
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 Adjusted EBITDA in making the
determinations 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 (1)(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 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) 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, an 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
<PAGE> 15
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 Junior 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; or (II) 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 (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 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 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 (1)(i)
above in an aggregate principal amount equal to the aggregate liquidation value
of the Preferred Stock to be issued.
<PAGE> 16
(v) Reports. The Corporation shall provide to the holders
of Junior 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) 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.
"Additional Dividends" shall have the meaning ascribed to it
in paragraph (c) (v) hereof.
"Adjusted EBITDA" means, for any Person, prior to the date
specified by the Corporation in a written notice delivered to the Trustee of the
Corporation's election of its one time right to change the calculation of
Adjusted EBITDA (the "Calculation Change Notice"), the sum of (a) Consolidated
EBITDA of such Person and its Restricted Subsidiaries for the four most recent
fiscal quarters for which internal financial statements are available, minus
inTV EBITDA for the most recent four fiscal quarter period and (b) inTV EBITDA
for the most recent quarterly period, multiplied by four and, subsequent to the
effective date specified by the Corporation in its Calculation Change Notice,
the Consolidated EBITDA of such Person and its Restricted Subsidiaries for the
four most recent fiscal quarters for which internal financial statements are
available.
"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 of the Corporation 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 thereof, (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 thereof,
<PAGE> 17
or a division, line of business or comparable business segment of the
Corporation or any Restricted Subsidiary thereof; 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(iii), 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, and delivered
to the Holders.
"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.
<PAGE> 18
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 of the Corporation 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.
"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.
"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 Junior
Preferred Stock and the 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
<PAGE> 19
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 New Exchange Debentures, 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.
"Convertible Preferred Stock" shall have the meaning ascribed
to it in paragraph (b) hereof.
"Corporation" shall have the meaning ascribed to it in the
first paragraph of this Resolution.
"Credit Facility" means the Credit Agreement dated as of
December 19, 1995, and amended and restated as of April 30, 1998, among the
Corporation, the financial institutions party thereto in their capacities
<PAGE> 20
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 June 10, 1998
to the end of the Corporation'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 that do not require the
approval of the holders of a majority of the shares of Junior Preferred Stock
outstanding to be issued, in each case from June 10, 1998 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 the mandatory redemption date of the Junior Preferred
Stock. 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 Company is obligated to pay current dividends or distributions
in cash during the period prior to the redemption date of the Junior Preferred
Stock; and (iii) as long as the Junior 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 a change of control offer to be made for such
Preferred Stock in the event of a change of control of the Corporation or
Restricted Subsidiary, which provisions have substantially the same effect as
the provisions described under paragraph (h), shall not be deemed to be
Disqualified Capital Stock solely by virtue of such provisions; (ii) the Junior
Preferred Stock, the Existing Preferred Stock and the Convertible Preferred
Stock, as in effect on the Issue Date, shall not be considered Disqualified
Capital Stock; (iii) Disqualified Capital Stock paid as dividends on Preferred
Stock existing on the date hereof 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; and (iv) issuances of Junior
Preferred Stock, Senior Securities and Parity Securities that the Corporation is
permitted to issue, as described under paragraph (b), without the approval of
the holders of at least a majority of the shares of Junior Preferred Stock then
outstanding.
"Dividend Payment Date" means May 15 and November 15 of each
year commencing November 15, 1998.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Semi-annual Dividend Period.
"Dividend Record Date" means May 1 and November 1 of each
year.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
<PAGE> 21
"Exchange Date" means the date of original issuance of the
New Exchange Debentures.
"Exchange Notice" shall have the meaning ascribed to it in
paragraph (g)(ii) hereof.
"Exchange Offer" means a registered offer to exchange any and
all shares of the Junior Preferred Stock for a like number of shares of another
series of the Corporation's cumulative Junior exchangeable preferred stock that
has terms identical in all material respects to the junior Preferred Stock
except that (i) the Exchange Preferred Stock shall have been registered pursuant
to an effective registration statement under the Securities Act and the
certificates therefor shall contain no restrictive legends thereon and (ii) the
certificate of designation governing such Exchange Preferred Stock does not need
to contain provisions with respect to Additional Dividends, including, without
limitation, those contained in paragraph (c) hereof.
"Exchange Offer Registration Statement" means the registration
statement filed by the Corporation with the Commission with respect to an
Exchange Offer.
"Exchange Preferred Stock" means the series of the
Corporation's cumulative junior exchangeable preferred stock publicly offered in
exchange for the Junior Preferred Stock.
"Existing Debt Indentures" means the Existing Indenture and
the Existing Exchange Indenture.
"Existing Exchange Debentures" means the 12 1/2% Exchange
Debentures due 2006 (if issued) issued under the Existing Exchange Indenture.
"Existing Exchange Indenture" means the indenture dated
October 4, 1996 between the Corporation, the guarantors thereto and The Bank of
New York, as trustee, which governs 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 Private Preferred Stock
and the Public Preferred Stock, collectively.
"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 Junior 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
<PAGE> 22
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 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 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 Dividend Period" means the dividend period commencing
on the Issue Date and ending on November 15, 1998.
"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.
<PAGE> 23
"inTV" means the Corporation's network of owned, operated or
affiliated television stations dedicated to Infomercial programming.
"inTV EBITDA" means Consolidated EBITDA for the Infomall TV
Network determined on a basis consistent with the Corporation's internal
financial statements, generated by stations declared by the Board of Directors
as inTV properties.
"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 New Exchange
Debentures, the Existing Exchange Debentures, the Existing Preferred Stock, the
Junior Preferred Stock or the Convertible Preferred Stock by the Corporation.
"Issue Date" means the date of original issuance of the
Junior Preferred Stock.
"Junior Preferred Stock" shall have the meaning ascribed to it
in paragraph (a) hereof.
"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 an Asset Sale or series of related
Asset Sales involving assets with a fair market value in excess of $25,000,000.
"Mandatory Redemption Price" shall have the meaning ascribed
to it in paragraph (e)(ii) hereof.
"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).
"Net Proceeds Redemption Price" shall have the meaning
ascribed to it in paragraph (e)(i) hereof.
<PAGE> 24
"New Exchange Debentures" shall mean the 13 1/4% Exchange
Debentures due 2006 (if issued) issued under the New Exchange Indenture.
"New Exchange Indenture" shall have the meaning ascribed to it
in paragraph (f) (ii) (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".
"Optional Redemption Price" shall have the meaning ascribed to
it in paragraph (e)(i) hereof.
"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 Indenture 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;
<PAGE> 25
(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 (1) (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 of the
Corporation to the Corporation or to a Restricted
Subsidiary of the Corporation for so long as such
Indebtedness is held by the Corporation or a
Restricted Subsidiary of the Corporation, in each
case subject to no Lien held by a Person other than
the Corporation or a Restricted Subsidiary of the
Corporation; provided that if as of any date any
Person other than the Corporation or a Restricted
Subsidiary of the Corporation 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 of the Corporation for so long as such
Indebtedness is held by a Restricted Subsidiary of
the Corporation, in each case subject to no Lien;
provided that (a) any Indebtedness of the Corporation
to any Restricted Subsidiary of the Corporation 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 of the Corporation 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:
<PAGE> 26
(i) Investments by the Corporation, or by a Restricted
Subsidiary thereof, in the Corporation or a
Restricted Subsidiary;
(ii) Cash Equivalents;
(iii) Investments by the Corporation, 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
Corporation, (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
thereof 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 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 Corporation or a Restricted
Subsidiary solely as partial consideration for the
consummation of an Asset Sale;
(vi) time brokerage and other similar agreements 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 Federal Communications Commission),
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 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.
<PAGE> 27
"Private Exchange" means the exchange of the Junior Preferred
Stock for a like number of shares of Private Exchange Preferred Stock.
"Private Exchange Preferred Stock" means a series of the
Corporation's Cumulative Junior exchangeable preferred stock having terms
identical in all material respects to the Junior Preferred Stock except that the
certificate of designation thereof shall provide that Additional Dividends with
respect thereto shall be paid, if required, through the issuance of additional
shares of such series of Cumulative Junior exchangeable preferred stock.
"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.
"Public Equity Offering" means a public offering by the
Corporation 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.
"Public Preferred Stock" means the Cumulative Exchangeable
Preferred Stock, $.001 par value, 12 1/2% dividend rate per annum, of which
170,782 shares are currently 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.
"Redemption Notice" shall have the meaning ascribed to it in
paragraph (e)(iii) hereof.
"Redemption Date", with respect to any shares of Junior
Preferred Stock, means the date on which such shares of Junior Preferred Stock
are redeemed by the Corporation.
"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.
"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 the Corporation of Indebtedness
incurred in accordance with paragraph (l)(i) above, 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
<PAGE> 28
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 Parity Securities or Junior Securities, or any
warrants, rights or options to acquire shares of Parity Securities or Junior
Securities, other than through the exchange of such Parity Securities or Junior
Securities or any warrants, rights or options to acquire shares of any class of
such Parity Securities or 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.
"Semi-Annual Dividend Period" shall mean the semi-annual
period commencing on each May 15 and November 15 and ending on the next
succeeding Dividend Payment Date, respectively.
"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
<PAGE> 29
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 (1) (i) hereof.
"Senior Securities" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Shelf Registration Statement" means a registration statement
filed by the Corporation with the Commission for an offering to be made on a
continuous basis pursuant to Rule 415 promulgated under the Securities Act
covering all of the Junior Preferred Stock or the Private Exchange Preferred
Stock.
"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)(ii) above. The transfer agent for the Junior 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)(iv) 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> 30
IN WITNESS WHEREOF, said Paxson Communications Corporation has
caused this Certificate to be signed by Arthur D. Tek, its Vice President and
Chief Financial Officer, this 9th day of June, 1998.
PAXSON COMMUNICATIONS CORPORATION
By:
--------------------------------
Name:
Title:
<PAGE> 1
Exhibit 3.2.4
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 9 3/4% SERIES A
CONVERTIBLE PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
- -------------------------------------------------------------------------------
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 June 9, 1998 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
9 3/4% Series A Convertible Preferred Stock, par value $.001 per share,
with a stated value of $10,000.00 per share, consisting of 17,500
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 "9 3/4% Series A Convertible Preferred Stock". The
number of shares constituting such class shall be 17,500 and are referred to as
the "Convertible Preferred Stock." 7,500 shares of Convertible Preferred Stock
shall be initially issued with an additional 10,000 shares reserved for issuance
in accordance with paragraph (c)(i) hereof. The liquidation preference of the
Convertible Preferred Stock shall be $10,000.00 per share.
(b) Rank. The 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
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
Convertible Preferred Stock as to dividends and distributions upon liquidation,
winding-up or dissolution (collectively referred to as "Parity Securities"); and
(iii) junior to the Existing Preferred Stock and to the Junior 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 Convertible
Preferred Stock as to dividends
<PAGE> 2
-2-
and distributions upon liquidation, winding-up or dissolution of the Corporation
(collectively referred to as "Senior Securities"); provided that any such Senior
Securities that were not approved by the Holders in accordance with paragraph
(f)(ii)(A) 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 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 Convertible Preferred Stock, at a
rate per annum equal to 9 3/4% of the liquidation preference per share of the
Convertible Preferred Stock, payable quarterly. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the Issue
Date and shall be payable quarterly in arrears on each Dividend Payment Date,
commencing September 30, 1998. Dividends may be paid, at the Corporation's
option, on any Dividend Payment Date either in cash or by the issuance of
additional shares of Convertible Preferred Stock (including fractional shares)
having an aggregate liquidation preference equal to the amount of such dividends
or by the issuance of shares of Class A Common Stock (and payment of cash in
lieu of fractional shares) having a value, based upon the average Common Stock
Trading Price as of the consecutive five trading days ending two Business Days
prior to the Dividend Payment Date equal to the amount of such dividends. In the
event that dividends are declared and paid through the issuance of additional
shares of Convertible Preferred Stock or Class A Common Stock, as herein
provided, such dividends shall be deemed paid in full and will not accumulate.
Each dividend shall be payable to the Holders of record as they appear on the
stock books of the Corporation on the Dividend Record Date immediately preceding
the related Dividend Payment Date. Dividends shall cease to accumulate in
respect of shares of the 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
Convertible Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata
to the Holders entitled thereto.
(iii) Unpaid dividends accumulating on the Convertible
Preferred Stock for any past dividend period and dividends in connection with
any optional redemption may be declared and paid at any time, without references
to any regular Dividend Payment Date, to holders of record on such date, not
more than forty-five (45) days prior to the payment thereof, as may be fixed by
the Board of Directors.
(iv) Dividends payable on the 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.
(v) Notwithstanding paragraph (c)(i) above, if the
Company elects to pay dividends on any Dividend Payment Date in shares of Class
A Common Stock and such shares are not freely tradable without volume or manner
of sale limitations under the Securities Act by any Holder which is not an
Affiliate of the Corporation, the dividend rate for the Quarterly Period for
which the dividend is being paid shall be increased to 12 1/4% per annum. For
purposes of the prior sentence, the shares of Class A Common Stock shall be
deemed not freely tradable, unless the certificates evidencing such shares are
delivered to the Holders without any restrictive legend appearing thereon and
are accompanied by a copy of an Opinion of Counsel addressed to the Corporation
to the effect that such shares of Class A Common Stock are freely tradable
without volume or manner of sale limitations under the Securities Act by a
Holder who is not an Affiliate of the Corporation.
<PAGE> 3
-3-
(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 Convertible Preferred Stock then outstanding shall be
entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders, an amount in cash equal to 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 (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the date fixed
for liquidation, dissolution or winding up) 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. Except as
provided in the preceding sentence, Holders of 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 Convertible Preferred Stock and all
Parity Securities, then 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.
(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) The Corporation may, at
the option of the Board of Directors, redeem at any time on or after June 30,
2003, in whole or in part, in the manner provided for in paragraph (e)(iii)
hereof, any or all of the shares of the Convertible Preferred Stock, at the
redemption prices (expressed an a percentage of the liquidation preference) set
forth below, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends per share (including an amount in cash equal to
a prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date) (the "Optional Redemption
Price") if redeemed during the 12-month period beginning June 30 of each of the
years set forth below:
<TABLE>
<S> <C>
2003............................... 104.00%
2004............................... 102.00%
2005 and thereafter................ 100.00%
</TABLE>
(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 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 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 in cash, or declared and a sum in cash set apart
sufficient for such payment, on the Convertible Preferred Stock for all
Dividend Periods terminating on or prior to the Redemption Date.
<PAGE> 4
-4-
(ii) Mandatory Redemption. On December 31, 2006, the
Corporation shall redeem, to the extent of funds legally available therefor, in
the manner provided for in paragraph (e)(iii) hereof, all of the shares of the
Convertible Preferred Stock then outstanding at a redemption price equal to the
liquidation preference per share, plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends per share to the Redemption Date
(the "Mandatory Redemption Price").
(iii) Procedures for Redemption. (A) At least thirty (30)
days and not more than sixty (60) days prior to the date fixed for any
redemption of the Convertible Preferred Stock, 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 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 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) whether the redemption is pursuant to
paragraph (e)(i)(A) or (e)(ii) hereof;
(2) the Optional Redemption Price or the
Mandatory Redemption Price, as the case may be;
(3) whether all or less than all the outstanding
shares of the Convertible Preferred Stock are to be redeemed
and the total number of shares of the Convertible Preferred
Stock being redeemed;
(4) the date fixed for redemption;
(5) 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 Convertible Preferred Stock to be redeemed; and
(6) that dividends on the shares of the
Convertible Preferred Stock to be redeemed shall cease to
accumulate on such Redemption Date unless the Corporation
defaults in the payment of the Optional Redemption Price or
the Mandatory Redemption Price, as the case way be.
(B) Each Holder of Convertible Preferred Stock shall surrender
the certificate or certificates representing such shares of 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 Optional Redemption Price or Mandatory
Redemption Price, as the case may be, 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 applicable redemption price,
dividends on the Convertible Preferred Stock called for redemption
shall cease to accumulate on the Redemption Date, and all rights of the
Holders of redeemed
<PAGE> 5
-5-
shares shall terminate with respect thereto on the Redemption Date,
other than the right to receive the Optional Redemption Price or the
Mandatory Redemption Price, as the case may be, without interest;
provided, however, that if a notice of redemption shall have been given
as provided in paragraph (iii)(A) above and the funds necessary for
redemption (including an amount in respect of all dividends that will
accrue to the Redemption Date) shall have been segregated and
irrevocably deposited in trust for the equal and ratable benefit of the
Holders of the shares to be redeemed, then, at the close of business on
the day on which such funds are segregated and set aside, the Holders
of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the Optional
Redemption Price or the Mandatory Redemption Price, as the case may be.
(f) Voting Rights.
(i) The Holders of Convertible Preferred Stock are
entitled to vote on all matters submitted for a vote to the holders of the
Corporation's common stock generally voting as a class with the Class A Common
Stock and are entitled to one vote for each share of Class A Common Stock into
which their shares of Convertible Preferred Stock is convertible in accordance
with paragraph (g) below. The Holders will vote on all such matters as a class
with the holders of the Class A Common Stock. In addition, Holders have the
voting rights required under Delaware law and as set forth in paragraphs (ii),
(iii) and (iv) below.
(ii) (A) So long as any shares of the Convertible
Preferred Stock are outstanding, the Corporation may not issue any 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) without the
approval of the holders of at least a majority of the shares of Convertible
Preferred Stock then outstanding, voting or consenting, as the case may be,
together as one class; provided, however, that the Corporation may 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) without the
approval of the holders of at least a majority of the shares of Convertible
Preferred Stock then outstanding, voting or consenting, as the case may be,
together as one class at any time after the Common Stock Trading Price first
exceeds 120% of the Conversion Price (as then in effect) for twenty consecutive
trading days. Notwithstanding the prior sentence, the Corporation may: (I) issue
additional shares of Senior Securities which Senior 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 the Private Preferred Stock (as existing
on the Issue Date) and which does not prevent either the payment or cash
dividends on the Convertible Preferred Stock, in an amount sufficient to acquire
the Private 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 Private Preferred Stock
and issuing such additional Senior Securities; with such shares being issued no
sooner than the date the Corporation repurchases, redeems or otherwise retires
the Private Preferred Stock, (II) issue additional shares of Public Preferred
Stock as dividends on the Public Preferred Stock in accordance with the
certificate of designation of the Public Preferred Stock, as in existence on the
Issue Date, (III) issue additional shares of Junior Preferred Stock as dividends
on the Junior Preferred Stock in accordance with the certificate of designation
of the Junior Preferred Stock, as in existence on the Issue Date; or (IV) issue
shares of Senior Securities with an aggregate liquidation preference not in
excess of $75,000,000.
(B) So long as any shares of the Convertible Preferred Stock
are outstanding, the Corporation shall not amend this Resolution so as
to affect materially and adversely the specified rights, preferences,
privileges or voting rights of Holders of shares of
<PAGE> 6
-6-
Convertible Preferred Stock without the affirmative vote or consent of
Holders of at least a majority of the issued and outstanding shares of
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) Except as set forth in paragraphs (f)(ii)(A) above, (x)
the creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities or (y) 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
Convertible Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of Holders of
Convertible Preferred Stock.
(iii) Without the affirmative vote or consent of Holders of
a majority of the issued and outstanding shares of 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 Company's
assets (as entirely 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
Convertible Preferred Stock shall be converted into or exchanged for and shall
become shares of such successor, transferee or resulting Person the same powers,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations or restrictions thereon, that the Convertible
Preferred Stock had immediately prior to such transaction; (C) immediately after
giving effect to such transaction, no Voting Rights Triggering Event shall have
occurred or be continuing; and (D) the Corporation has delivered to the transfer
agent for the 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.
(iv) (A) If (I) the Corporation fails to redeem all of the
then outstanding shares of Convertible Preferred Stock on or before December 31,
2006 or otherwise fails to discharge any redemption obligation with respect to
the 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 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) or (1)(ii) 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 Convertible Preferred Stock then outstanding; (IV) the
Corporation fails to pay at the final stated maturity (giving effect to any
extensions
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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 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 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 Convertible Preferred
Stock expire (other than as described in (f)(iv)(B) below). The voting rights
provided herein shall be the exclusive remedy at law or in equity of the holders
of the Convertible Preferred Stock for any Voting Rights Triggering Event.
(B) The right of the Holders of Convertible Preferred Stock
voting together as a separate class to elect members of the Board of
Directors as set forth in subparagraph (f)(iv)(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)(iv)(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 Convertible Preferred Stock then outstanding and entitled
to vote thereon, at which time (I) the special right of the Holders of
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 Convertible Preferred Stock shall each terminate and the
directors elected by the holders of Common Stock or Capital Stock
(other than the 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 Convertible Preferred Stock pursuant to paragraph
(f)(iv) hereof, or if vacancies shall exist in the offices of directors
elected by the Holders of Convertible Preferred Stock, a proper officer
of the Corporation may, and upon the written request of the Holders of
record of at least twenty-five percent (25%) of the shares of
Convertible Preferred Stock then outstanding addressed to the secretary
of the Corporation shall, call a special meeting of the Holders of
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 twenty (20) days
after personal service of said written request upon the secretary of
the Corporation, or within twenty (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 twenty-five percent (25%) of the outstanding
shares of 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 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.
<PAGE> 8
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(C) At any meeting held for the purpose of electing directors
at which the Holders of Convertible Preferred Stock shall have the
right, voting together as a separate class, to elect directors an
aforesaid, the presence in person or by proxy of the Holders of at
least a majority of the outstanding shares of Convertible Preferred
Stock shall be required to constitute a quorum of such Convertible
Preferred Stock.
(D) Any vacancy occurring in the office of a director elected
by the Holders of Convertible Preferred Stock may be filled by the
remaining directors elected by the Holders of Convertible Preferred
Stock unless and until such vacancy shall be filled by the Holders of
Convertible Preferred Stock.
(v) In any case in which the Holders of Convertible
Preferred Stock shall be entitled
to vote pursuant to this paragraph (f) or pursuant to Delaware law, each Holder
of Convertible Preferred Stock entitled to vote with respect to such matter
shall be entitled to one vote for each share of Class A Common Stock into which
the Convertible Preferred Stock held by such Holder is convertible.
(g) Conversion.
(i) Shares of the Convertible Preferred Stock will be
convertible at the option of the Holder thereof, at any time and from time to
time (A) on or after June 30, 1999, (B) immediately in the event of a Change of
Control or Major Asset Sale, or (C) in the event that the Common Stock Trading
Price equals or exceeds $25.00 per share for five consecutive trading days, in
each case into a number of shares of Class A Common Stock equal to the aggregate
liquidation preference amount of the shares of Convertible Preferred Stock
surrendered for conversion divided by the Conversion Price as then in effect,
except that, if shares of 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 of Class
A Common Stock will be issued upon conversion; in lieu of fractional shares of
Class A Common Stock, the Company 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 Convertible Preferred Stock shall be converted by the holder
thereof by surrendering the certificate or certificates representing the shares
of Convertible Preferred Stock to be converted, appropriately completed, to the
transfer agent for the Class A Common Stock. The transfer agent shall issue one
or more certificates representing the Class A Common Stock to be issued in the
conversion in the name of names requested by the Holder. The transfer agent will
deliver to the Holder a new certificate representing the shares of Convertible
Preferred Stock in excess of those being surrendered for conversion.
(ii) (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, (x) the Conversion Price in effect immediately prior thereto shall be
adjusted so that the Holder of a share of 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 such shares of Class A Common Stock which such Holder would have
been entitled to receive after the happening of such event had such share of
Convertible Preferred Stock been converted immediately prior to such record
date, and (y) the Company shall simultaneously effect such transaction to the
Convertible Preferred
<PAGE> 9
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Stock (i.e., dividend, subdivision, combination, etc.) so that the Holder of a
share of Convertible Preferred Stock after such Stock Transaction shall be
entitled to the same percentage voting power which such holder was entitled to
for such share before such Stock Transaction. Such adjustment shall be made
whenever any of such events shall happen, but shall also be effective
retroactively as to shares of Convertible Preferred Stock converted between such
record date and the date of the happening of any such event.
(B) In the event the Company shall, at any time or from time
to time while any shares of 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 Company), for a consideration on
the date of such issuance, sale or exchange 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 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 date 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 exchange plus (II) the aggregate Fair Market Value of the
consideration to be received by the Company in respect of such
issuance, sale or distribution 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 pricing terms) of such issuance, sale or exchange
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 exchange 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 shares of Convertible Preferred Stock are
outstanding, repurchase or redeem any portion of the Class A Common
Stock from holders generally at a premium over the Common Stock Trading
Price thereof on the next trading day immediately preceding the
consummation of such repurchase or redemption (a "Repurchase"), then
and in the case of each Repurchase the Conversion Price in effect
immediately prior thereto shall be adjusted by multiplying such
conversion price by the fraction the numerator of which is (I) the
product of (x) the number of shares of Class A Common Stock outstanding
immediately before such repurchase or redemption multiplied by (y) the
Common Stock Trading Price per share of Class A Common Stock on the
next trading day immediately following the consummation of such
Repurchase minus (II) the aggregate purchase price of the Repurchase
and the denominator of which shall be the product of (x) the number of
shares of Class A Common Stock outstanding immediately before such
Repurchase minus the number of shares of Class A Common Stock
repurchased or redeemed by the Company multiplied by (y) the Common
Stock Trading Price per share of Class A Common Stock on the next
trading day immediately following the consummation of such Repurchase.
Such adjustment shall be made whenever any such events shall happen,
but shall also be effective retroactively as to shares of Convertible
Preferred Stock converted between such record date and the date of the
happening of any such event.
<PAGE> 10
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(D) In the event the Company shall at any time or from time to
time while any shares of 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 Company or any of its
subsidiaries or evidences of indebtedness of the Company or any other
person on its Class A Common Stock or pay any Extraordinary Cash
Divided, (other than any dividend or distribution on the Class A Common
Stock (I) referred to in paragraphs (A), (B) or (C) above or (II) if in
conjunction therewith the Company declares and pays or makes a dividend
or distribution on each share of 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 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 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 shares of Convertible Preferred Stock). An
adjustment made pursuant to this paragraph (D) 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 immediately after 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 Company 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 Company to its stockholders shall not be taxable to such stockholders.
(iv) Holders of shares of Convertible Preferred Stock at
the close of business on a Dividend Record Date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such Dividend Record Date and
on or prior to such Dividend Payment Date. However, shares of Convertible
Preferred Stock surrendered for conversion during the period between the opening
of business on any Dividend Record Date and the close of business on the
corresponding Dividend Payment Date (except shares of Convertible Preferred
Stock called for redemption on a Redemption Date during such period) must be
accompanied by payment of an amount equal to the dividend payment with respect
to such shares of Convertible Preferred Stock presented for conversion on such
Dividend Payment Date; provided, however, that no such payment need be made if,
at the time of conversion, dividends payable on the shares of Convertible
Preferred Stock outstanding are in arrears for more than 30 days beyond the
previous Dividend Payment Date. The dividend payment with respect to shares of
Convertible Preferred Stock called for redemption on a Redemption Date during
the period between the opening of business on a Dividend Record Date and the
close of business on the corresponding Dividend Payment Date shall be payable on
that Dividend Payment Date to the Holder of such shares at the close of business
on
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the Dividend Record Date notwithstanding the conversion of such shares after
the opening of business on such Dividend Record Date and on or prior to the
close of business on such Dividend Payment Date, and the holder of such shares
need not make a payment equal to the dividend payment amount upon surrender of
such shares for conversion. A holder of shares of Convertible Preferred Stock on
a Dividend Record Date who converts such shares on or after the corresponding
Dividend Payment Date will receive the dividend payable by the Company on such
shares of Convertible Preferred Stock on such date and need not include payment
in the amount of such dividend upon surrender of such shares of Convertible
Preferred Stock for conversion. Except as provided above, the Company shall make
no payments or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Class A Common Stock issued
upon such conversion. The Company will not issue fractional shares of Class A
Common Stock upon conversion of shares of Convertible Preferred Stock and, in
lieu thereof, 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 Common
Stock Trading Price of the Class A Common Stock (determined as set forth in the
Certificate of Designation) on the last business day prior to the date of
conversion.
In the event of any capital reorganization (other than a
capital reorganization covered by paragraph (ii) (D) above) or reclassification
of outstanding shares of Class A 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 Company with or into another corporation, 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 "Transaction"), each share of Convertible Preferred Stock
shall continue to remain outstanding if the Company is the Surviving Person (as
defined below) of such Transaction, and shall be subject to all the provisions,
as in effect prior to such Transaction, or if the Company is not the Surviving
Person, each share of 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 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 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 (v) 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
Company will not effect any Transaction unless, prior to the consummation
thereof, (A) proper provision is made to ensure that the holders of shares of
Convertible Preferred Stock will be entitled to receive the benefits afforded by
this paragraph (v), and (B) if, following the Change in Control, one or more
entitles other than the Company shall be required to deliver securities or other
property upon the conversion of the Convertible Preferred Stock, such entity or
entities shall assume, by written instrument delivered to each holder of shares
of Convertible Preferred Stock the obligation to deliver to such holder the
amount in cash to which, in accordance with the foregoing provisions, such
holder is entitled.
For purposes of this paragraph (v), the following terms shall
have the meanings ascribed to them below:
<PAGE> 12
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"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 Company, or the Person consolidating with or merging into
the Company in a merger, consolidation or other corporate combination
in which the Company is the continuing or surviving Person, but in
connection with which the Convertible Preferred Stock or Common Stock
of the Company is exchanged, converted or reclassified into the
securities of any other Person or cash or any other property.
(A) At the time of the Exchange, the Corporation shall deliver
Debentures which may be resold by the holder thereof to the public
without delivering a prospectus under the Securities Act.
(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 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 Convertible Preferred Stock at a purchase price of 100% of
the liquidation preference thereof plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends thereon (including an amount in
cash equal to a prorated dividend for the period from the immediately preceding
Dividend Payment Date to the Change of Control Payment Date) (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 (i) 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 (ii) send by first class mail, postage prepaid, a notice to
each Holder of 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 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
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 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 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
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
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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 Convertible Preferred Stock
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such shares of Convertible Preferred
Stock purchased;
(G) that Holders whose shares of Convertible Preferred Stock
are purchased only in part will be issued a new certificate
representing the number of shares of 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 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 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 Convertible Preferred Stock, (C) execute and issue a new
Convertible Preferred Stock certificate equal to any unpurchased shares of
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 Convertible Preferred Stock tendered pursuant
to the Change of Control Offer, dividends will cease to accumulate with respect
to the shares of 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 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, the
New Exchange Indenture, the Existing Preferred Stock or the Junior Preferred
Stock, then, notwithstanding anything to the contrary contained above, prior to
complying with the foregoing provisions, but in any event within 45 days
following the Change of Control Date, the Corporation shall, to the extent
required to permit such purchase of the Convertible Preferred Stock, either (A)
repay in full all Indebtedness under the Credit Facility, such Senior Debt, the
Existing Notes, the Existing Exchange Debentures and the New 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 and Junior Preferred Stock or (B)
obtain the requisite consents, if any, under the Credit Facility, the
instruments governing such Senior Debt, the Existing Debt Indentures, the New
Exchange Indenture and the certificates of designation governing the Existing
Preferred Stock and Junior Preferred Stock required to permit redemption of the
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 the
provision of this paragraph (h)(v) shall constitute a Voting Rights Triggering
Event.
<PAGE> 14
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(i) Conversion or Exchange. Other than as set forth in
paragraph (g) above, the Holders of shares of 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 Convertible Preferred Stock. Shares of
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 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 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 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 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, an 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
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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
Convertible Preferred Stock.
(ii) 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; or (II) 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 (II) 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
therein, 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) (i) 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.
(iii) Reports. The Corporation shall provide to the holders
of 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) 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:
"Adjusted EBITDA" means, for any Person, prior to the date
specified by the Corporation in a written notice delivered to the transfer agent
for the Convertible Preferred Stock of the Corporation's election of its one
time right to change the calculation of Adjusted EBITDA (the "Calculation Change
Notice"),
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the sum of (a) Consolidated EBITDA of such Person and its Restricted
Subsidiaries for the four most recent fiscal quarters for which internal
financial statements are available, minus inTV EBITDA for the most recent four
fiscal quarter period and (b) inTV EBITDA for the most recent quarterly period,
multiplied by four and, subsequent to the effective date specified by the
Corporation in its Calculation Change Notice, the Consolidated EBITDA of such
Person and its Restricted Subsidiaries for the four most recent fiscal quarters
for which internal financial statements are available.
"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)(ii) 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 of the Corporation 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 thereof, (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 thereof, or a division,
line of business or comparable business segment of the Corporation or any
Restricted Subsidiary thereof; 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(iii), 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, and delivered
to the Holders.
"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.
<PAGE> 17
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"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, (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 (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.
<PAGE> 18
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"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.
"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 the Junior Preferred
Stock and the 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 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
<PAGE> 19
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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 New Exchange Debentures, 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.
"Convertible Preferred Stock" shall have the meaning ascribed
to it in paragraph (a) hereof.
"Corporation" shall have the meaning ascribed to it in the
first paragraph of this Resolution.
"Credit Facility" means the Credit Agreement dated as of
December 19, 1995, and amended and restated as of April 30, 1998, among the
Corporation, 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.
<PAGE> 20
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"Cumulative Consolidated EBITDA" means, with respect to any
Person, as of any date of determination, Consolidated EBITDA from June 10, 1998
to the end of the Corporation'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 that do not require the
approval of the holders of a majority of the shares of Convertible Preferred
Stock outstanding to be issued, in each case from June 10, 1998 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 the mandatory redemption date of the Convertible
Preferred Stock. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include (i) any Preferred Stock of a Restricted Subsidiary of
the Corporation, (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 the
redemption date of the Convertible Preferred Stock; and (iii) as long as the
Convertible Preferred Stock remains outstanding, Senior Securities and Parity
Securities; provided, however, that (i) Preferred Stock of the Corporation or
any Restricted Subsidiary thereof 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 Corporation or Restricted Subsidiary, which
provisions have substantially the same effect as the provisions described under
paragraph (h), shall not be deemed to be Disqualified Capital Stock solely by
virtue of such provisions; (ii) the Junior Preferred Stock, the Existing
Preferred Stock and the Convertible Preferred Stock, as in effect on the Issue
Date, shall not be considered Disqualified Capital Stock; (iii) Disqualified
Capital Stock paid as dividends on Preferred Stock existing on the date hereof
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; and (iv) issuances of Junior Preferred Stock, Senior Securities
and Parity Securities that the Corporation is permitted to issue, as described
under paragraph (b), without the approval of the holders of at least a majority
of the shares of the Convertible Preferred Stock then outstanding shall not be
considered Disqualified Capital Stock.
"Dividend Payment Date" means March 31, June 30, September 30
and December 31 of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Quarterly Dividend Period.
"Dividend Record Date" means March 15, June 15, September 15
and December 15 of each year.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
<PAGE> 21
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"Existing Debt Indentures" means the Existing Indenture and
the Existing Exchange Indenture.
"Existing Exchange Debentures" means the 12 1/2% Exchange
Debentures due 2006 (if issued) issued under the Existing Exchange Indenture.
"Existing Exchange Indenture" means the indenture dated
October 4, 1996 between the Corporation, the guarantors thereto and The Bank of
New York, as trustee, which governs 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 Private Preferred Stock
and the Public Preferred Stock, collectively.
"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 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.
"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 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,
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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 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 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 Dividend Period" means the dividend period commencing
on the Issue Date and ending on September 30, 1998.
"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.
"inTV" means the Corporation's network of owned, operated or
affiliated television stations dedicated to Infomercial programming.
"inTV EBITDA" means Consolidated EBITDA for the Infomall TV
Network determined on a basis consistent with the Corporation's internal
financial statements, generated by stations declared by the Board of Directors
as inTV properties.
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"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 New Exchange
Debentures, the Existing Exchange Debentures, the Existing Preferred Stock, the
Junior Preferred Stock or the Convertible Preferred Stock by the Corporation.
"Issue Date" means the date of original issuance of the
Convertible Preferred Stock.
"Junior Preferred Stock" means the Cumulative Junior
Exchangeable Preferred Stock, par value $.001 per share, 13 1/4 % dividend rate
per annum, of which 20,000 shares are outstanding with a liquidation preference
of $10,000.
"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).
"Mandatory Redemption Price" shall have the meaning ascribed
to it in paragraph (e)(ii) hereof.
"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 13 1/4 % Exchange
Debentures due 2006 (if issued) issued under the New Exchange Indenture.
"New Exchange Indenture" means the indenture dated as of June
10, 1998 among the Corporation and The Bank of New York, as Trustee which
governs the New Exchange Debentures.
<PAGE> 24
-24-
"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".
"Optional Redemption Price" shall have the meaning ascribed to
it in paragraph (e)(i) hereof.
"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 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 thereof, in the Corporation or a
Restricted Subsidiary;
(ii) Cash Equivalents;
(iii) Investments by the Corporation, 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
Corporation, (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
thereof 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 thereof in the form of any
stock, bonds, notes, debentures, partnership or joint
venture interests
<PAGE> 25
-25-
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;
(vi) time brokerage and other similar agreements 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 Federal Communications Commission),
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 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.
"Public Preferred Stock" means the Cumulative Exchangeable
Preferred Stock, $.001 par value, 12 1/2% dividend rate per annum, of which
170,782 shares are currently 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.
<PAGE> 26
-26-
"Quarterly Dividend Period" shall mean the quarterly period
commencing on each March 31, June 30, September 30 and December 31 and ending on
the next succeeding Dividend Payment Date, respectively.
"Redemption Date", with respect to any shares of Convertible
Preferred Stock, means the date on which such shares of Convertible Preferred
Stock are redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in
paragraph (e)(iii) hereof.
"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.
"Refinancing Indebtedness" means any Refinancing by the
Corporation or any Restricted Subsidiary of the Corporation 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.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
<PAGE> 27
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"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 or (iv) any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business.
"Senior Securities" shall have the meaning ascribed to it in
paragraph (b) 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 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)(iv) 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> 28
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IN WITNESS WHEREOF, said Paxson Communications Corporation has
caused this Certificate to be signed this 9th day of June, 1998.
PAXSON COMMUNICATIONS CORPORATION
By:
--------------------------------
Name:
Title:
<PAGE> 1
Exhibit 4.4
PAXSON COMMUNICATIONS CORPORATION, as Issuer,
ITS DIRECT AND INDIRECT SUBSIDIARIES, as Guarantors,
and
THE BANK OF NEW YORK, as Trustee
--------------------
INDENTURE
Dated as of June 10, 1998
--------------------
$200,000,000
13 1/4% Exchange Debentures due 2006
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<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
</TABLE>
- -------------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions................................................................. 1
Section 1.02. Other Definitions........................................................... 23
Section 1.03. Incorporation by Reference of Trust Indenture Act........................... 24
Section 1.04. Rules of Construction....................................................... 25
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture.................................. 25
Section 2.02. Execution and Authentication................................................ 26
Section 2.03. Registrar and Paying Agent.................................................. 27
Section 2.04. Paying Agent to Hold Assets in Trust........................................ 27
Section 2.05. Securityholder Lists........................................................ 28
Section 2.06. Transfer and Exchange....................................................... 28
Section 2.07. Replacement Securities...................................................... 29
Section 2.08. Outstanding Securities...................................................... 29
Section 2.09. Temporary Securities........................................................ 30
Section 2.10. Cancellation................................................................ 30
Section 2.11. Defaulted Interest.......................................................... 30
Section 2.12. Deposit of Moneys........................................................... 31
Section 2.13. CUSIP-Number................................................................ 31
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.......................................................... 31
Section 3.02. Selection by Trustee of Securities to Be Redeemed........................... 31
Section 3.03. Notice of Redemption........................................................ 32
Section 3.04. Effect of Notice of Redemption.............................................. 33
Section 3.05. Deposit of Redemption Price................................................. 33
Section 3.06. Securities Redeemed in Part................................................. 34
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities....................................................... 34
Section 4.02. SEC Reports................................................................. 34
Section 4.03. Waiver of Stay, Extension or Usury Laws..................................... 35
Section 4.04. Compliance Certificate...................................................... 36
</TABLE>
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<TABLE>
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<S> <C> <C>
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.................................................. 56
Section 6.09. Trustee May File Proofs of Claim............................................ 56
Section 6.10. Priorities.................................................................. 57
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................................................ 60
Section 7.04. Trustee's Disclaimer........................................................ 60
Section 7.05. Notice of Defaults.......................................................... 60
Section 7.06. Reports by Trustee to Holders............................................... 60
</TABLE>
-ii-
<PAGE> 5
<TABLE>
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<S> <C> <C>
Section 7.07. Compensation and Indemnity.................................................. 61
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........................... 64
Section 7.12. Paying Agents............................................................... 64
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.................................................. 64
Section 8.02. With Consent of Holders..................................................... 65
Section 8.03. Compliance with Trust Indenture Act......................................... 67
Section 8.04. Revocation and Effect of Consents........................................... 67
Section 8.05. Notation on or Exchange of Securities....................................... 68
Section 8.06. Trustee to Sign Amendments, etc............................................. 68
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture...................................................... 69
Section 9.02. Legal Defeasance............................................................ 69
Section 9.03. Covenant Defeasance......................................................... 70
Section 9.04. Conditions to Defeasance or Covenant Defeasance............................. 70
Section 9.05. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.................................... 72
Section 9.06. Reinstatement............................................................... 73
Section 9.07. Moneys Held by Paying Agent................................................. 73
Section 9.08. Moneys Held by Trustee...................................................... 74
ARTICLE 10
GUARANTEE OF SECURITIES
Section 10.01. Guarantee................................................................... 75
Section 10.02. Execution and Delivery of Guarantees........................................ 76
Section 10.03. Limitation of Guarantee..................................................... 76
Section 10.04. Additional Guarantors....................................................... 77
Section 10.05. Release of Guarantor........................................................ 77
Section 10.06. Guarantee obligations Subordinated to Guarantor Senior Debt................. 77
Section 10.07. Payment Over of Proceeds upon Dissolution, etc., of a Guarantor............. 78
Section 10.08. Suspension of Guarantee Obligations When Guarantor Senior Debt
in Default............................................................... 80
</TABLE>
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<PAGE> 6
<TABLE>
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<S> <C> <C>
Section 10.09. Subrogation to Rights of holders of Guarantor Senior Debt................... 82
Section 10.10. Guarantee Subordination Provisions Solely to Define Relative
Rights................................................................... 82
Section 10.11. Application of Certain Article 11 Provisions................................ 83
ARTICLE 11
SUBORDINATION OF SECURITIES
Section 11.01. Securities Subordinate to Senior Debt....................................... 84
Section 11.02. Payment Over of Proceeds upon Dissolution, etc.............................. 84
Section 11.03. Suspension of Payment When Senior Debt in Default........................... 86
Section 11.04. Trustee's Relation to Senior Debt........................................... 88
Section 11.05. Subrogation to Rights of holders of Senior Debt............................. 88
Section 11.06. Provisions Solely to Define Relative Rights................................. 89
Section 11.07. Trustee to Effectuate Subordination......................................... 89
Section 11.08. No Waiver of Subordination Provisions....................................... 90
Section 11.09. Notice to Trustee........................................................... 90
Section 11.10. Reliance on Judicial Order or Certificate of Liquidating Agent.............. 92
Section 11.11. Rights of Trustee as a Holder of Senior Debt; Preservation of
Trustee's Rights......................................................... 92
Section 11.12. Article Applicable to Paying Agents......................................... 92
Section 11.13. No Suspension of Remedies................................................... 93
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls................................................ 93
Section 12.02. Notices..................................................................... 93
Section 12.03. Communications by Holders with Other Holders................................ 94
Section 12.04. Certificate and Opinion as to Conditions Precedent.......................... 95
Section 12.05. Statements Required in Certificate and Opinion.............................. 95
Section 12.06. When Treasury Securities Disregarded........................................ 95
Section 12.07. Rules by Trustee and Agents................................................. 96
Section 12.08. Business Days; Legal Holidays............................................... 96
Section 12.09. Governing Law............................................................... 96
Section 12.10. No Adverse Interpretation of Other Agreements............................... 96
Section 12.11. No Recourse Against Others.................................................. 97
Section 12.12. Successors.................................................................. 97
</TABLE>
-iv-
<PAGE> 7
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 12.13. Multiple Counterparts....................................................... 97
Section 12.14. Table of Contents, Headings, etc............................................ 98
Section 12.15. Separability................................................................ 98
EXHIBITS
Exhibit A. Form of Security............................................................ A-1
</TABLE>
-v-
<PAGE> 8
INDENTURE, dated as of June 10, 1998, 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 THE BANK OF NEW YORK, 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 13
1/4% Exchange Debentures due 2006 (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 EBITDA" means, for any Person, prior to the date
specified by the Company in a written notice delivered to the Trustee of the
Company's election of its one time right to change the calculation of Adjusted
EBITDA (the "Calculation Change Notice"), the sum of (a) Consolidated EBITDA of
such Person and its Restricted Subsidiaries for the four most recent fiscal
quarters for which internal financial statements are available, minus inTV
EBITDA for the most recent four fiscal quarter period and (b) inTV EBITDA for
the most recent quarterly period, multiplied by four and, subsequent to the
effective date specified by the Company in its Calculation Change Notice, the
Consolidated EBITDA of such Person and its Restricted Subsidiaries for the four
most recent fiscal quarters for which internal financial statements are
available.
"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
<PAGE> 9
-2-
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
<PAGE> 10
-3-
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
<PAGE> 11
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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 Designation" means the Certificate of
Designation under which the Junior Preferred Stock was issued, as in effect on
the date of this Indenture.
<PAGE> 12
-5-
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.
"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.
"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.
<PAGE> 13
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"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 Junior
Preferred Stock and the 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
<PAGE> 14
-7-
(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 New Exchange Debentures, 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.
"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
<PAGE> 15
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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 June 10, 1998
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, for purposes of the Certificate of Designation, any cash dividends paid on
Senior Securities or Parity Securities not already reflected in Consolidated
Interest Expense that do not require the approval of the holders of a majority
of the shares of Junior Preferred Stock outstanding to be issued, in each case
from June 10, 1998 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.
<PAGE> 16
-9-
"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 (i) the mandatory redemption date of the Junior
Preferred Stock, in the case of the Junior Preferred Stock or (ii) the final
maturity date of the Securitiess, in the case 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 redemption date of the Junior Preferred Stock or the
maturity date of the Securities; and (iii) as long as the Junior 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, which provisions have substantially the same effect as
the provisions of the Certificates of Designation, Existing Debt Indentures and
the New Exchange Indenture described under "Change of Control," shall not be
deemed to be Disqualified Capital Stock solely by virtue of such provisions;
(ii) the Junior Preferred Stock, the Existing Preferred Stock and the
Convertible Preferred Stock, as in effect on the Issue Date, shall not be
considered Disqualified Capital Stock; (iii) Disqualified Capital Stock paid as
dividends on Preferred Stock existing on the date hereof 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; and (iv)
issuances of Junior Preferred Stock, Senior Securities and Parity Securities
that the Company is permitted to issue, as described under "-- Ranking", without
the approval of the holders of at least a majority of the shares of Junior
Preferred Stock then outstanding shall not be considered Disqualified Capital
Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 17
-10-
"Exchange Date" means the date of original issuance of the
Securities.
"Existing Exchange Indenture" means the indenture dated
October 4, 1996 between the Company, the guarantors thereto and The Bank of New
York, as trustee, which governs the Existing Exchange Debentures.
"Existing Exchange Debentures" means the 12 1/2% Exchange
Debentures due 2006 (if issued) issued under the Existing Exchange Indenture.
"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 Debt Indentures" means the Existing Indenture and
the Existing Exchange Indenture.
"Existing Notes" means the 11 5/8% Senior Subordinated Notes
due 2002 issued under the Existing Indenture.
"Existing Preferred Stock" means the Private Preferred Stock
and the Public Preferred Stock, collectively.
"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 the New Exchange
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 the New Exchange
Indenture.
<PAGE> 18
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"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.
"inTV" means the Company's network of owned, operated or
affiliated television stations dedicated to infomercial programming.
"inTV EBITDA" means Consolidated EBITDA for the Infomall TV
Network determined on a basis consistent with the
<PAGE> 19
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Company's internal financial statements, generated by stations declared by the
Board of Directors as inTV properties.
"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
<PAGE> 20
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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.
"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
<PAGE> 21
-14-
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, the Junior Preferred Stock or the Convertible Preferred Stock
by the Company.
"Issue Date" means the date of original issuance of the Junior
Preferred Stock or the Securities, as the case may be.
"Junior Preferred Stock" means the 13 1/4% Cumulative Junior
Exchangeable Preferred Stock, par value $.001 per share offered hereby.
"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 November 15, 2006.
"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).
<PAGE> 22
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"New Exchange Debentures" shall mean the 13 1/4% Exchange
Debentures due 2006 offered hereby pursuant to an indenture dated as of June 10,
1998 among the Company and The Bank of New York, as trustee.
"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 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.
<PAGE> 23
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"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 Indenture 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 Certificates 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;
<PAGE> 24
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(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;
<PAGE> 25
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(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 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.
<PAGE> 26
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"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.
"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.
<PAGE> 27
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"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, the Junior Preferred
Stock and the 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 Public Preferred Stock for the
Existing Exchange Debentures or the exchange of shares of Junior 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
<PAGE> 28
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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
Security.
"Securities" means the Company's 13 1/4 Exchange Debenture due
2006, 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
<PAGE> 29
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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
the New Exchange Indenture.
"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.
<PAGE> 30
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"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
<PAGE> 31
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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:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"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
</TABLE>
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.
<PAGE> 32
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"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
<PAGE> 33
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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
$200,000,000 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
Junior Preferred Stock for the Securities such that each holder of Junior
Preferred Stock shall receive Securities in a principal amount equal to the full
liquidation preference of the Junior
<PAGE> 34
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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
<PAGE> 35
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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 May 15 and November 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
<PAGE> 36
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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 12.06, a Security does not cease to be
outstanding solely because the Company or an Affiliate holds the Security.
<PAGE> 37
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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.
<PAGE> 38
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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
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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; provided, however, that a redemption pursuant to the
provisions of paragraph 6(b) of the Securities shall be made by the Trustee on a
pro rata basis, unless such method is prohibited. 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 30 days, and no more than 60 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;
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(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
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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
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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
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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
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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 Adjusted 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 Adjusted 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 Adjusted EBITDA in making the
determinations
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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
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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 Junior Preferred Stock
in accordance with the optional and mandatory redemption and put provisions as
in effect on the Issue Date and the payment of cash dividends on the Junior
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 certificate of designations 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.
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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
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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;
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(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
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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.
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(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.
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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
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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
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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.
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(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
12.02.
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
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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 12.02 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
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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.
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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;
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(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.
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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.
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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
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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.
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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.
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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
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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.
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(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 12.05 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
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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).
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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.
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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
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(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
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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
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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 New Preferred Stock, if
any, provided for in Paragraph (f)(ii)(D) 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 New Preferred Stock, if any, provided for in Paragraph (f)(ii)(D) 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:
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(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
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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
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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.
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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
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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 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
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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
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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
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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
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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.
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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
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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
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such other Guarantor under its Guarantee or pursuant to its contribution
obligation 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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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 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.
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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
<PAGE> 97
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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.
<PAGE> 98
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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
<PAGE> 99
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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.
<PAGE> 100
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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
MISCELLANEOUS
Section 12.01. 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 12.02. 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
400 North Ashley
Suite 2300
Tampa, Florida 33602
Attention: Michael L. Jamieson, Esq.
<PAGE> 101
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If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust
Trustee Administration
Fax Number: (212) 815-5915
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 12.03. 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).
<PAGE> 102
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Section 12.04. 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 12.05 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 12.05 below) stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 12.05. 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 12.06. 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,
<PAGE> 103
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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 12.07. 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 12.08. 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 12.09. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. 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 12.10. 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.
<PAGE> 104
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Section 12.11. 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 12.12. 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 12.13. 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.
<PAGE> 105
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Section 12.14. 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 12.15. 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> 106
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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)
<PAGE> 107
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)
<PAGE> 108
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)
<PAGE> 109
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)
<PAGE> 110
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)
<PAGE> 111
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)
<PAGE> 112
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)
<PAGE> 113
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)
<PAGE> 114
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> 115
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> 116
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:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE> 117
EXHIBIT A
CUSIP NO.
PAXSON COMMUNICATIONS CORPORATION
13 1/4% Exchangeable Debentures due 2006
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 November 15, 2006.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
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> 118
Trustee's Certificate of Authentication
This is one of the 13 1/4% Exchange Debentures due 2006
referred to in the within-mentioned Indenture.
Dated:
The Bank of New York,
as Trustee
By:
---------------------------
Authorized Signatory
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<PAGE> 119
(REVERSE OF SECURITY)
13 1/4 Exchange Debentures due 2006
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. 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 June 10, 1998. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing May 15, 2003.
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 November 15, 2006, the entire amount
of the interest payment on the Securities may be paid, 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
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<PAGE> 120
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, The Bank of New
York, 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 June 10, 1998 (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 $200,000,000 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,
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<PAGE> 121
(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. (a) The Securities will be redeemable,
at the Company's option, in whole at any time or in part from time to time, on
and after May 15, 2003, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the twelve-month period
commencing on May 15 of the year set forth below, plus, in each case, accrued
interest thereon to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003................................................. 106.625%
2004................................................. 103.313%
2005 and thereafter.................................. 100.000%
</TABLE>
(b) In addition, on or prior to May 15, 2001, the Company may,
at its option, use the Net Proceeds of either or both of one or more Public
Equity Offerings or Major Asset Sales to redeem for cash up to an aggregate of
35% of the aggregate principal amount of the Securities whether initially issued
or issued in payment of interest obligations thereon at a redemption price of
113.25% of the aggregate principal amount thereon, plus accrued interest to the
date of redemption; provided, however, that after any such redemption, at least
(i) $75,000,000 aggregate principal amount of the Securities or (ii)
$130,000,000 of the combined aggregate liquidation preference of the Junior
Preferred Stock and aggregate principal amount of the Securities remain
outstanding. Any such redemption will be required to occur on or prior to 90
days after the receipt by the Company of the proceeds of each Public Equity
Offering or Major Asset Sale.
7. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of a Public
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<PAGE> 122
Equity Offering or a Major Asset Sale, the Company shall send the redemption
notice not later than 60 days after the consummation of such Public Equity
Offering or Major Asset Sale. 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 and Securities
issued in exchange for the New Preferred Stock 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. 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
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<PAGE> 123
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.
13. 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.
14. 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.
15. 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
A-7
<PAGE> 124
otherwise deal with the Company, any Guarantor or their Affiliates as if it were
not Trustee.
16. 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.
17. 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.
18. 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).
19. 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.
20. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. 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,
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<PAGE> 125
REQUESTS MAY BE MADE TO: PAXSON COMMUNICATIONS CORPORATION, 601 Clearwater Park
Road, West Palm Beach, Florida 33401, Attention: General Counsel.
A-9
<PAGE> 126
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:
--------------------------------
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<PAGE> 127
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.
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<PAGE> 128
Guarantors:
By: ______________________________
Name:
Title:
ATTEST:
- ------------------
Name:
Title:
A-12
<PAGE> 129
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
A-13
<PAGE> 1
Exhibit 4.5
================================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
PAXSON COMMUNICATIONS CORPORATION
The Several Lenders
from Time to Time Parties Hereto
and
UNION BANK OF CALIFORNIA, N.A.,
as the Agent
Dated as of April 28, 1998
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. DEFINITIONS................................................................................... 1
1.1 Defined Terms................................................................................. 1
1.2 Other Definitional Provisions................................................................. 22
SECTION 2. AMOUNT AND TERMS OF LOANS AND COMMITMENTS..................................................... 23
2.1 Loans and Commitments......................................................................... 23
2.2 Procedure for Borrowing....................................................................... 23
2.3 Installments.................................................................................. 23
2.4 Repayment of Loans; Evidence of Debt.......................................................... 24
2.5 Optional Prepayments.......................................................................... 24
2.6 Mandatory Prepayments......................................................................... 25
2.7 Conversion and Continuation Options........................................................... 25
2.8 Minimum Amounts and Maximum Number of Tranches................................................ 26
2.9 Interest Rates and Payment Dates.............................................................. 26
2.10 Computation of Interest and Fees.............................................................. 27
2.11 Inability to Determine Interest Rate.......................................................... 27
2.12 Pro Rata Treatment and Payments............................................................... 28
2.13 Illegality.................................................................................... 28
2.14 Requirements of Law........................................................................... 28
2.15 Taxes......................................................................................... 30
2.16 Indemnity..................................................................................... 31
2.17 Change of Lending Office...................................................................... 32
2.18 Further Assurances Regarding Security; Additional Security.................................... 32
SECTION 3. REPRESENTATIONS AND WARRANTIES................................................................ 34
3.1 Organization, Powers, Good Standing and Business.............................................. 34
3.2 Authorization of Borrowing, etc............................................................... 36
3.3 Financial Condition........................................................................... 37
3.4 No Material Adverse Change; No Restricted Payments............................................ 37
3.5 Title To Properties; Liens.................................................................... 38
3.6 Litigation; Adverse Facts..................................................................... 38
3.7 Payment of Taxes.............................................................................. 38
3.8 Performance of Agreements..................................................................... 38
3.9 Governmental Regulation....................................................................... 39
3.10 Securities Activities......................................................................... 39
3.11 Employee Benefit Plans........................................................................ 39
3.12 Certain Fees.................................................................................. 39
3.13 Environmental................................................................................. 40
3.14 Solvency...................................................................................... 41
3.15 Related Documents............................................................................. 41
3.16 Insurance..................................................................................... 41
3.17 Intellectual Property......................................................................... 42
3.18 Disclosure.................................................................................... 42
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
3.19 Security Documents............................................................................ 42
3.20 Purposes of Loans............................................................................. 43
SECTION 4. CONDITIONS PRECEDENT.......................................................................... 43
SECTION 5. AFFIRMATIVE COVENANTS......................................................................... 46
5.1 Financial Statements and Systems.............................................................. 47
5.2 Maintenance of Existence, etc................................................................. 50
5.3 Payment of Taxes and Claims; Tax Consolidation................................................ 50
5.4 Maintenance of Properties; Insurance.......................................................... 51
5.5 Inspection; Lender Meeting.................................................................... 51
5.6 Compliance with Laws, etc..................................................................... 51
5.7 Compliance with Related Documents............................................................. 52
5.8 Environmental Disclosure and Inspection....................................................... 52
5.9 Hazardous Materials; the Borrower's Remedial Action........................................... 53
5.10 FCC Licenses.................................................................................. 53
5.11 Additional Loan Parties....................................................................... 54
5.12 Corporate Separateness; Tax Sharing Agreement................................................. 54
SECTION 6. NEGATIVE COVENANTS............................................................................ 54
6.1 Financial Condition Covenants................................................................. 54
6.2 Limitation on Indebtedness.................................................................... 55
6.3 Liens and Related Matters..................................................................... 57
6.4 Investments; Joint Ventures................................................................... 58
6.5 Contingent Obligations........................................................................ 59
6.6 Restricted Payments........................................................................... 60
6.7 Restriction on Fundamental Changes; Asset Sales............................................... 61
6.8 Fiscal Year................................................................................... 62
6.9 Sales and Lease-Backs......................................................................... 62
6.10 Sale or Discount of Receivables............................................................... 62
6.11 Transactions with Shareholders and Affiliates................................................. 62
6.12 Disposal of Subsidiary Stock.................................................................. 62
6.13 Conduct of Business........................................................................... 63
6.14 Amendments or Waivers of Related Documents and Charter Documents;
Limitation on Optional Payments............................................................... 63
SECTION 7. EVENTS OF DEFAULT............................................................................. 64
SECTION 8. THE AGENT..................................................................................... 68
8.1 Appointment................................................................................... 68
8.2 Delegation of Duties.......................................................................... 68
8.3 Exculpatory Provisions........................................................................ 68
8.4 Reliance by the Agent......................................................................... 68
8.5 Notice of Default............................................................................. 69
8.6 Non-Reliance on the Agent and Other Lenders................................................... 69
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8.7 Indemnification............................................................................... 70
8.8 The Agent in Its Individual Capacity.......................................................... 70
8.9 Successor the Agent........................................................................... 70
SECTION 9. MISCELLANEOUS................................................................................. 71
9.1 Amendments and Waivers........................................................................ 71
9.2 Notices....................................................................................... 71
9.3 No Waiver; Cumulative Remedies................................................................ 72
9.4 Survival of Representations and Warranties.................................................... 72
9.5 Payment of Expenses and Taxes................................................................. 72
9.6 Successors and Assigns; Participations and Assignments........................................ 73
9.7 Adjustments; Set-off.......................................................................... 75
9.8 Counterparts; Effectiveness................................................................... 76
9.9 Severability.................................................................................. 76
9.10 Integration................................................................................... 76
9.11 GOVERNING LAW................................................................................. 76
9.12 Submission To Jurisdiction; Waivers........................................................... 76
9.13 Acknowledgements.............................................................................. 77
9.14 WAIVERS OF JURY TRIAL......................................................................... 77
9.15 Confidentiality............................................................................... 77
9.16 Effect of Amendment and Restatement of the Existing Credit
Agreement..................................................................................... 78
9.17 Redemption of Senior Subordinated Notes....................................................... 78
</TABLE>
- iii -
<PAGE> 5
SCHEDULES
1.1A Lenders, Continued Loans, Commitments and Addresses
1.1B Preapproved Acquisitions
1.1C License Companies and Partners
2.6(b) Certain Mandatory Prepayment Matters
3.1(d) Ownership of Subsidiaries
3.1(e) FCC Licenses, Television Stations
3.1(f) Real Property
3.16 Insurance
3.17(b) Intellectual Property
3.19(b) UCC Filing Offices
5.10 Certain FCC Licenses
6.2(d) Existing Indebtedness and Liens
6.4(d) Existing Investments
7(r) Certain Minority Interests
EXHIBITS
A Form of Note
B Form of Second Amended and Restated Borrower Pledge Agreement
C Form of Second Amended and Restated Borrower Security Agreement
D Form of Second Amended and Restated Subsidiaries Guarantee
E Form of Second Amended and Restated Subsidiaries Pledge Agreement
F Form of Second Amended and Restated Subsidiaries Security Agreement
G Form of Borrowing Certificate
H Form of Assignment and Acceptance
I Form of Cash Collateral Agreement
<PAGE> 6
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
April 28, 1998, among PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation
(the "BORROWER"), the several banks and other financial institutions from time
to time parties to this Agreement (the "LENDERS") and UNION BANK OF CALIFORNIA,
N.A., as Agent for the Lenders hereunder.
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lenders to amend and
restate its Amended and Restated Credit Agreement (the "EXISTING CREDIT
AGREEMENT") dated as of November 19, 1996 to make available a $122,000,000 term
loan facility to be used by the Borrower to refinance the indebtedness
outstanding on the date hereof under the Existing Credit Agreement and to pay
costs and expenses in connection with such refinancing.
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"ACQUISITION CAPITAL EXPENDITURES": capital expenditures (i)
made with respect to a Person or assets acquired pursuant to a
Permitted Purchase within two years of the consummation of such
Permitted Purchase or otherwise made with respect to a Broadcast
Station within two years of the acquisition of such Broadcast Station
or (ii) made in connection with the conversion of a Broadcast Station
from an analog broadcast format to a digital broadcast format.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"AGENT": Union Bank of California, N.A., together with its
affiliates, as the arranger of the Commitments and as the agent for the
Lenders under this Agreement and the other Loan Documents.
"AGREEMENT": this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
<PAGE> 7
2
"APPLICABLE MARGIN": for Base Rate Loans, 1.75% per annum; and
for Eurodollar Loans, 2.75% per annum.
"ASSET SALE": any sale, transfer or other disposition by the
Borrower or any of its Subsidiaries of their respective assets
(including any sale and leaseback of assets and any mortgage of real
property), other than the sale or other disposition of property or
assets in the ordinary course of business or an Asset Swap permitted by
subsection 6.7(g) (PROVIDED that any Asset Swap permitted by subsection
6.7(g) shall be deemed to be an Asset Sale to the extent provided for
in said subsection).
"ASSET SWAP": any exchange, with any other Person, of (a)
assets owned by the Borrower or any of its Subsidiaries other than any
Top 25 TV Station for (b) Equivalent Assets of such other Person.
"ASSIGNEE": as defined in subsection 9.6(c).
"BASE RATE": with respect to each day, the greater on such day
of (a) the per annum rate most recently determined by the Agent at its
U.S. lending office from time to time as its base rate and (b) 1/2% per
annum plus the Federal Funds Rate. Each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in
such base rate or the Federal Funds Rate, as the case may be. The Base
Rate is not intended to be necessarily the lowest rate of interest
charged by the Agent in connection with extensions of credit to
debtors.
"BASE RATE LOANS": Loans the rate of interest applicable to
which is based upon the Base Rate.
"BOARD": the Board of Governors of the Federal Reserve
System.
"BORROWER PLEDGE AGREEMENT": the Second Amended and Restated
Pledge Agreement to be executed and delivered by the Borrower,
substantially in the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time.
"BORROWER SECURITY AGREEMENT": the Second Amended and Restated
Security Agreement to be executed and delivered by the Borrower,
substantially in the form of Exhibit C, as the same may be amended,
supplemented or otherwise modified from time to time.
"BORROWING DATE": any Business Day specified in a notice
pursuant to subsection 2.2 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"BROADCAST STATION": any of the Owned Television Stations and
LMA Television Stations, and "Broadcast Stations" means all such
entities collectively.
<PAGE> 8
3
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"CAPITAL LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"CASH": money, currency or a credit balance in a Deposit
Account.
"CASH COLLATERAL AGREEMENT": the Cash Collateral Agreement to
be executed and delivered by the Borrower, substantially in the form of
Exhibit I, as the same may be amended, supplemented or otherwise
modified from time to time.
"CASH EQUIVALENTS": (i) direct obligations of the United
States or any agency thereof, or obligations guaranteed or insured by
the United States, PROVIDED that in each case such obligations mature
within one year from the date of acquisition thereof, (ii) certificates
of deposit maturing within one year from the date of creation thereof
issued by any United States national or state banking institution
having capital, surplus and undivided profits aggregating at least
$250,000,000 and rated at least A-1 by Standard & Poor's Corporation
and P-1 by Moody's Investors Service, Inc., (iii) commercial paper with
a maturity of 180 days or less issued by a corporation (except an
Affiliate of the Borrower) organized under the laws of any state of the
United States or the District of Columbia and rated at least A-1 by
Standard & Poor's Corporation or at least P-1 by Moody's Investors
Service, Inc. and (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by an 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;
PROVIDED that the terms of such agreements comply with the guidelines
set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency and (v) tax-exempt auction rate securities
and municipal preferred stock, in each case, subject to reset no more
than 35 days after the date of acquisition and having a rating of at
least AA by Standard & Poor's Ratings Services or AA by Moody's
Investors Service, Inc.
"CERTIFICATE OF DESIGNATIONS": (i) the Certificate of
Designations of Junior Cumulative Compounding Redeemable Preferred
Stock of Paxson Communications Corporation dated as of December 22,
1994, as amended as of the date hereof in accordance with the terms
hereof and thereof, and (ii) the Certificate of Designations of
Exchangeable Preferred Stock of Paxson Communications Corporation dated
as of September 30, 1996.
<PAGE> 9
4
"CLOSING DATE": the date on which the conditions precedent set
forth in Section 4 shall be satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"COMMITMENT": as to any Lender, the obligation of such Lender
to make a Loan to the Borrower hereunder in a principal amount equal to
the amount set forth opposite such Lender's name on Schedule 1.1A.
"COMMITMENT PERCENTAGE": as to any Lender at any time, the
percentage which the aggregate principal amount of such Lender's Loans
then outstanding constitutes of the aggregate principal amount of the
Loans then outstanding.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"COMMUNICATIONS ACT": 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 Federal
Communications Commission, in each case as from time to time in effect.
"COMPLIANCE CERTIFICATE": as defined in subsection
5.1(b)(iv).
"CONSOLIDATED CAPITAL EXPENDITURES": for any period, the
aggregate of all expenditures (whether paid in cash or accrued as a
liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of the Borrower) by the
Borrower and its Subsidiaries during such period that, in conformity
with GAAP, are included in "additions to property, plant or equipment"
or comparable items reflected in the consolidated statement of changes
in financial position of the Borrower and its Subsidiaries but, in any
event, excluding expenditures (a) in respect of Acquisition Capital
Expenditures, Permitted Purchases or Studio Construction Expenditures
or (b) made in connection with a Recovery Event.
"CONSOLIDATED CASH INTEREST EXPENSE": for any period,
Consolidated Interest Expense of the Borrower and its Subsidiaries, but
excluding, however, amortization of discount, deferred financing costs
and other items included in interest expense not payable or not
actually paid in cash during such period (including, but not limited
to, any interest on Indebtedness subordinated to the Obligations which
is paid in kind).
<PAGE> 10
5
"CONSOLIDATED DEBT SERVICE": for any period, the aggregate
amount of all regularly scheduled payments of principal of and interest
or dividends and fees on any Indebtedness required by the terms of such
Indebtedness to be paid in cash by the Borrower or its Subsidiaries
during such period, including, without limitation, any such payments
with respect to the Loans and the Senior Subordinated Notes and any
obligations paid with respect to Capital Leases.
"CONSOLIDATED FIXED CHARGES": for any period, without
duplication, the sum of (i) Consolidated Debt Service, (ii)
Consolidated Capital Expenditures to the extent actually made, (iii) to
the extent actually paid in cash during such period, income tax expense
(other than, to the extent otherwise included therein, current income
tax expenses attributable to gains on Asset Sales) and (iv) the
aggregate amount paid in cash during such period in connection with any
dividend or other distribution or redemption, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or
indirect, on account of any preferred capital stock (including, but not
limited to, in respect of Cumulative Preferred Stock or Exchangeable
Preferred Stock) of the Borrower or its Subsidiaries now or hereafter
outstanding, except, in each case pursuant to refinancings permitted
hereunder and entered into in the discretion of the Borrower.
"CONSOLIDATED INTEREST EXPENSE": for any period, the total
interest expense (including that portion attributable to Capital Leases
in accordance with GAAP and capitalized interest and the net cash costs
associated with Interest Rate Agreements) of the Borrower and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries, including, without
limitation, (i) all amounts payable to the Agent and the Lenders
pursuant to subsection 2.9 and all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers'
acceptance financing and (ii) time brokerage and affiliate fees under
an LMA Agreement relating to the financing of radio or television
stations as to which the Borrower or any of its Subsidiaries has an
agreement or option to acquire if such Station is not owned by the
Borrower at the end of such period. In determining Consolidated
Interest Expense for any period, there shall be (i) included all
interest expense attributable to Indebtedness incurred or assumed by
the Borrower or any of their Subsidiaries during the period in
connection with any Permitted Purchase as if such Indebtedness was
incurred or assumed on the day before the first day of such period and
bore interest from the first day of such period until the date of such
incurrence or assumption at a rate per annum equal to the weighted
average rate of interest on the other Indebtedness outstanding during
such period and (ii) excluded Consolidated Interest Expense
attributable to that portion of the principal amount of Indebtedness
repaid in connection with an Asset Sale as if such portion of the
principal amount of Indebtedness was prepaid on the day before the
first day of such period.
"CONSOLIDATED NET INCOME": for any period, the consolidated
net income (or loss) of the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP; PROVIDED that there
shall be excluded (a) the income (or
<PAGE> 11
6
deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or deficit) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower
or any of its Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by the Borrower or
such Subsidiary in the form of dividends or similar distributions, (c)
the undistributed earnings of any Subsidiary of the Borrower to the
extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the
terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary, (d) any
after-tax gains or losses attributable to Asset Sales or returned
surplus assets of any Pension Plan, and (e) (to the extent not included
in clauses (a) through (d) above) any net extraordinary, unusual or
non-recurring gains or losses.
"CONSOLIDATED OPERATING CASH FLOW": for any period, the sum
(without duplication) of the amounts for such period of (a)
Consolidated Net Income, (b) Consolidated Interest Expense, (c) taxes
payable by the Borrower and its Subsidiaries on a consolidated basis
which reduced Consolidated Net Income, (d) total depreciation expense,
(e) total amortization expense including, without limitation,
Programming Amortization Expense, (f) other non-cash items reducing
Consolidated Net Income, and (g) whether or not includable as a
separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets LESS the sum (without duplication) of
the amounts for such period of (i) Programming Rights Payments, (ii)
Program Development Expenses, (iii) non-cash items increasing
Consolidated Net Income, (iv) whether or not includable as a separate
item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets, and (v) consolidated interest income, all
of the foregoing as determined on a consolidated basis for the Borrower
and its Subsidiaries in conformity with GAAP. For the purposes of
calculating Consolidated Operating Cash Flow for any period, any
acquisition by the Borrower or any Subsidiary permitted pursuant to the
terms hereof shall be deemed to have occurred on the first day of such
period, any Asset Sale by the Borrower or any Subsidiary shall be
deemed to have occurred as of the day before the first day of such
period, and Consolidated Operating Cash Flow shall be adjusted to give
effect to such acquisition or Asset Sale in accordance with the
foregoing.
"CONSOLIDATED TOTAL ASSETS": at any date of determination, all
assets of the Borrower and its Subsidiaries at such date, determined on
a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL DEBT": as at any date of determination,
without duplication, the aggregate amount of (a) all Indebtedness
(including, without limitation, the Loans) other than preferred capital
stock PLUS (b) the aggregate amount of all Contingent Obligations
(other than any guaranty of the Obligations by any Subsidiary of the
Borrower), in each case, of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
<PAGE> 12
7
"CONTINGENT OBLIGATION": as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person (a) with
respect to any indebtedness, lease, dividend or other obligation of
another if the primary purpose or intent thereof by the Person
incurring the Contingent Obligation is to provide assurance to the
obligee of such obligation of another that such obligation of another
will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof, (b)
with respect to any letter of credit issued for the account of that
Person or as to which that Person is otherwise liable for reimbursement
of drawings, or (c) under Interest Rate Agreements. Contingent
Obligations shall include, without limitation, (i) the direct or
indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting
with recourse or sale with recourse by such Person of the obligation of
another, (ii) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to
an agreement, and (iii) any liability of such Person for the
obligations of another through any agreement (contingent or otherwise)
(x) to purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or (y) to maintain the
solvency or any balance sheet item, level of income or financial
condition of another, if in the case of any agreement described under
subclauses (x) or (y) of this sentence, the primary purpose or intent
thereof is as described in the preceding sentence. The amount of any
Contingent Obligation (other than Interest Rate Agreements) as of any
date shall be equal to the amount of the obligation as of any date so
guaranteed or otherwise supported. The amount of any Interest Rate
Agreement as of any date shall be equal to the aggregate amount that
would be payable by such Person if such Interest Rate Agreement were
terminated on such date as a result of a default thereunder by such
Person.
"CONTINUED LOANS": as defined in subsection 2.1.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement (credit or
otherwise), instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.
"CORE BUSINESS": the ownership and operation of radio stations
(in a number not exceeding two), network television stations and cable
television channels; the production or purchase of television
programming; the ownership of up to a 30% ownership interest in The
Travel Channel; the production of travel transaction television
programming and consulting in connection therewith; the exhibition of
television programming via one or more satellite television networks
owned by one or more Persons other than the Borrower or any of its
Subsidiaries; and long form advertising production, in each case
located in the United States, Puerto Rico or the Virgin Islands.
<PAGE> 13
8
"CUMULATIVE PREFERRED STOCK": the preferred stock of the
Borrower designated the Junior Cumulative Compounding Redeemable
Preferred Stock, issued by the Borrower pursuant to, and with such
rights, restrictions, privileges and preferences as set forth in, its
Certificate of Designation.
"DEFAULT": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"DEPOSIT ACCOUNT": a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable
certificate of deposit.
"DOLLARS" and "$": dollars in lawful currency of the United
States of America.
"EMPLOYEE BENEFIT PLAN": any employee benefit plan within the
meaning of Section 3(3) of ERISA which is maintained for employees of
the Borrower or any ERISA Affiliates.
"ENVIRONMENTAL CLAIM": any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person
for any damage, including, without limitation, personal injury
(including sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential damages,
damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or
restrictions, resulting from or based upon (i) the existence of a
Release (whether sudden or non-sudden or accidental or non-accidental),
of, or exposure to, any Hazardous Material, in, into or onto the
environment, (ii) the use, handling, transportation, storage, treatment
or disposal of Hazardous Materials, or (iii) the violation, or alleged
violation, of any Environmental Laws.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"EQUITY PREPAYMENT PERCENTAGE": 75%; PROVIDED, that, with
respect to Net Cash Proceeds from the issuance of equity Securities
(including preferred Capital Stock) received at any time when no
Default or Event of Default shall have occurred and be continuing, the
Equity Prepayment Percentage shall be reduced to 25% (i) if the
Leverage Ratio as at the last day of the then most recently completed
fiscal period of the Borrower for which financial statements shall have
been delivered pursuant to subsection 5.1 is less than 4.5 to 1.0. or
(ii) at the point at which the application of
<PAGE> 14
9
Net Cash Proceeds pursuant to subsection 2.6(a) shall have reduced the
Leverage Ratio to less than 4.5 to 1.0 (by reducing the Loans then
outstanding).
"EQUIVALENT ASSETS": of (i) any television station (other than
a Top 25 TV Station): any other television station or television
stations; or (ii) any Non-Core Business: any Core Business.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA AFFILIATE": the Borrower and (a) any corporation which
is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Code of which the Borrower is a member; (b) any
trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning
of Section 414(c) of the Code of which the Borrower is a member; and
(c) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Code of which the Borrower, any
corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.
"ERISA EVENT": (a) the occurrence of a reportable event within
the meaning of Section 4043 of ERISA with respect to any Pension Plan,
(b) a failure to meet the minimum funding standard of Section 412 of
the Code or of Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, (regardless of
the issuance of any waivers in accordance with Section 412(d) of the
Code) and any request for a waiver under Section 412(d) of the Code in
connection with any Pension Plan; (c) the provision of the
administrator of any Pension Plan of a notice pursuant to Section
4041(a)(2) of ERISA to terminate such plan pursuant to Section 4041(c)
of ERISA; (d) the withdrawal by the Borrower or any ERISA Affiliate
from a Pension Plan during a plan year for which it was a "substantial
employer" within the meaning of Section 4001(a)(2) of ERISA; (e) the
institution by the PBGC of proceedings to terminate a Pension Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition which the Borrower or any ERISA Affiliate reasonably
anticipates would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, a
Pension Plan; (f) the withdrawal by the Borrower or any ERISA Affiliate
in a complete or partial withdrawal (within the meaning of Section 4203
or 4205 of ERISA) from a Multiemployer Plan, or the receipt by the
Borrower or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA; (g) the imposition on the Borrower or any ERISA
Affiliate of fines, penalties, taxes or related charges under Chapter
43 of the Code or under Sections 502(c), (i) or (l) or 4071 of ERISA;
(h) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan or the assets thereof, or
against the Borrower or any ERISA Affiliate in connection with any such
plan; or (i) receipt from the Service of notice of the failure of any
Pension Plan
<PAGE> 15
10
to qualify under Section 401(a) of the Code, or the failure of any
trust forming part of a Pension Plan to fail to qualify for exemption
from taxation under Section 501(a) of the Code.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board) maintained by a member bank of the Federal Reserve System.
"EURODOLLAR BASE RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined by the Agent to be equal to the arithmetic mean of the rates
per annum offered by leading banks in the London interbank market at
approximately 11:00 a.m. (London time) two Working Days prior to the
beginning of such Interest Period, as quoted on Page 3750 of the Dow
Jones Market Service (or otherwise on such service) or, in the event
that such Page 3750 shall at such time quote such rates for fewer than
two leading banks, the rate at which the Agent is offered Dollar
deposits at or about 11:00 A.M. (London time), two Working Days prior
to the beginning of such Interest Period in the London interbank market
for delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of the
Agent's Eurodollar Loan to be outstanding during such Interest Period.
"EURODOLLAR LOANS": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/16th of 1%):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 7,
PROVIDED that any requirement for the giving of notice, the lapse of
time, or both, or any other condition,
has been satisfied.
"EXCHANGEABLE PREFERRED STOCK": the preferred stock of the
Borrower designated the 12 1/2% Cumulative Exchangeable Preferred
Stock, issued by the Borrower pursuant to, and with such rights,
restrictions, privileges and preferences as set forth in its
Certificate of Designations.
<PAGE> 16
11
"EXCHANGE DEBENTURES": 12 1/2% Exchange Debentures due 2006,
which may be issued by the Borrower pursuant to, and with such rights,
restrictions, privileges and preferences as set forth in the Exchange
Debenture Indenture.
"EXCHANGE DEBENTURE INDENTURE": the Indenture dated as of
September 30, 1996 pursuant to which the Borrower may issue the
Exchange Debentures, as the same may be amended, supplemented or
otherwise modified from time to time.
"EXCLUDED ASSET SALES": Asset Sales in respect of (i) FCC
Licenses and the towers and broadcast equipment used in the operation
of the Broadcast Stations to which such FCC Licenses relate, the
aggregate Net Cash Proceeds of which during the term of this Agreement
do not exceed $10,000,000 and (ii) the assets or property (other than
assets of a type described in clause (i) above) of Broadcast Stations
the aggregate Net Cash Proceeds of which during the term of this
Agreement do not exceed $10,000,000.
"EXISTING CREDIT AGREEMENT": as defined in the recitals to
this Agreement.
"FACILITIES": any and all real property (including, without
limitation, all buildings, fixtures or other improvements located
thereon) now, or hereafter, owned, leased, operated or used by the
Borrower or any of its Subsidiaries or any of their respective
predecessors.
"FCC": the Federal Communications Commission and any successor
governmental agency performing functions similar to those performed by
the Federal Communications Commission on the date hereof.
"FCC LICENSE": any of the licenses, permits or other
authorizations issued by the FCC relating to or necessary for the
operation of the Broadcast Stations, the loss of which could reasonably
be expected to have a Material Adverse Effect, including, without
limitation, those listed on Schedule 3.1(e) hereto.
"FEDERAL FUNDS RATE": with respect to each day, the rate per
annum (rounded upward, if necessary, to the nearest 1/16 of 1%) offered
in the interbank market to the Agent as the overnight "federal funds
rate" at or about 10:00 A.M., Los Angeles time, on such day (or, if
such day is not a Business Day, for the next preceding Business Day).
"FINANCIAL STATEMENTS": the audited consolidated balance
sheet, statement of operations, cash flows and shareholders' equity for
the Borrower and its consolidated Subsidiaries for the fiscal years
ended December 31, 1996 and 1997.
"GAAP": generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the
audited financial statements referred to in subsection 3.3.
<PAGE> 17
12
"GOVERNMENTAL AUTHORITY": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS MATERIALS": (a) any chemical, material or substance
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", or "toxic substances" or words of similar
import under any applicable Environmental Laws, (b) any oil, petroleum
or petroleum derived substance, any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil, any flammable substances or explosives, any
radioactive materials, any hazardous wastes or substances, any toxic
wastes or substances or any other materials or pollutants which (i)
pose a material hazard to any property of the Borrower or any of its
Subsidiaries or to Persons on or about such property or (ii) cause such
property to be in violation of any Environmental Laws, (c) asbestos in
any form which is or could become friable, urea formaldehyde foam
insulation, polychlorinated biphenyls, and (d) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or may or could pose a hazard
to the health and safety of the owners, occupants or any Persons
surrounding the Facilities.
"INDEBTEDNESS": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Capital Leases,
(d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (e) all liabilities secured by
any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof and
(f) the liquidation value of any preferred capital stock of such Person
its Subsidiaries held by any Person other than such Person and its
wholly owned Subsidiaries.
"INTELLECTUAL PROPERTY": all patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or necessary for
the conduct of business of the Borrower and its Subsidiaries as
currently conducted that are material to the condition (financial or
other), business, or operations of the Borrower and its Subsidiaries
taken as a whole.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the
last day of each March, June, September and December and the date on
which such Loan is paid or converted into a Loan of another Type, (b)
as to any Eurodollar Loan having an Interest Period of three months or
less, the last day of such Interest Period, and (c) as to any
Eurodollar Loan having an Interest Period longer than three months,
each day which is three months or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest
Period.
<PAGE> 18
13
"INTEREST PERIOD": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three, six, nine
or twelve months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case
may be, given with respect thereto; and
(b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three, six, nine or
twelve months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Working
Days prior to the last day of the then current Interest Period
with respect thereto;
PROVIDED that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a
day that is not a Working Day, such Interest Period shall be
extended to the next succeeding Working Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Working Day;
(2) any Interest Period that begins on the last
Working Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Working
Day of a calendar month; and
(3) the Borrower shall select Interest Periods with
respect to any Eurodollar Loan so as not to require a payment
or prepayment of any such Eurodollar Loan during an Interest
Period for such Loan.
"INTEREST RATE AGREEMENT": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or
any of its Subsidiaries against fluctuations in interest rates.
"INVESTMENT": (a) any direct or indirect purchase or other
acquisition by the Borrower or any of its Subsidiaries of, or a
beneficial interest in, stock or other Securities of any other Person,
or (b) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business)
or capital contribution by the Borrower or any of its Subsidiaries to
any other Person, including all indebtedness and accounts receivable
from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The
amount of any Investment shall be the original cost of such Investment
<PAGE> 19
14
plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such investment. Investments shall not
include any purchase of Program Rights in the ordinary course of
business.
"JOINT VENTURE": a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form.
"LEVERAGE RATIO": at any date of determination, the ratio of
(a) Consolidated Total Debt of the Borrower and its Subsidiaries on
such date to (b) Consolidated Operating Cash Flow for the 12 month
period ended on the last day of the month for which the Borrower shall
have then most recently delivered financial statements pursuant to
subsection 5.1(b)(i).
"LICENSE SUBSIDIARY": each Subsidiary of the Borrower which
holds any FCC License relating to a Broadcast Station as specified on
Schedule 1.1C; and "License Subsidiaries" means all such Persons
collectively.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the same
economic effect as any of the foregoing).
"LMA AGREEMENTS": (i) each of the agreements pursuant to which
certain of the Loan Parties operate an LMA Television Station, together
with any amendments, supplements or modifications thereto, as the same
may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof, and (ii) any
other local marketing agreements, local management agreements, local
sales agreements, time brokerage agreements or similar arrangements
entered into by the Borrower or any of its Subsidiaries to the extent
permitted hereby.
"LMA TELEVISION STATION": each of the television stations
(including, without limitation, those identified on Schedule 1.1C)
operated by the Borrower or its Subsidiaries pursuant to LMA
Agreements.
"LOAN DOCUMENTS": this Agreement, any Notes and the Security
Documents.
"LOAN PARTIES": the Borrower and each Subsidiary of the
Borrower which is a party to a Loan Document.
"LOANS": as defined in subsection 2.1.
"MARGIN STOCK": has the meaning assigned to that term in
Regulation U of the Board as in effect from time to time.
<PAGE> 20
15
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this or any of the other Loan
Documents or the rights or remedies of the Agent or the Lenders
hereunder or thereunder.
"MULTIEMPLOYER PLAN": a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any
ERISA Affiliate has an obligation to contribute or in respect of which
the Borrower or any ERISA Affiliate has any outstanding liability,
contingent or otherwise.
"NET CASH PROCEEDS": in connection with:
(a) any Asset Sale or Recovery Event, the proceeds thereof in
the form of Cash and Cash Equivalents (including any such proceeds
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received), net of customary "hold
backs," reserves and escrows for indemnification (in each case, until
such time as such cash is released to the Borrower or any Subsidiary),
attorneys' fees, accountants' fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness secured by a
Lien expressly permitted hereunder on any asset which is the subject of
such Asset Sale or Recovery Event (other than any Lien in favor of the
Agent for the benefit of the Lenders) and other customary fees and
expenses actually incurred in connection therewith and net of taxes
paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax
sharing arrangements); and
(b) any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the Cash proceeds
received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"NETWORK START-UP": shall exist when and so long as the
Borrower and its Subsidiaries shall operate a television network that
(a) is available in television markets containing at least 68% of
television households located in the United States, Puerto Rico or the
Virgin Islands through, without duplication, a Broadcast Station, a
standard affiliation agreement, cable carriage arrangement or
television stations as to which the Borrower or any of its Subsidiaries
are under contract to purchase and reasonably expects to purchase
within one year of the date of determination (excluding in each case
low power television systems); (b) exhibits traditional prime time
programming 100% of the time during the hours of 6:00 p.m. to 11:00
p.m., Monday through Sunday and (c) exhibits traditional programming
75% of the time during the hours of 6 a.m. to midnight, Monday through
Friday.
"NON-EXCLUDED TAXES": as defined in subsection 2.15.
<PAGE> 21
16
"NOTE": as defined in subsection 2.4(e).
"OBLIGATIONS": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
the Notes and all other obligations and liabilities of the Borrower to
the Agent or to any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, any Interest Rate Agreement entered
into with any Lender, whether on account of principal, interest, fees,
indemnities, costs, expenses (including, without limitation, all fees,
charges and disbursements of counsel to the Agent or to any Lender that
are required to be paid by the Borrower pursuant hereto) or otherwise.
"OPERATING LEASE": as applied to any Person, any lease
(including, without limitation, any leases that may be terminated by
the lessee at any time) of any property (whether real, personal or
mixed) of such Person that is not a Capital Lease other than any such
lease under which such Person is the lessor.
"OWNED TELEVISION STATION": each of the television stations
(including, without limitation, those identified on Schedule 3.1(f))
owned by the Borrower or its Subsidiaries and such other television
stations acquired pursuant to a Permitted Purchase.
"OWNERSHIP REPORT": the Ownership Report of each Loan Party
most recently filed with the FCC.
"PARTICIPANT": as defined in subsection 9.6(b).
"PAXSON": Lowell W. Paxson, residing on the date hereof at 780
South Ocean Boulevard, Palm Beach, Florida 33480.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PENSION PLAN": any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA.
"PERMITTED ACQUISITION": has the meaning assigned to that term
in subsection 6.4(f).
"PERMITTED ENCUMBRANCES": the following types of Liens
(PROVIDED that enforcement of the same will not have a Material Adverse
Effect except with respect to clauses (i) and (v) hereof):
<PAGE> 22
17
(i) Liens for taxes, assessments or governmental charges
or claims the payment of which is not, at the time, required by
subsection 5.3;
(ii) Liens of carriers, warehousemen and other liens
imposed by law incurred in the ordinary course of business for sums not
yet delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made therefor;
(iii) Liens of mechanics and materialmen for sums not yet
due or the validity of which is being contested in good faith;
(iv) Liens (other than any Lien imposed pursuant to
Section 401(a)(29) or Section 412(n) of the Code or under ERISA or any
Environmental Law) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money) and deposits made
pursuant to the terms of Purchase Agreements permitted hereunder;
(v) any attachment or judgment Lien not constituting an
Event of Default under subsection 7(j);
(vi) leases or subleases granted to others not
interfering in any material respect with the business of the Borrower
or any of its Subsidiaries;
(vii) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with
the ordinary conduct of the business of the Borrower or any of its
Subsidiaries; and
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement.
"PERMITTED PURCHASE": any of (i) a Permitted Acquisition, (ii)
a Preapproved Acquisition or (iii) any other acquisition of a Core
Business permitted hereunder or otherwise consented to by the Required
Lenders from time to time in accordance with the terms hereof.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or,
<PAGE> 23
18
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENTS": the collective reference to the Borrower
Pledge Agreement and the Subsidiaries Pledge Agreement.
"PREAPPROVED ACQUISITION": each of the acquisitions listed on
Schedule 1.1B, PROVIDED that such acquisition is effected pursuant to
the Purchase Agreement relating to such acquisition.
"PROGRAM": any television series or other program produced or
distributed for television release (including any syndicated series or
other program regardless of its medium of initial exploitation), in
each case whether recorded on film, videotape, audiotape, cassette,
cartridge, disc or by any other means, method, process or device,
whether now known or hereafter developed.
"PROGRAM CONTRACTS": all contracts for television broadcast
rights of Programs, including, but not limited to, film, music and
related audio rights and syndicated series exhibition rights acquired
under license agreements.
"PROGRAM DEVELOPMENT EXPENSES": for any period, the aggregate
cash payments made by the Borrower and/or any of its Subsidiaries
during such period in connection with the development or production of
television programming.
"PROGRAM RIGHTS": any right, whether arising under Program
Contracts or otherwise, to broadcast, sell, distribute, subdistribute,
exhibit, lease, sublease, license, sublicense or otherwise exploit
Programs.
"PROGRAM RIGHTS COSTS": the maximum amount which the Borrower
and/or any of its Subsidiaries or its or their co-venturers have
furnished or have contractually committed to furnish (to the extent
such commitments shall be reflected as an asset or liability on the
consolidated balance sheet and the notes thereto of the Borrower)
toward the production or acquisition by the Borrower and/or any of its
Subsidiaries or its or their co-venturers of any Program Rights with
respect to any Program.
"PROGRAMMING AMORTIZATION EXPENSE": for any period, total
amortization expense of the Borrower and/or any of its Subsidiaries for
such period which is directly attributable to Programs, Program Rights
or Program Contracts, determined on a consolidated basis in conformity
with GAAP.
"PROGRAMMING OBLIGATIONS": at any date of determination, all
direct or indirect liabilities, contingent or otherwise, with respect
to Program Contracts, Programs or Program Rights (including, without
limitation, all Program Rights Costs) of the Borrower and its
Subsidiaries, to the extent reflected on the consolidated balance sheet
and the notes thereto of the Borrower and its Subsidiaries prepared in
conformity with GAAP.
<PAGE> 24
19
"PROGRAMMING RIGHTS PAYMENTS": for any period, the aggregate
cash payments scheduled to be made by the Borrower and/or any of its
Subsidiaries for such period in respect of Programming Obligations,
determined on a consolidated basis in conformity with GAAP.
"PURCHASE AGREEMENTS": the agreements, contracts and other
documents pursuant to which the Borrower or its Subsidiaries will
consummate a Permitted Purchase.
"RECOVERY EVENT": any settlement of or payment in respect of
any property or casualty insurance claim or any condemnation proceeding
relating to any asset (other than inventory) of the Borrower or any of
its Subsidiaries (excluding to the extent, and only to the extent, that
within 180 days of the casualty or condemnation proceeding upon which
such settlement or payment is based, such Person commences and
thereafter diligently pursues the repair or replacement of the property
affected by such event).
"REGISTER": as defined in subsection 9.6(d).
"RELATED DOCUMENTS": (a) the Purchase Agreements and (b) the
LMA Agreements.
"RELEASE": any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
leaching, or migration into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any
Hazardous Materials), or into or out of any Facility, including the
movement of any Hazardous Material through the air, soil, surface
water, groundwater or property.
"REQUIRED LENDERS": at a particular time, the holders of at
least 51% of the aggregate unpaid principal amount of the Loans, or, if
no Loans are outstanding, Lenders the Commitment Percentages of which
aggregate at least 51%.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"RESTRICTED PAYMENT": means (i) any dividend or other
distribution, direct or indirect, on account of any equity interests
(including preferred capital stock) of the Borrower or any of its
Subsidiaries now or hereafter outstanding, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any equity interests
(including preferred capital stock) of the Borrower or any of its
Subsidiaries now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other
<PAGE> 25
20
rights to acquire any equity interests (including preferred capital
stock) of the Borrower or any of its Subsidiaries now or hereafter
outstanding and (iv) any direct or indirect payment, loan, contribution
or other transfer of funds or other property to any equity holder of
the Borrower or any of its Subsidiaries.
"SECURITIES": any stock, shares, voting trust certificates,
bonds, debentures, options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities"
or any certificates of interest, shares or participations in temporary
or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITY AGREEMENTS": the collective reference to the
Borrower Security Agreement and the Subsidiaries Security Agreement.
"SECURITY DOCUMENTS": the collective reference to the Pledge
Agreements, the Subsidiaries Guarantee, the Security Agreements, the
Cash Collateral Agreement and all other security documents hereafter
delivered to the Agent granting a Lien on any asset or assets of any
Person to secure the obligations and liabilities of the Borrower
hereunder and under any of the other Loan Documents or to secure any
guarantee of any such obligations and liabilities.
"SENIOR SUBORDINATED NOTE INDENTURE": the Indenture dated as
of September 28, 1995 pursuant to which the Borrower issued the Senior
Subordinated Notes, as the same may be amended, supplemented or
otherwise modified from time to time.
"SENIOR SUBORDINATED NOTES": the Senior Subordinated Notes due
October 1, 2002 of the Borrower in the aggregate principal amount of
$230,000,000.
"SOLVENT": with respect to any Person, that as of the date of
determination, both (A) (i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of
liabilities (including Contingent Obligations net of the estimated
value of any subrogation or contribution rights relating thereto) of
such Person and (z) greater than the amount that will be required to
pay the probable liabilities of such Person's then existing debts as
they become absolute and matured considering all financing
alternatives, sharing and allocation arrangements and potential asset
sales reasonably available to such Person; (ii) such Person's capital
is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not
intend to incur, or believe or reasonably should believe that it will
incur, debts beyond its ability to pay such debts as they become due
and (B) such Person is solvent within the meaning given that term and
similar terms under applicable laws relating to fraudulent transfers.
"STOCKHOLDERS' AGREEMENT": the Amended and Restated
Stockholders' Agreement of the Borrower dated as of December 22, 1994,
as the same may be amended, supplemented or otherwise modified from
time to time.
<PAGE> 26
21
"STUDIO CONSTRUCTION EXPENDITURES": expenditures by the
Borrower or its Subsidiaries for the construction of a corporate
headquarters and studio facilities to be located at Old Okeechobee
Road, West Palm Beach, Florida 33407 and related equipment (including
software) in an aggregate amount not to exceed $20,000,000.
"SUBSIDIARIES GUARANTEE": the Second Amended and Restated
Guarantee to be executed and delivered by each Subsidiary in favor of
the Agent, substantially in the form of Exhibit D, as the same may be
amended, supplemented or otherwise modified from time to time.
"SUBSIDIARIES PLEDGE AGREEMENT": the Second Amended and
Restated Subsidiaries Pledge Agreement to be executed and delivered by
each Subsidiary in favor of the Agent, substantially in the form of
Exhibit E, as the same may be amended, supplemented or otherwise
modified from time to time.
"SUBSIDIARIES SECURITY AGREEMENT": the Second Amended and
Restated Subsidiaries Security Agreement to be executed and delivered
by each Subsidiary in favor of the Agent, substantially in the form of
Exhibit F, as the same may be amended, supplemented or otherwise
modified from time to time.
"SUBSIDIARIES SECURITY DOCUMENTS": the collective reference to
the Subsidiaries Pledge Agreement and the Subsidiaries Security
Agreement.
"SUBSIDIARY": as to any Person, a corporation, partnership 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. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower. All references in this
Agreement to a "Subsidiary" or "Subsidiaries" of the Borrower shall not
include any Unrestricted Subsidiary of the Borrower.
"SUBSIDIARY GUARANTOR": any Subsidiary of the Borrower that is
a party to the Subsidiaries Guarantee.
"TERMINATION DATE": June 30, 2002.
"TOP 25 TV STATION": a Broadcast Station located in an
"Designated Market Area" ranked from number 1 to number 25; PROVIDED
that, to the extent the Borrower or any of its Subsidiaries at any time
owns or has an interest in more than one Broadcast Station located in
the same "Designated Market Area", as to such Broadcast Stations, only
the Broadcast Station with the greater or greatest fair market value
shall be deemed to be a "Top 25 TV Station."
<PAGE> 27
22
"TRANCHE": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"TRANSFEREE": as defined in subsection 9.6(f).
"TYPE": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"UNRESTRICTED SUBSIDIARY": any corporation, partnership or
other entity which, but for the operation of this definition, would be
a Subsidiary of the Borrower (i) created, invested in or acquired by
the Borrower or any Subsidiary of the Borrower after April 28, 1998,
other than pursuant to a Preapproved Acquisition, (ii) designated by a
resolution of the Board of Directors of the Borrower as an Unrestricted
Subsidiary and such designation and the basis for such designation are
provided in writing to the Agent, and (iii) into which the Borrower or
any Subsidiary has made any Investment with the proceeds of any
issuance or sale of any class of equity Securities of the Borrower as
permitted by subsection 6.4(i); PROVIDED that if such Subsidiary is a
partnership, such Subsidiary may be an Unrestricted Subsidiary only if
neither the Borrower nor a Subsidiary of the Borrower is a general
partner of such Subsidiary.
"WORKING DAY": shall mean any Business Day on which dealings
in foreign currencies and exchange between banks may be carried on in
London, England.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
<PAGE> 28
23
SECTION 2. AMOUNT AND TERMS OF LOANS AND COMMITMENTS
2.1 LOANS AND COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Lender severally agrees (i) to continue a term loan to
the Borrower in an aggregate principal amount set forth in Schedule 1.1A (the
"CONTINUED LOANS") and (ii) to make a term loan to the Borrower (together with
the Continued Loans, the "LOANS") on the Closing Date in a principal amount
equal to the amount of such Lender's Commitment.
2.2 PROCEDURE FOR BORROWING. (a) The Loans may from time to
time be (i) Eurodollar Loans or (ii) Base Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with subsections 2.2(b) and 2.7, PROVIDED that no Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.
(b) The Borrower may borrow on any Working Day, if all or any
part of such Loans are to be initially Eurodollar Loans, or on a Business Day,
if all of such Loans are to be initially Base Rate Loans, PROVIDED that the
Borrower shall give the Agent irrevocable notice (which notice must be received
by the Agent prior to 10:00 A.M., Los Angeles time, (a) three Business Days
prior to the Closing Date, if all or any part of the requested Loans are to be
initially Eurodollar Loans or (b) one Business Day prior to the requested
Borrowing Date, otherwise), specifying (i) whether the borrowing is to be
Eurodollar Loans, Base Rate Loans, or a combination thereof and (ii) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Upon receipt of any such notice from the Borrower,
the Agent shall promptly notify each Lender thereof. Each Lender will make the
amount of its pro rata share of the borrowing available to the Agent for the
account of the Borrower at the office of the Agent specified in subsection 9.2
prior to 11:00 A.M., New York City time, on the Closing Date in funds
immediately available to the Agent. Such borrowing will then be made available
to the Borrower by the Agent crediting the account of the Borrower on the books
of such office with the aggregate of the amounts made available to the Agent by
the Lenders and in like funds as received by the Agent.
2.3 INSTALLMENTS. The Loan of each Lender shall be paid in
seven consecutive quarterly installments, commencing on December 31, 2000, each
of which shall be in an amount equal to such Lender's Commitment Percentage
multiplied by the amount set forth below opposite such installment:
INSTALLMENT DATE PRINCIPAL AMOUNT
- ---------------- ----------------
December 31, 2000 $18,300,000
March 31, 2001 12,962,500
June 30, 2001 12,962,500
September 30, 2001 12,962,500
December 31, 2001 12,962,500
March 31, 2002 25,925,000
June 30, 2002 25,925,000
<PAGE> 29
24
2.4 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay to the Agent for the account of each
Lender the then unpaid principal amount of each Loan of such Lender in
accordance with subsection 2.3 (or such earlier date on which the Loans become
due and payable pursuant to Section 7). The Borrower hereby agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in subsection 2.9.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Agent shall maintain the Register pursuant to
subsection 9.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Agent hereunder
from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 2.4(b) shall, to the extent permitted
by applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or the Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by
any Lender, the Borrower will execute and deliver to such Lender a promissory
note of the Borrower evidencing the Loans of such Lender, substantially in the
form of Exhibit A with appropriate insertions as to date and principal amount (a
"NOTE").
2.5 OPTIONAL PREPAYMENTS. The Borrower may, at any time and
from time to time, prepay the Loans, in whole or in part, without premium or
penalty, upon at least three Business Days' irrevocable notice to the Agent in
the case of Eurodollar Loans, and upon at least one Business Days' irrevocable
notice to the Agent in the case of Base Rate Loans, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans, Base
Rate Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of any such notice the Agent shall
promptly notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with any amounts payable pursuant to subsection 2.16. Partial
prepayments shall be in an aggregate principal amount of $250,000 or a whole
multiple of $50,000 in excess thereof. Prepayments of the Loans may not be
reborrowed.
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2.6 MANDATORY PREPAYMENTS. (a) If the aggregate Net Cash
Proceeds received by the Borrower and/or any of its Subsidiaries subsequent to
the date hereof from the issuance of shares of any class of its equity
Securities (including preferred Capital Stock) shall exceed $300,000,000
(exclusive of any shares of any class of its equity Securities (including
preferred Capital Stock) issued to refinance or prepay Indebtedness permitted
hereunder outstanding on the date thereof in accordance with the terms hereof),
on the date of each such issuance which results in any such receipt of such
excess Net Cash Proceeds, an amount equal to the Equity Prepayment Percentage of
such excess Net Cash Proceeds from such issuance shall be applied on the date of
such issuance toward the prepayment of the Loans in accordance with the
provisions of paragraph (d) of this subsection 2.6.
(b) The Loans shall be prepaid in accordance with the
provisions of paragraph (d) of this subsection 2.6 by an amount equal to the
aggregate amount of Net Cash Proceeds received by the Borrower and its
Subsidiaries subsequent to the Closing Date from any Asset Sale (other than (1)
any Excluded Asset Sale, (2) any sale of WNGM-TV (Atlanta), WPXE- TV
(Milwaukee), WIPX-TV (Bridgeport), WYCL-FM (Pensacola), WHNZ - AM (Tampa), KVUT
- - TV (Little Rock) or KAJW - TV (Phoenix) or of the promissory note currently
owing to the Borrower by the owner of WTWS-TV (Hartford) or WHRC - TV (Boston)
if the consideration received by the Borrower and its Subsidiaries of such sale
is in an amount not less than the applicable amount with respect thereto set
forth on Part A of Schedule 2.6(b), (3) any sale of a Broadcast Station set
forth on Part B of Schedule 2.6(b) under "Construction Permit Stations" if the
consideration received by the Borrower and its Subsidiaries of such sale is in
an amount not less than the applicable amount with respect thereto set forth on
Part B of Schedule 2.6(b); PROVIDED that the Net Cash Proceeds thereof are
invested by the Borrower or a Subsidiary on or prior to the 181st day following
the date of such Asset Sale in a Core Business, (4) any sale of any Broadcast
Station listed on Part C of Schedule 2.6(b) under "Other Stations" if the
consideration received by the Borrower and its Subsidiaries of such sale is in
an amount not less than the applicable amount with respect thereto set forth on
Part C of Schedule 2.6(b); PROVIDED that the Net Cash Proceeds thereof are
invested by the Borrower or a Subsidiary on or prior to the 181st day following
the date of such Asset Sale in a Core Business, (5) any sale of any Broadcast
Station set forth in Part D of Schedule 2.6(b) under "Duplicative Top 25
Stations", (6) the sale of its interest in the American Hockey League Franchise
to operate a hockey team in West Palm Beach, Florida.
(c) The Loans shall be prepaid in accordance with the
provisions of paragraph (d) of this subsection 2.6 by an amount equal to the Net
Cash Proceeds received by the Borrower and its Subsidiaries from any Recovery
Event.
(d) Prepayments of the Loans pursuant to this subsection 2.6
shall be applied to Loans pro rata to the remaining installments thereof. Each
prepayment of the Loans under this subsection 2.6 shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid and any
amounts due pursuant to subsection 2.16. Amounts prepaid may not be reborrowed.
2.7 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans, by
giving the Agent at least
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two Business Days' prior irrevocable notice of such election. The Borrower may
elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving
the Agent at least three Working Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon receipt
of any such notice the Agent shall promptly notify each Lender thereof. All or
any part of outstanding Eurodollar Loans and Base Rate Loans may be converted as
provided herein, PROVIDED that (i) no Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the Agent has
or the Required Lenders have determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, PROVIDED that
no Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Agent has or the Required Lenders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to the Termination Date and PROVIDED, FURTHER, that if
the Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period.
2.8 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $3,000,000 or
a whole multiple of $1,000,000 in excess thereof. In no event shall there be
more than 8 Eurodollar Tranches outstanding at any time.
2.9 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined with respect
to such Loan for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii)
any interest payable thereon, or (iii) any other amount payable hereunder shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), the principal of such overdue Loans and any such overdue interest,
commitment fee or other amount shall bear interest at a rate per annum which is
(x) in the case of principal, the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this subsection plus 2% or (y)
in the case of any such overdue interest, commitment fee or other amount, the
rate described in paragraph (b) of this subsection plus 2%, in each case from
the date of such non-payment until such
<PAGE> 32
27
overdue principal, interest, commitment fee or other amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.10 COMPUTATION OF INTEREST AND FEES. (a) Interest on Base
Rate Loans and commitment fees shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed. Interest on
Eurodollar Loans shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Agent shall as soon as practicable notify the Borrower
and the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Agent shall as
soon as practicable notify the Borrower and the Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The Agent shall,
at the request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
subsection 2.9(a) or (b).
2.11 INABILITY TO DETERMINE INTEREST RATE. If prior to the
first day of any Interest Period:
(a) the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (y) any Loans that were to have been converted
on the first day of such Interest Period to Eurodollar Loans shall be continued
as Base Rate Loans and (z) any affected outstanding Eurodollar Loans shall be
converted, on the first day of such Interest Period, to Base Rate Loans. Until
such notice has been withdrawn by the Agent (which notice shall be withdrawn
upon the cessation of such circumstances), no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
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2.12 PRO RATA TREATMENT AND PAYMENTS. (a) The borrowing by the
Borrower from the Lenders hereunder shall be made pro rata according to the
respective Commitment Percentages of the Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding principal amounts
of the Loans then held by the Lenders. All payments (including prepayments) to
be made by the Borrower hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set off or counterclaim and shall be
made prior to 11:00 A.M. Los Angeles time, on the due date thereof to the Agent,
for the account of the Lenders, at the Agent's office specified in subsection
9.2, in Dollars and in immediately available funds. The Agent shall distribute
such payments to the Lenders promptly upon receipt in like funds as received. If
any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing by
any Lender prior to the Closing Date that such Lender will not make the amount
that would constitute its Commitment Percentage of such borrowing available to
the Agent, the Agent may assume that such Lender is making such amount available
to the Agent, and the Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Agent by the required time on the Closing Date, such Lender
shall pay to the Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Rate for the period until such Lender
makes such amount immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the Agent by
such Lender within three Business Days of the Closing Date, the Agent shall also
be entitled to recover such amount with interest thereon, without duplication of
any amounts received by the Agent from such Lender, at the rate per annum
applicable to Base Rate Loans hereunder, on demand, from the Borrower.
2.13 ILLEGALITY. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, other than as a result of the
gross negligence or willful act of such Lender, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 2.16.
2.14 REQUIREMENTS OF LAW. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any
<PAGE> 34
29
Lender with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non- Excluded Taxes covered by
subsection 2.15 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
thereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, such Lender shall notify
the Borrower of such increased cost or reduced amount receivable and describe in
reasonable detail the basis for such notification, and the Borrower shall
promptly pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower (with
a copy to the Agent) of the event by reason of which it has become so entitled.
A certificate showing in reasonable detail the calculation of any additional
amounts payable pursuant to this subsection submitted by such Lender to the
Borrower (with a copy to the Agent) shall be conclusive in the absence of
manifest error. The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
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30
(d) In the event any Lender delivers a certificate requesting
compensation pursuant to this subsection 2.14, the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Agent, require such
Lender to transfer and assign, without recourse (in accordance with and subject
to the restrictions contained in subsection 9.6), all of its interests, rights
and obligations under this Agreement to an assignee which shall assume such
assigned obligations (which assignee may be another Lender, if a Lender accepts
such assignment); PROVIDED, HOWEVER, that (x) such assignment shall not conflict
with any law, rule or regulation or order of any court or other Governmental
Authority having jurisdiction, (y) the Borrower shall have received the prior
written consent to such assignment of the Agent, which consent shall not
unreasonably be withheld, and (z) the Borrower or such assignee shall have paid
to the affected Lender in immediately available funds an amount equal to the sum
of the principal of the outstanding Loans of such Lender plus all interest, fees
and other amounts accrued and unpaid for the account of such Lender hereunder
(including any amounts under this subsection 2.14); PROVIDED, FURTHER, that if
prior to any such transfer and assignment the circumstances or event that
resulted in such Lender's claim for compensation under this subsection 2.14
cease to cause such Lender to suffer increased costs or reductions in amounts
received or receivable or reduction in return on capital (including as a result
of any action taken by such Lender pursuant to subsection 2.17), or if, within
twenty days after the Borrower shall have notified such Lender of its election
to exercise its rights pursuant to this subsection, such Lender shall waive its
right to claim further compensation under this subsection 2.14 in respect of
such circumstances or event, then such Lender shall not thereafter be required
to make any such transfer and assignment hereunder.
2.15 TAXES. (a) All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent or any Lender as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("NON-EXCLUDED TAXES") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under any Note, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
PROVIDED, HOWEVER, that the Borrower shall not be required to increase any such
amounts payable to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection. Whenever any Non-Excluded
Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the
<PAGE> 36
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Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by the
Agent or any Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii) deliver to the Borrower and the Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested by
the Borrower or the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 9.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, PROVIDED that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
2.16 INDEMNITY. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on
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32
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans PROVIDED for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.17 CHANGE OF LENDING OFFICE. Each Lender agrees that if it
makes any demand for payment under subsection 2.14 or 2.15(a), or if any
adoption or change of the type described in subsection 2.13 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to designate
a different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 2.14 or
2.15(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.13.
2.18 FURTHER ASSURANCES REGARDING SECURITY; ADDITIONAL
SECURITY. (a) The Borrower shall, and shall cause each of its Subsidiaries to,
from time to time, execute and deliver to the Agent on behalf of the Lenders,
such additional Security Documents, statements, documents, agreements and
reports as it may from time to time reasonably request to evidence, perfect or
otherwise implement or assure the security for repayment of the Obligations
provided for under the Security Documents. With respect to the Lenders'
insurance policies, upon the Agent's reasonable request, the Borrower shall
arrange for co-insurance and/or reinsurance, with companies and in amounts
satisfactory to the Agent. All reinsurance policies shall include direct access
agreements acceptable to the Agent.
(b) Notwithstanding anything herein to the contrary, to the
extent this Agreement or any other Loan Document purports to require any Loan
Party to grant to the Agent, on behalf of Lenders, a security interest in the
FCC Licenses of any Loan Party now owned or hereafter acquired, as the case may
be, the Agent, on behalf of Lenders, shall only have a security interest in such
FCC Licenses at such times and to the extent that a security interest in such
licenses is permitted under applicable law. Notwithstanding anything to the
contrary set forth herein, the Agent, on behalf of Lenders, agrees that to the
extent prior FCC approval is required pursuant to the Communications Act for (a)
the operation and effectiveness of any grant, right or remedy hereunder or under
the Security Documents or (b) taking any action that may be taken by the Agent
hereunder or under the Security Documents, such grant, right, remedy or actions
will be subject to such prior FCC approval having been obtained by or in favor
of the Agent, on behalf of Lenders. The Borrower agrees that, upon an Event of
Default and at the Agent's request, the Borrower will, and will cause its
Subsidiaries to, immediately file, or cause to be filed, such applications for
approval and shall take all other and further actions reasonably required by the
Agent, on behalf of Lenders, to obtain such FCC approvals or consents as are
necessary to transfer ownership and
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control to the Agent, on behalf of Lenders, or their successors, assigns or
designees of the FCC Licenses held by the Borrower, its License Subsidiaries or
any of its other Subsidiaries. To enforce the provisions of this subsection, the
Agent is empowered to request the appointment of a receiver from any court of
competent jurisdiction. Such receiver shall be instructed to seek from the FCC
an involuntary transfer of control of any such FCC License for the purpose of
seeking a bona fide purchaser to whom control will ultimately be transferred.
The Borrower hereby agrees to authorize, and to cause each of its Subsidiaries
to authorize, such an involuntary transfer of control upon the request of the
receiver so appointed, and, if the Borrower shall refuse to authorize or cause
any of its Subsidiaries to so authorize the transfer, its approval may be
required by the court. Upon the occurrence and continuance of an Event of
Default, and the request of the Agent, the Borrower shall further use its best
efforts to assist in obtaining approval of the FCC, if required, for any action
or transactions contemplated by this Agreement or the other Loan Documents,
including, without limitation, the preparation, execution and filing with the
FCC of the assignor's or transferor's portion of any application or applications
for consent to the assignment of any FCC License or transfer of control
necessary or appropriate under the FCC's rules and regulations for approval of
the transfer or assignment of any portion of the Collateral, together with any
FCC License or other authorization.
(c) The Borrower acknowledges that the assignment or transfer
of such FCC Licenses is integral to the Lenders' realization of the value of the
Collateral, that there is no adequate remedy at law for failure by the Borrower
to comply with the provisions of this subsection and that such failure would not
be adequately compensable in damages, and therefore agrees that the agreements
contained in this subsection may be specifically enforced.
(d) Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, neither the Agent nor any Lender shall,
without first obtaining the approval of the FCC, take any action pursuant to
this Agreement or any other Loan Document which would constitute or result in
any assignment of an FCC License or any change of control of the Borrower or any
of its Subsidiaries if such assignment or change in control would require, under
then existing law (including the written rules and regulations promulgated by
the FCC), the prior approval of the FCC.
(e) At any time or from time to time upon the reasonable
request of the Agent, the Borrower shall, and shall cause each of its
Subsidiaries to, execute and deliver such further documents (including without
limitation such financing statements, continuation statements or amendments
thereto and such other documents and certificates as the Agent may reasonably
request to perfect and preserve the security interests granted or purported to
be granted under any of the Security Documents) and do such other acts and
things as the Agent may reasonably request to effect fully the purposes of this
Agreement and the other Loan Documents and to provide for payment of the
Obligations in accordance with the terms of this Agreement and the other Loan
Documents. Without limiting any of the foregoing, in the event a Person becomes
a Subsidiary of the Borrower after the Closing Date, the Borrower shall cause
such Subsidiary to execute and deliver such guarantees, Security Documents and
such other agreements, pledges, assignments, documents and certificates
(including, without limitation, any amendments to the Loan Documents) as the
Agent may
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reasonably request and do such other acts and things as the Agent may reasonably
request to have such Subsidiary guaranty the Obligations, grant, subject to the
limitation set forth in subsection 2.18(b), to the Agent on behalf of Lenders, a
duly perfected first priority Lien (subject to Liens permitted hereunder) on all
real, personal and mixed property (in each case, if so requested by the Agent)
of such Subsidiary, and effect fully the purposes of this Agreement and the
other Loan Documents and to provide for payment of the Obligations in accordance
with the terms of this Agreement and the other Loan Documents. Without limiting
the generality of the foregoing, in the event the Borrower forms or otherwise
acquires a Subsidiary after the Closing Date, the Borrower shall (i) execute and
deliver to the Agent a pledge agreement substantially in the form attached
hereto as Exhibit B and (ii) cause such Subsidiary to execute and deliver a
guarantee substantially in the form attached hereto as Exhibit E, a pledge
agreement substantially in the form attached hereto as Exhibit E and a security
agreement in the form of Exhibit F.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Agent and each Lender that:
3.1 ORGANIZATION, POWERS, GOOD STANDING AND BUSINESS
(a) ORGANIZATION AND POWERS. Each Loan Party is a corporation,
limited liability company or limited partnership, as the case may be, duly
formed and validly existing under the laws of the jurisdiction of its
organization. Each Loan Party has all requisite corporate or partnership, as the
case may be, power and authority to own and operate its properties, to carry on
its business as now conducted and proposed to be conducted, and each Loan Party
has all requisite corporate or partnership, as the case may be, power and
authority to enter into the Related Documents and the Loan Documents, to carry
out the transactions contemplated thereby and to issue the Notes, in each case
to the extent it is a party thereto.
(b) GOOD STANDING. Each Loan Party is in good standing in
every jurisdiction where its assets are located and wherever necessary to carry
out its present business and operations, except where the failure to be so
qualified has not had and could not reasonably be expected to have a Material
Adverse Effect.
(c) CONDUCT OF BUSINESS. The Loan Parties are engaged only in
the businesses permitted to be engaged in under subsection 6.13 and are
conducting their businesses in accordance with the provisions of subsection
6.13. Each Loan Party holds all licenses, permits, franchises, leases,
certificates of authority, or any waivers of the foregoing that are necessary to
permit each of them to conduct their respective businesses as now conducted and
to hold and operate their respective properties, except where the failure to
have such licenses, permits, franchises, leases and certificates of authority,
or waivers of any of the foregoing, could not reasonably be expected to have a
Material Adverse Effect. All such licenses, permits, franchises, leases,
certificates of authority and waivers are valid and in full force and effect,
except where the failure to be in full force and effect of such licenses,
permits,
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35
franchises, leases, certificates of authority and waivers could not reasonably
be expected to have a Material Adverse Effect.
(d) OWNERSHIP AND SUBSIDIARIES. Except as set forth in
Schedule 3.1(d), all of the issued and outstanding Capital Stock of each of the
other Loan Parties is held directly or indirectly by the Borrower. The ownership
of each of the Loan Parties and each of the Subsidiaries of each of the Loan
Parties is specified correctly and completely on Schedule 3.1(d) annexed hereto.
None of the Capital Stock of the Persons identified on Schedule 3.1(d) annexed
hereto is Margin Stock, except as specified on such Schedule. Each of the
Subsidiaries of the Loan Parties identified on Schedule 3.1(d) annexed hereto is
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization, as the case may be, and has full
corporate or partnership, as the case may be, power and authority to own its
assets and properties and to operate its business as presently owned and
conducted except where failure to be in good standing or a lack of corporate or
partnership, as the case may be, power and authority, has not had and could not
reasonably be expected to have a Material Adverse Effect.
(e) FCC MATTERS.
(i) Schedule 3.1(e) correctly sets forth all of the FCC
Licenses (other than auxiliary service licenses and receive only earth
stations) owned or held by any Subsidiary of the Borrower or their
respective Affiliates as of the Closing Date or, upon consummation of
any Permitted Purchase, to be held by each Loan Party and correctly
sets forth the expiration date, if any, of each such FCC License. Each
FCC License was duly and validly issued by the FCC pursuant to
procedures which comply with all requirements of applicable law, and
neither the Borrower nor any other Loan Party has any knowledge of the
occurrence of any event or the existence of any circumstance which, in
the reasonable judgment of the Borrower or any other Loan Party, is
likely to lead to the revocation or suspension of any FCC License. The
Loan Parties have the right to use all FCC Licenses required in the
ordinary course of business for the operation of the Broadcast
Stations. Each such FCC License is in full force and effect, and each
holder thereof is in substantial compliance therewith with no known
conflict with the valid rights of others which could reasonably be
expected to have a Material Adverse Effect. No event has occurred which
permits, or after notice or lapse of time or both would permit, the
revocation, termination, modification or restriction of any such FCC
License or other right which could reasonably be expected to have a
Material Adverse Effect. Except as permitted by subsection 5.10, the
Borrower does not directly own or hold any FCC License.
(ii) The Loan Parties have duly filed in a timely manner
all material filings which are required to be filed by the Loan Parties
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 Broadcast
Stations.
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36
(iii) None of the Facilities (including without
limitation, the transmitter and tower sites owned or used by the
Borrower or any of its Subsidiaries) violate in any material respect
the provisions of any applicable building codes, fire regulations,
building restrictions or other governmental ordinances, orders or
regulations, and (except as set forth in Schedule 3.1(f)) each such
Facility is zoned so as to permit the commercial uses intended by the
owner or occupier thereof and there are no outstanding variances or
special use permits materially affecting any of the Facilities or the
uses thereof.
(iv) The Ownership Report filed by the Borrower is true,
correct and complete in all material respects, and there has been no
change in control of the ownership of the Loan Parties or the FCC
Licenses of the Loan Parties since the most recently filed Ownership
Report for any of the Loan Parties other than as disclosed in writing
to the Agent and the Lenders.
(f) REAL PROPERTY. Schedule 3.1(f) accurately states all
material real property interests held by the Loan Parties.
3.2 AUTHORIZATION OF BORROWING, ETC.
(a) AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Loan Documents and the Related Documents and the issuance,
delivery and payment of the Notes have been duly authorized by all necessary
corporate or partnership, as the case may be, action by each Loan Party a party
thereto except, in the case of any Related Document, the failure of which could
not reasonably be expected to result in a Material Adverse Effect.
(b) NO CONFLICT. The execution, delivery and performance by
each Loan Party of the Loan Documents and the Related Documents, the issuance,
delivery and performance of the Notes and any other transaction contemplated by
the Loan Documents or the Related Documents do not and will not (i) violate any
provision of law applicable to any Loan Party, the Certificate of Incorporation,
Bylaws, Management Agreement (with respect to any limited liability company),
Partnership Agreement or other organizational documents of any Loan Party or any
order, judgment or decree of any court or other agency of government binding on
any Loan Party, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any material Contractual
Obligation of any Loan Party, (iii) result in or require the creation or
imposition of any material Lien upon any of the properties or assets of any Loan
Party (other than Liens hereunder in favor of the Agent on behalf of the
Lenders) or (iv) require any approval of stockholders or other equity holders or
any approval or consent of any Person under any Contractual Obligation of any
Loan Party, EXCEPT for such approvals or consents which (x) have been obtained
by the Borrower or its Subsidiaries or which relate to any Permitted Purchase
and will be obtained prior to the consummation thereof or (y) are immaterial to
the business, operations or financial position of the Borrower and its
Subsidiaries.
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37
(c) GOVERNMENTAL CONSENTS. The execution, delivery and
performance by each Loan Party of the Loan Documents and the Related Documents
to which it is a party, the issuance, delivery and performance of the Notes and
any other transactions contemplated by the Loan Documents or the Related
Documents, do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state or
other governmental authority or regulatory body including, without limitation,
the FCC and any issuer of any permit or grant of authority relating to the
Broadcast Stations, EXCEPT for filings required in connection with the
perfection of the security interests granted pursuant to the Loan Documents, the
consent, if any, required from the FCC in connection with the consummation or
enforcement of the Loan Documents and the Related Documents in each case to the
extent such consummation or enforcement involves the assignment of any FCC
License or may be deemed a "change of control" under the Communications Act,
filings required with the FCC in connection with any License Subsidiary transfer
and the filing with the FCC, for notice purposes only, of this Agreement and any
of the other Loan Documents and the Related Documents required to be filed,
filings pursuant to the Hart-Scott-Rodino Act in connection with any Permitted
Purchase and, with respect to Related Documents, any registration with, consent
or approval of, or notice to, or other action to, the failure of which to make
or obtain could not reasonably be expected to have a Material Adverse effect.
(d) BINDING OBLIGATION. Each of the Loan Documents and the
Related Documents has been duly executed and delivered by each Loan Party which
is a party thereto, and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
and subject to the availability of equitable remedies.
3.3 FINANCIAL CONDITION. The Borrower has heretofore delivered
to the Lenders, at the Lenders' request, the Financial Statements. All such
statements were prepared in conformity with GAAP and, together with the
accompanying notes thereto, if any, fairly present in accordance with GAAP the
financial position (where applicable on a consolidated basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and changes in financial position (where applicable on
a consolidated basis) of the entities described therein for each of the periods
then ended (subject to, in the case of unaudited financial statements, normal
year-end adjustments). The Borrower has no (and will not following the funding
of the Loans have) material Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that is not (or will not be, upon the delivery thereof) reflected in the
foregoing financial statements or the notes thereto or in the annual financial
statements required to be delivered pursuant to subsection 5.1(b)(iii).
3.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED PAYMENTS. Since
December 31, 1997, no event or change has occurred that has caused or evidences,
either individually or in the aggregate, a Material Adverse Effect. Since
December 31, 1997, the Borrower has not directly or indirectly declared,
ordered, paid or made or set apart any sum or property for any Restricted
Payment or agreed so to do, except as permitted by subsection 6.6.
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38
3.5 TITLE TO PROPERTIES; LIENS. Each Loan Party holds (i)
good, marketable and insurable fee simple title, subject to Liens permitted by
subsection 6.3, to all its owned real property, (ii) good, sufficient, insurable
(in the case of all material leased real property) and valid leasehold title,
subject to Liens permitted by subsection 6.3, to its respective leased real
property and (iii) good, sufficient and legal title, subject to Liens permitted
by subsection 6.3, to all of its material properties and assets (other than as
described in clauses (i) and (ii) of this sentence) reflected in the balance
sheet included with the Financial Statements or in the most recent financial
statements delivered pursuant to subsection 5.1(b) of this Agreement, except for
assets acquired or disposed of since the date of such financial statements.
Except as permitted by subsection 6.3, all such properties and assets are free
and clear of Liens.
3.6 LITIGATION; ADVERSE FACTS. There is no action, suit,
proceeding, governmental arbitration or governmental investigation (whether or
not purportedly on behalf of any Loan Party) at law or in equity or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, including,
without limitation, the FCC, pending or, to the knowledge of the Borrower,
threatened against or affecting any Loan Party or any property of any Loan Party
(but, in any event, excluding suits or proceedings affecting the broadcasting
industry or television industry generally) that has had, or could reasonably be
expected to result in any Material Adverse Effect. Neither the Borrower nor any
of its Subsidiaries has received any notice of termination of any material
contract, lease or other agreement, or suffered any material damage, destruction
or loss (whether or not covered by insurance) or had any employee strike,
work-stoppage, slow-down or lock-out or any substantial threat directed to it of
any imminent strike, work-stoppage, slow-down or lock-out, any of which remain
pending and are material to the conduct of the Borrower or its Subsidiaries'
business as presently conducted that could reasonably be expected to result in a
Material Adverse Effect.
3.7 PAYMENT OF TAXES. Except to the extent permitted by
subsection 5.3, all tax returns and reports of the Borrower and its Subsidiaries
required to be filed by it or on its behalf have been timely filed, and all
taxes, assessments, fees and other governmental charges upon such Persons and
upon their respective properties, assets, income and franchises which are due
and payable have been paid when due and payable. The Borrower does not know of
any proposed tax assessment against any such Person which is not being actively
contested by such Person, in good faith and by appropriate proceedings; PROVIDED
that such reserves or other appropriate provisions, if any, as shall be required
in conformity with GAAP shall have been made or provided therefor.
3.8 PERFORMANCE OF AGREEMENTS. (a) No Loan Party is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except, in each case, where the consequences,
direct or indirect, of such default or defaults, if any, could not reasonably be
expected to have a Material Adverse Effect.
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39
(b) No Loan Party is a party or subject to any agreement or
instrument which has or could reasonably be expected to have, individually or
the aggregate, a Material Adverse Effect.
3.9 GOVERNMENTAL REGULATION. No Loan Party is subject to
regulation under the Public Utility Company Act of 1935, the Federal Power Act
or the Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur Indebtedness.
3.10 SECURITIES ACTIVITIES. Neither any Loan Party nor any of
their respective Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
3.11 EMPLOYEE BENEFIT PLANS. (a) The Borrower and each ERISA
Affiliate is in substantial compliance with all provisions and requirements of
ERISA with respect to each Employee Benefit Plan, and have substantially
performed all their obligations under each Employee Benefit Plan. There are no
actions, suits or claims (other than routine claims for benefits) pending or
threatened against any Employee Benefit Plan or its assets, and, to the best
knowledge of the Borrower, no facts exist which could give rise to any such
actions, suits or claims.
(b) Within the period of five years ending on the Closing
Date, no ERISA Event has occurred, and there is no unpaid liability of the
Borrower or any ERISA Affiliate that arose in connection with any ERISA Event
that occurred prior to that five-year period. As of the Closing Date, no ERISA
Event is reasonably expected to occur with respect to any Employee Benefit Plan.
(c) Except to the extent required under Section 4980B of the
Code, no Employee Benefit Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employees of the
Borrower or any ERISA Affiliate.
(d) As of the most recent valuation date for any Pension Plan,
the excess of the actuarial present value (determined on the basis of reasonable
assumptions employed by the independent actuary for such Pension Plan) of the
benefit liabilities (as defined in Section 4001(a)(16) of ERISA), whether or not
vested, over the fair market value of the assets of such Pension Plan,
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which there is no such
excess), does not exceed $500,000.
3.12 CERTAIN FEES. No broker's or finder's fee or commission
will be payable by the Borrower or any of its Subsidiaries (or to the best
knowledge of the Borrower, by any other Person), other than to CEA, Inc., with
respect to the making of the Loans, or any of the other transactions
contemplated hereby (except that with respect to any Permitted Purchase the
Borrower has or will inform the Lenders of any such fees or commissions), and
the Borrower hereby indemnifies the Lenders against and agrees that it will hold
the Lenders harmless from any claim, demand or liability for broker's or
finder's fees (other than any
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broker's or finder's fee of any broker or finder retained by the Agent or the
Lenders) alleged to have been incurred in connection with any such offer,
issuance and sale, or any of the other transactions contemplated hereby or by
the Related Documents and any expenses, including legal fees, arising in
connection with any such claim, demand or liability.
3.13 ENVIRONMENTAL.
(i) The operations of the Borrower and its Subsidiaries
(including, without limitation, all operations and conditions at or in
the Facilities) comply, and for the period within any applicable
statute of limitations have complied, in all material respects with all
Environmental Laws;
(ii) The Borrower and each of its Subsidiaries have
obtained all permits under Environmental Laws necessary to their
respective operations, and all such permits are in good standing, and
the Borrower and each of its Subsidiaries are in compliance with all
material terms and conditions of such permits;
(iii) Neither the Borrower nor any of its Subsidiaries
has received (a) any material notice or claim to the effect that it is
or may be liable to any Person as a result of the Release or threatened
Release of any Hazardous Materials or (b) any letter or request for
information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or
comparable state laws, and to the best of the Borrower's knowledge,
none of the operations of the Borrower or any of its Subsidiaries is
the subject of any federal or state investigation evaluating whether
any further investigation or remedial action is needed to respond to a
Release or threatened Release of any Hazardous Material at any Facility
or at any other location;
(iv) None of the operations of the Borrower or any of
its Subsidiaries is subject to any judicial, administrative, or
arbitral proceeding alleging the violation of or liability under any
Environmental Laws which if adversely determined could reasonably be
expected to have a Material Adverse Effect;
(v) The Borrower and each of its Subsidiaries and all
of their Facilities or operations are not subject to any outstanding
written order or agreement with any governmental authority or private
party relating to (a) any Environmental Laws or (b) any Environmental
Claims that in each case could reasonably be expected to have a
Material Adverse Effect;
(vi) To the best knowledge of each Loan Party, neither
the Borrower nor any of its Subsidiaries has any contingent liability
in connection with any Release of any Hazardous Materials by the
Borrower or any Subsidiaries of the Borrower that could reasonably be
expected to have a Material Adverse Effect;
(vii) Neither the Borrower nor any of its Subsidiaries
or, to the best of the Borrower's knowledge, any predecessor of the
Borrower or any Subsidiaries of the
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41
Borrower has filed any notice under any Environmental Law indicating
past or present treatment or disposal of Hazardous Materials at any
Facility, and none of the Borrower's or any of its Subsidiary's
operations involves the generation, transportation, treatment, storage
or disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent in material violation of any such law;
(viii) To the best knowledge of each Loan Party, no
Hazardous Material exists on, under or about any Facility in a manner
that could give rise to an Environmental Claim having a Material
Adverse Effect, and neither the Borrower nor any Subsidiary of the
Borrower has filed any notice or report of a Release of any Hazardous
Materials that could reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(ix) To the best knowledge of each Loan Party, neither
the Borrower nor any Subsidiary of the Borrower (or any of their
predecessors) has disposed of any Hazardous Materials in a manner that
could reasonably be expected to give rise to an Environmental Claim
having a Material Adverse Effect;
(x) No underground storage tanks or surface
impoundments are on or at the Facilities, other than those that could
not reasonably be expected to give rise to an Environmental Claim
having a Material Adverse Effect;
(xi) No Lien in favor of any Person for (a) any material
liability under Environmental Laws, or (b) damages arising from or
costs incurred by such Person in response to a Release has been filed
or has been attached to the Facilities; and
(xii) There is no radio frequency radiation,
electromagnetic field or similar condition of or about any property
owned, operated, or otherwise used by any Loan Party that could
reasonably be expected to give rise to a Material Adverse Effect.
3.14 SOLVENCY. Each Loan Party is, and on and after the
consummation of the transactions contemplated hereby will be, Solvent.
3.15 RELATED DOCUMENTS. As of the Closing Date, the Related
Documents have been duly authorized, executed and delivered by each Loan Party
and their respective Subsidiaries, to the extent each is a party thereto, and
are in full force and effect and no material term or condition thereof has been
amended or modified in any respect that could reasonably be expected to have a
Material Adverse Effect, without the consent of the Agent and the Required
Lenders. The Borrower has delivered or offered to deliver to the Lenders
complete and correct copies of the Related Documents and of all exhibits and
schedules delivered to or by any Loan Party or their respective Subsidiaries in
connection with Related Documents.
3.16 INSURANCE. The Borrower and its Subsidiaries maintain,
with insurers identified in Schedule 3.16, insurance with respect to its
properties and business and the properties and business of its Subsidiaries,
against loss or damage of the kinds customarily
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insured against by entities of established reputation engaged in the same or
similar business of such types and in such amounts as are customarily carried
under similar circumstances by such other entities. Schedule 3.16 is a complete
and accurate description of all policies of insurance that will be in effect as
of the Closing Date for the Borrower and its Subsidiaries.
3.17 INTELLECTUAL PROPERTY. (a) The Borrower and its
Subsidiaries own, or are licensed to use, the Intellectual Property and all such
Intellectual Property is, in all material respects, fully protected and duly and
properly registered, filed or issued in the appropriate office and jurisdictions
for such registrations, filing or issuances.
(b) Except as disclosed on Schedule 3.17(b), (i) no material
claim has been asserted by any Person with respect to the use of any such
Intellectual Property, or challenging or questioning the validity or
effectiveness of any such Intellectual Property; (ii) to the best of the
Borrower's knowledge, the use of such Intellectual Property by the Borrower or
any of its Subsidiaries does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the aggregate, give rise to any
liabilities on the part of the Borrower or any of its Subsidiaries that are
material to the Borrower and its Subsidiaries taken as a whole; and (iii) the
consummation of the transactions contemplated by this Agreement will not in any
material manner or to any material extent impair the ownership of (or the
license to use, as the case may be) any of such Intellectual Property by the
Borrower or any of its Subsidiaries.
3.18 DISCLOSURE. No representation or warranty of any Loan
Party contained in any Loan Document or Related Document or any other document,
certificate or written statement furnished to the Lenders by or on behalf of any
Loan Party for use in connection with the transactions contemplated by this
Agreement (including any Permitted Purchase) contains any untrue statement of a
material fact or omits to state a material fact (known to the Borrower in the
case of any document not furnished by it) 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 such materials are based upon good faith
estimates and assumptions believed by the Borrower to be reasonable at the time
made, it being recognized by the Lenders 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 from the projected
results. There is no fact known (or which should upon the reasonable exercise of
diligence be known) to the Borrower (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 such other
documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated hereby.
3.19 SECURITY DOCUMENTS. (a) Each of the Pledge Agreements is
effective to create in favor of the Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Securities
described therein and proceeds thereof and, when the Pledged Notes described
therein and stock certificates representing the Pledged Stock described therein
are delivered to the Agent, each such Pledge Agreement shall constitute a
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43
fully perfected first priority Lien on, and security interest in, all right,
title and interest of the relevant Loan Party in such Pledged Securities and the
proceeds thereof, as security for the Obligations (as defined in the relevant
Pledge Agreement), in each case prior and superior in right to any other Person.
(b) Each of the Security Agreements is effective to create in
favor of the Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof, and when financing statements in appropriate form are filed in the
offices specified on Schedule 3.19(b), each such Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral and the proceeds thereof, to
the extent permitted under the Communications Act, as security for the
Obligations (as defined in the relevant Security Agreement), in each case prior
and superior in right to any other Person, other than with respect to Liens
expressly permitted by subsection 6.3.
(c) The Cash Collateral Agreement is effective to create in
favor of the Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof, and the Cash Collateral Agreement shall constitute a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Borrower in such Collateral and the proceeds thereof, as security for the
Obligations, in each case prior and superior in right to any other Person.
3.20 PURPOSES OF LOANS. The proceeds of the Loans shall be
used by the Borrower to refinance the indebtedness outstanding on the date
hereof under the Existing Credit Agreement and to pay costs and expenses in
connection with such refinancing.
SECTION 4. CONDITIONS PRECEDENT
The agreement of each Lender to make the initial Loan
requested to be made by it is subject to the satisfaction on or prior to May 8,
1998 of the following conditions precedent:
(a) LOAN DOCUMENTS. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) each of the Pledge
Agreements, each executed and delivered by a duly authorized officer of
the parties thereto, with a counterpart or a conformed copy for each
Lender, (iii) the Subsidiaries Guarantee, executed and delivered by a
duly authorized officer of the parties thereto, with a counterpart or a
conformed copy for each Lender, (iv) the Security Agreements, executed
and delivered by a duly authorized officer of the parties thereto, with
a counterpart or a conformed copy for each Lender, (v) the Cash
Collateral Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart or conformed copy for each
Lender and (vi) for the account of each relevant Lender which has made
a request therefor to the Agent, Notes conforming to the requirements
hereof and executed and delivered by a duly authorized officer of the
Borrower.
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44
(b) RELATED AGREEMENTS. The Agent shall have received, with a
copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the LMA Agreements, the Purchase
Agreements, the Exchange Debenture Indenture and such other documents
or instruments as may be reasonably requested by the Lenders,
including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower or any of
its Subsidiaries may be a party.
(c) BORROWING CERTIFICATE. The Agent shall have received, with
a counterpart for each Lender, a certificate of each Loan Party, dated
the Closing Date, substantially in the form of Exhibit G, with
appropriate insertions and attachments, satisfactory in form and
substance to the Agent, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of the Borrower.
(d) CORPORATE PROCEEDINGS OF THE BORROWER. The Agent shall
have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of the Borrower authorizing (i) the execution,
delivery and performance of this Agreement and the other Loan Documents
to which it is a party, (ii) the borrowings contemplated hereunder and
(iii) the granting by it of the Liens created pursuant to the Borrower
Security Documents, certified by the Secretary or an Assistant
Secretary of the Borrower as of the Closing Date, which certificate
shall be in form and substance satisfactory to the Agent and its
counsel and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded.
(e) BORROWER INCUMBENCY CERTIFICATE. The Agent shall have
received, with a counterpart for each Lender, a Certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of
the officers of the Borrower executing any Loan Document satisfactory
in form and substance to the Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(f) ORGANIZATIONAL PROCEEDINGS OF SUBSIDIARIES. The Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of each Subsidiary (and its general partner, if
applicable) which is a party to a Loan Document authorizing (i) the
execution, delivery and performance of the Loan Documents to which it
is a party and (ii) the granting by it of the Liens created pursuant to
the Subsidiaries Security Documents to which it is a party, certified
by the Secretary or an Assistant Secretary of each such Subsidiary (and
its general partner, if applicable) as of the Closing Date, which
certificate shall be in form and substance satisfactory to the Agent
and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(g) SUBSIDIARY INCUMBENCY CERTIFICATES. The Agent shall have
received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing
Date, as to the incumbency and signature of the
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45
officers of such Subsidiaries (and its general partner, if applicable)
executing any Loan Document, satisfactory in form and substance to the
Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of each such Subsidiary (and its
general partner, if applicable).
(h) ORGANIZATIONAL DOCUMENTS. The Agent shall have received,
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws or other organizational
documents of each Loan Party, certified as of the Closing Date as
complete and correct copies thereof by the Secretary or an Assistant
Secretary of the such Loan Party (or, in lieu of such copies,
certification that such documents have not been amended, supplemented
or otherwise modified subsequent to the date of delivery thereof to the
Agent in connection with the closing of the Existing Credit Agreement).
(i) INTEREST RESERVE. The Borrower shall have deposited at
least $22,400,000 in the cash collateral account established pursuant
to the Cash Collateral Agreement to pay interest on the Loans and
otherwise in accordance with the Cash Collateral Agreement.
(j) FEES. All fees and expenses which the Borrower has agreed
to pay in connection with the execution and delivery of this Agreement
and all fees and expenses then accrued and unpaid under the Existing
Credit Agreement shall have been paid in full to the Agent and Lenders
on the date on which this Agreement shall become effective in
accordance with subsection 9.8.
(k) LEGAL OPINIONS. The Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Holland &
Knight, counsel to the Borrower and the other Loan Parties, in
form and substance satisfactory to the Agent and the Lenders;
(ii) the executed legal opinion of Dow Lohnes &
Albertson, special FCC counsel to the Borrower and the other
Loan Parties, in form and substance satisfactory to the Agent
and the Lenders; and
(iii) the executed legal opinion of Anthony L.
Morrison, General Counsel to the Borrower, in form and
substance satisfactory to the Agent and the Lenders.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require.
(l) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES. The Agent
shall have received the certificates representing the shares pledged
pursuant to each of the Pledge Agreements, together with an undated
stock power for each such certificate executed
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46
in blank by a duly authorized officer of the pledgor thereof, and the
notes pledged pursuant to each of the Pledge Agreements, each endorsed
in blank by a duly authorized officer of the pledgor thereof.
(m) ACTIONS TO PERFECT LIENS. The Agent shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the opinion of the Agent, desirable to perfect
the Liens created by the Security Documents shall have been completed.
(n) LIEN SEARCHES. The Agent shall have received the results
of a recent search by a Person satisfactory to the Agent, of the
Uniform Commercial Code, judgement and tax lien filings which may have
been filed with respect to personal property of the Borrower, and the
results of such search shall be satisfactory to the Agent.
(o) INSURANCE. The Agent shall have received evidence in form
and substance satisfactory to it that all of the requirements of
subsection 5.4 shall have been satisfied.
(p) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrower and its
Subsidiaries in or pursuant to the Loan Documents shall be true and
correct in all material respects on and as of such date as if made on
and as of such date except for any representation and warranty which is
expressly made as of an earlier date, which representation and warranty
shall have been true and correct in all material respects as of such
earlier date.
(q) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans requested to be made on such date.
(r) ADDITIONAL MATTERS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance to the
Agent, and the Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any amount is
owing to any Lender or the Agent hereunder or under any other Loan Document, the
Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
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47
5.1 FINANCIAL STATEMENTS AND SYSTEMS.
(a) ACCOUNTING SYSTEM: Maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP.
(b) FINANCIAL STATEMENTS AND OTHER REPORTS: Deliver to the
Lenders:
(i) MONTHLY FINANCIALS: as soon as practicable and in
any event within 30 days after the end of each calendar month of the
Borrower, 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 Borrower and
its Subsidiaries for and as of the end of such month;
(ii) QUARTERLY FINANCIALS: as soon as practicable and in
any event within 45 days after the end of each fiscal quarter of the
Borrower, a consolidated balance sheet of the Borrower 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
Borrower to the Securities and Exchange Commission (or any successor or
analogous Governmental Authority), and if such Form 10-Q is no longer
required to be so provided by the Borrower, then the Borrower shall
provide the Lenders with comparable financial statements, certified by
the chief financial officer of the Borrower that they fairly present
the financial condition and results of operations of the Borrower and
its 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;
(iii) YEAR-END FINANCIALS: as soon as practicable and in
any event within 90 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet of the Borrower 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 Borrower and its Subsidiaries for such fiscal year,
(a) accompanied by a report thereon of independent certified public
accountants of recognized national standing selected by the Borrower
and reasonably satisfactory to Agent and the Required Lenders, which
report shall contain no qualifications with respect to the continuance
of the Borrower and its consolidated Subsidiaries as going concerns and
shall state that such financial statements present fairly the financial
position of the Borrower and its consolidated Subsidiaries as at the
dates indicated and the statements of income and cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise stated therein) and 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 (b) certified by the chief financial officer of the
Borrower that they fairly present the financial condition and
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48
results of operations of the Borrower and its Subsidiaries, as at the
dates and for the periods indicated, as appropriate;
(iv) OFFICERS' AND COMPLIANCE CERTIFICATES: together
with each delivery of financial statements of the Borrower and its
Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) an
Officer's Certificate of the Borrower stating that the signers have
reviewed the terms of this Agreement and the Notes and have made, or
caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of the Borrower and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not
have knowledge of the existence as at the date of such Officers'
Certificate, of any condition or event which constitutes an Event of
Default or Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action the Borrower has taken, is taking and proposes to take with
respect thereto; and (b) a certificate (a "COMPLIANCE CERTIFICATE") in
a form satisfactory to the Agent demonstrating in reasonable detail
compliance during and at the end of the applicable accounting periods
with the provisions of subsection 2.6 and Section 6;
(v) 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 Borrower and its consolidated Subsidiaries delivered pursuant to
subsections (ii), (iii) or (xii) of this subsection 5.1(b) 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 (ii),
(iii) or (xii) following such change, financial statements of the
Borrower and its consolidated Subsidiaries prepared on a pro forma
basis, for (y) the current year to the effective date of such change
and (z) 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;
(vi) ACCOUNTANTS' CERTIFICATION: together with each
delivery of consolidated financial statements of the Borrower and its
Subsidiaries pursuant to subdivision (iii) above, a written statement
by the independent public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms
of this Agreement and the Notes as they relate to accounting matters,
(b) stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or Default has
come to their attention and, if such a condition or event has come to
their attention, specifying the nature and period of existence thereof;
PROVIDED that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Event of Default or Default
with respect to accounting matters that would not be disclosed in the
course of their audit examination and (c) stating that, based on their
audit examinations nothing has come to their attention that causes them
to believe that the information contained in the Compliance
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49
Certificate delivered therewith pursuant to clause (b) of subdivision
(iv) above for the applicable fiscal year are not stated in accordance
with the terms of this Agreement;
(vii) ACCOUNTANTS' REPORTS: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
significant reports submitted to the Borrower by independent public
accountants in connection with each annual, interim or special audit of
the financial statements of the Borrower made by such accountants,
including, without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) REPORTS AND FILINGS: within five days after the
same are sent, copies of all financial statements and reports which the
Borrower sends to its stockholders, and within five days after the same
are filed, copies of all financial statements and reports which the
Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(ix) EVENTS OF DEFAULT ETC.: promptly upon, but in any
event no later than two Business Days after, any officer of the
Borrower obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Default, or becoming aware that any
Lender or the Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Default under this Agreement,
(b) that any Person has given any notice to the Borrower or any of its
Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 7(b)
and (e), (c) of any condition or event that would be required to be
disclosed in a current report filed by the Borrower with the Securities
and Exchange Commission on Form 8-K (Items 1, 2, 4 and 5 of such Form
as in effect on the date hereof) or (d) of any condition or event which
has had or could reasonably be expected to have a Material Adverse
Effect (which, for such purposes, shall be determined with respect to
the Borrower individually), 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 default, Event of Default, Default,
event or condition, and what action the Borrower has taken, is taking
and proposes to take with respect thereto;
(x) LITIGATION: promptly upon any officer of the
Borrower obtaining knowledge of (a) the institution of any action,
suit, proceeding, governmental investigation or arbitration against or
affecting any Loan Party or any property of any Loan Party not
previously disclosed by the Borrower or the other Loan Parties to the
Lenders or (b) any material adverse development in any such action,
suit, proceeding, governmental investigation or arbitration that, in
any case:
(y) involves claims in excess of $5,000,000 in the
aggregate; or
(z) would reasonably be expected to cause a Material
Adverse Effect;
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50
the Borrower shall promptly give notice thereof to the Lenders and
provide such other information as may be reasonably available to them
to enable the Lenders and their counsel to evaluate such matters;
(xi) ERISA EVENTS: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event in
connection with any Employee Benefit Plan or any trust created
thereunder, with a written notice specifying the nature thereof, what
action the Borrower or ERISA Affiliate has taken, is taking or proposes
to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;
(xii) ERISA NOTICES: with reasonable promptness, copies
of (a) all notices received by the Borrower or any of its ERISA
Affiliates from the PBGC relating to an ERISA Event, (b) each Schedule
B (Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan, if any, and (c) all
notices received by the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event;
(xiii) FINANCIAL PLANS: as soon as practicable and in any
event no later than the 30 days after the end of any fiscal year of the
Borrower, a budget and financial forecast for the Borrower and its
Subsidiaries including, (a) a forecasted operating cash flows statement
of the Borrower and its Subsidiaries for the next succeeding fiscal
year, (b) forecasted operating cash flows statement of the Borrower and
its Subsidiaries for each fiscal quarter of the next succeeding fiscal
year and (c) such other information and projections as any Lender may
reasonably request, in each case, in a format satisfactory to the
Agent; and
(xiv) OTHER INFORMATION: with reasonable promptness, such
other information and data with respect to the Borrower or any of its
Subsidiaries or Affiliates as from time to time may be reasonably
requested by any Lender.
5.2 MAINTENANCE OF EXISTENCE, ETC.. Except as permitted by
subsection 6.7, preserve and keep in full force and effect its corporate or
partnership existence, as the case may be, and rights and franchises material to
its business.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. Pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business, income or
property, non-payment of which would cause a Material Adverse Effect, before any
penalty accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a material Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; PROVIDED that no such tax, assessment, charge or
claim need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in
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51
conformity with GAAP shall have been made therefor. Neither the Borrower nor any
of its Subsidiaries will file or consent to the filing of any consolidated
income tax return with any Person (other than the Borrower or its Subsidiaries).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE. Maintain in good
repair, working order and condition all material properties used or useful in
the business of the Borrower and its Subsidiaries (including, without
limitation, Intellectual Property) and from time to time will make or cause to
be made all appropriate (as reasonably determined by the Borrower) repairs,
renewals and replacements thereof. The Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries (including without limitation, business interruption insurance and
insurance on plant, property and equipment) against loss or damage of the kinds
customarily carried or maintained under similar circumstances by entities of
established reputation engaged in similar businesses. On or before the end of
the second fiscal quarter of each fiscal year, the Borrower shall submit to the
Agent an Officers' Certificate updating the information contained in Schedule
3.16 as of such date. Each such policy of insurance (other than business
interruption insurance) shall name the Agent as the loss payee or as additional
insured, as the Agent may require, for the benefit of the Lenders thereunder and
provide for at least thirty (30) days prior written notice (or such other period
as is customary in the industry) to the Agent of any material modification or
any cancellation of such policies.
5.5 INSPECTION; LENDER MEETING. Subject to subsection 9.15,
permit any authorized representatives designated by the Agent to visit and
inspect any of the properties of the Borrower, any of its Subsidiaries or any
Broadcast Station, including its and their financial and accounting records, and
to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested.
Without in any way limiting the foregoing, the Borrower will, upon the request
of the Required Lenders, participate in a meeting with the Agent and the Lenders
once during each fiscal year to be held at the Borrower's corporate offices at
such time as may be agreed to by the Borrower and the Required Lenders.
5.6 COMPLIANCE WITH LAWS, ETC. (a)(i) Comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, including, without limitation, the Communications Act,
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect and (ii) comply in all material respects at all times with all
provisions of all FCC Licenses, certifications and permits, franchises or other
permits and authorizations relating to the operation of the Broadcast Stations
and all other material agreements, licenses and leases to which it is a party or
of which it is a beneficiary and suffer no loss or forfeiture thereof or
thereunder except for any non-compliance or a loss or forfeiture which does not
have and could not reasonably be expected to have a Material Adverse Effect; and
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52
(b) Not engage in any transaction or permit the occurrence of
any act or omission, and shall cause each ERISA Affiliate not to engage in any
transaction or to permit the occurrence of any act or omission, which would
constitute, or would give rise to, an ERISA Event which would cause a Material
Adverse Effect.
5.7 COMPLIANCE WITH RELATED DOCUMENTS. Comply at all times
with the covenants under the Related Documents except for any failure to comply
which could not reasonably be expected to result in a Material Adverse Effect or
otherwise materially adversely affect the interests of the Lenders under this
Agreement or any of the other Loan Documents. The Borrower and its Subsidiaries
shall deliver to the Agent copies of all reports, notices and other information
received or required to be delivered by the Borrower and its Subsidiaries with
respect to the Related Documents, if so requested by any Lender or if such
information relates to any matter or matters which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.8 ENVIRONMENTAL DISCLOSURE AND INSPECTION. (a) Comply, and
undertake all reasonable efforts to ensure that all tenants under any lease or
occupancy agreement affecting any portion of the Facilities and all other
Persons on or occupying such property comply, in all materials respects with all
Environmental Laws, PROVIDED that upon learning of any material noncompliance
with Environmental Laws by the Borrower or any of its Subsidiaries, the Borrower
shall promptly undertake all reasonable efforts to remedy such non-compliance.
(b) Agree that the Agent is entitled (but has no obligation),
from time to time (upon the Agent's determination in its reasonable discretion
that any of the following is advisable), upon notice to the Borrower and as
often as may reasonably be requested, to retain, at the Borrower's expense, an
independent professional consultant to review any report relating to Hazardous
Materials prepared by or for the Borrower and to conduct its own investigation
of any Facility. The Borrower hereby grants to the Agent, its agents, employees,
consultants and contractors the right to enter into or on to the Facilities upon
reasonable notice and at such times during normal business hours and as often as
may reasonably be requested to perform such tests on such property as are
reasonably necessary to conduct such a review and/or investigation. The Borrower
may receive copies of any reports prepared by independent experts, but the
Lenders shall have no duty to disclose or discuss any information produced by
such reviews or investigations with the Borrower or any of its Subsidiaries.
(c) Promptly advise the Lenders in writing and in reasonable
detail of (i) any Release of any Hazardous Material (of which the Borrower is
aware) required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to Environmental Claims or any Release of
Hazardous Material required to be reported to any federal, state or local
governmental or regulatory agency, (iii) any remedial action taken by the
Borrower or any other Person in response to (a) any Hazardous Material on, under
or about any Facility, the existence of which could reasonably be expected to
result in an Environmental Claim having a Material Adverse Effect or (b) any
Environmental Claim that could reasonably be expected to have a Material Adverse
Effect, (iv) the Borrower's discovery of any occurrence
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53
or condition on any real property adjoining or in the vicinity of any Facility
that could cause such Facility or any part thereof to be classified as a
"border-zone property" or to be otherwise subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws that could reasonably be expected to have a Material Adverse Effect, and
(v) any request for information from any governmental agency that indicates such
agency is investigating whether the Borrower or any of its Subsidiaries may be
potentially responsible for a Release of Hazardous Materials.
(d) Promptly notify the Lenders of any proposed acquisition or
disposition of stock, assets, or property by any Loan Party, that could
reasonably be expected to expose the Borrower or any of its Subsidiaries to, or
result in, Environmental Claims that could have a Material Adverse Effect and of
any proposed action to be taken by the Borrower or any of its Subsidiaries to
commence or cease manufacturing, industrial or other operations that could
reasonably be expected to subject the Borrower or any of its Subsidiaries to
additional laws, rules or regulations, including, without limitation, laws,
rules and regulations requiring additional environmental permits or licenses.
(e) At their own expense, provide copies of such documents or
information as the Agent may reasonably request in relation to any matters
disclosed pursuant to this subsection.
5.9 HAZARDOUS MATERIALS; THE BORROWER'S REMEDIAL ACTION. Take
promptly any and all necessary remedial action required by all applicable
Environmental Laws and perform such remedial action in compliance with all
applicable Environmental Laws and orders and directives of all federal, state
and local governmental authorities except when and only to the extent that the
Borrower's or such Subsidiary's liability for the presence, storage, use,
disposal, transportation or discharge of any Hazardous Material is being
contested in good faith by the Borrower or such Subsidiary by appropriate
proceedings, and the pendency of such proceedings is not reasonably likely to
give rise to a Material Adverse Effect.
5.10 FCC LICENSES. (a) Use their best efforts to keep in full
force and effect all of the FCC Licenses of the Borrower, if any, and its
Subsidiaries. The Loan Parties shall provide a copy of any (or, in the event of
any notice based on knowledge of such Loan Party, a brief description of such
default and the basis of such knowledge) notice from the FCC of any violation
with respect to any FCC License received by it or any of its respective
Subsidiaries (or with respect to which any of such Loan Parties may have any
knowledge).
(b) The Borrower shall establish and maintain wholly-owned
License Subsidiaries for the purpose of holding the FCC Licenses related to the
Broadcast Stations owned by them on and after the Closing Date and shall cause
the License Subsidiaries not to own any material assets other than the FCC
Licenses or to have any material liabilities (other than pursuant to the
Subsidiary Guarantee or the guarantees with respect to the Senior Subordinated
Notes). At all times on and after the date hereof (or (i) in the case of those
FCC Licenses described in Schedule 5.10, as soon as practicable following the
date hereof and at all times thereafter or (ii) in the case of any FCC License
acquired subsequent to the date hereof with respect to which it is not
practicable to cause such FCC License to be
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54
acquired directly by a License Subsidiary, as soon as practicable following the
date of acquisition and at all times thereafter), the Borrower shall, and shall
cause its Subsidiaries to, cause each new FCC License issued by the FCC to be
issued to, and held by, a License Subsidiary.
5.11 ADDITIONAL LOAN PARTIES. In the event that (i) any
Permitted Purchase is to be made by any Subsidiary or Affiliate of the Borrower
and such Subsidiary or Affiliate is not a Loan Party hereunder or under any of
the other Loan Documents immediately prior to the consummation of any such
transaction, or (ii) any Subsidiary of the Borrower is at any time not a Loan
Party hereunder (each such Subsidiary or Affiliate in any case referred to
herein as an "ADDITIONAL LOAN PARTY" and collectively as the "ADDITIONAL LOAN
PARTIES"), then, on or before the consummation of any such transaction or
addition as a Loan Party hereunder, such Additional Loan Party shall deliver
appropriate counterparts and assumptions of each Loan Document to which it is to
be a party and all such documents, opinions of counsel, certificate and
instruments as such Additional Loan Party would have been required to deliver
pursuant to subsection 4.1 had such Additional Loan Party been a Loan Party
hereunder on the Closing Date and such other documents, certificates,
instruments and assurances as are consistent with the provisions of subsection
2.18 and Section 4 in relation to such Additional Loan Party's proposed status
hereunder and under the other Loan Documents (including, without limitation,
taking into consideration whether the obligations of such Additional Loan Party
are to be of a limited recourse nature or otherwise), all as shall be reasonably
requested by the Agent at the time such Additional Loan Party shall become a
party under the Loan Documents. Upon satisfaction of the foregoing conditions,
such Additional Loan Party shall be a Loan Party for all purposes hereunder and
under the other Loan Documents.
5.12 CORPORATE SEPARATENESS; TAX SHARING AGREEMENT. (a) Cause
the management, business and affairs of each Unrestricted Subsidiary to be
conducted in such a manner so that such Unrestricted Subsidiary will be
perceived as a legal entity separate and distinct from the Borrower and its
Subsidiaries.
(b) Enter in a tax sharing agreement on terms and conditions
customary and reasonably satisfactory to the Agent if the Agent shall reasonably
determine that such an agreement is necessary to provide for the fair and
reasonable allocation of federal, state and local tax liabilities and benefits
between and among (i) the Borrower and its Subsidiaries and (ii) any
Unrestricted Subsidiaries.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any amount is
owing to any Lender or the Agent hereunder or under any other Loan Document, the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
6.1 FINANCIAL CONDITION COVENANTS. (a) LEVERAGE RATIO. Permit
the Leverage Ratio as of the last day of each calendar quarter occurring during
any of the periods set forth below to be greater than the correlative ratio
indicated:
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===============================================================================
PERIOD LEVERAGE RATIO
===============================================================================
March 31, 2000 - June 30, 2000 5.00:1.00
- -------------------------------------------------------------------------------
July 1, 2000 - December 31, 2000 4.50:1.00
- -------------------------------------------------------------------------------
January 1, 2001 - June 30, 2001 4.25:1.00
- -------------------------------------------------------------------------------
July 1, 2001 - December 31, 2001 3.75:1.00
- -------------------------------------------------------------------------------
January 1, 2002 - thereafter 3.50:1.00
===============================================================================
(b) CASH INTEREST COVERAGE. Permit the ratio of (y)
Consolidated Operating Cash Flow to (z) Consolidated Cash Interest Expense of
the Borrower and its Subsidiaries for the four quarter period ending on the last
day of each calendar quarter occurring during the periods specified below to be
less than the correlative ratio indicated:
===============================================================================
CASH INTEREST
PERIOD COVERAGE RATIO
===============================================================================
March 31, 2000 - June 30, 2000 1.75:1.00
- -------------------------------------------------------------------------------
July 1, 2000 - December 31, 2000 2.25:1.00
- -------------------------------------------------------------------------------
January 1, 2001 - thereafter 2.50:1.00
===============================================================================
(c) FIXED CHARGE COVERAGE. Permit the ratio of (y)
Consolidated Operating Cash Flow to (z) Consolidated Fixed Charges of the
Borrower and its Subsidiaries for the twelve consecutive month period ending as
of the last day of any calendar quarter ending on or after March 31, 2000 to be
less than 1.10:1.00.
(d) CASH FLOW FROM LMA AGREEMENTS. On or after March 31, 2000,
permit more than 25% of Consolidated Operating Cash Flow to be earned or
generated pursuant to LMA Agreements for any fiscal period.
6.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume,
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Contingent Obligations permitted by subsection 6.5 (other
than subsection 6.5(e)) and, upon any obligations actually arising
pursuant thereto, the Indebtedness corresponding to the Contingent
Obligations so extinguished;
(c) Indebtedness in respect of Capital Leases and/or purchase
money Indebtedness or any combination thereof in an aggregate amount at
any time
<PAGE> 61
56
outstanding not in excess of 5% of Consolidated Total Assets as of the
date incurred, so long as at the time any such Capital Lease is entered
into or such Indebtedness is incurred no Default or Event of Default
shall have occurred and be continuing or would result therefrom;
(d) (i) the Senior Subordinated Notes, the Exchangeable
Preferred Stock, any Exchangeable Preferred Stock issued in accordance
with subsection 6.2(g)(ii), any Exchange Debentures issued in
accordance with subsections 6.2(g)(i) or (i) and (ii) Indebtedness
existing as of the Closing Date as set forth in Schedule 6.2(d), and
(iii) renewals, refinancings, extensions and modifications of any
Indebtedness described in clauses (i) and (ii) of this paragraph (d):
(A) the terms of which have been provided to the Lenders at least seven
Business Days before the date of such renewal, refinancing, extension
or modification, (B) which do not increase the rate or shorten the date
for payment of interest thereon or shorten the maturity (or weighted
average life) or increase the principal amount thereof (except to the
extent of the amount of any premium required to be paid under the terms
of the instrument governing such Indebtedness and the amount of
reasonable expenses incurred by the Borrower in connection with such
refinancing) and which, after giving effect thereto, contain terms and
conditions (including, without limitation, subordination provisions (if
any), covenants and events of default) that are no less favorable to
the Lenders in any material respect taken as a whole than the terms and
conditions thereof applicable before giving effect thereto, and (C); at
any time that a Default or Event of Default shall not have occurred and
be continuing or would result therefrom;
(e) Indebtedness of the Borrower or any Subsidiary to any
Subsidiary and of any Subsidiary to the Borrower or any Subsidiary;
(f) preferred Capital Stock issued subsequent to the date
hereof (including preferred Capital Stock issued as dividends thereon),
PROVIDED that at the time of issuance thereof (other than in the case
of preferred Capital Stock issued as dividends) no Default or Event of
Default shall have occurred and be continuing or would result
therefrom;
(g) (i) Exchange Debentures issued as interest on other
Exchange Debentures in accordance with the Exchange Debenture Indenture
and (ii) Exchangeable Preferred Stock issued as dividends on other
Exchangeable Preferred Stock in accordance with its Certificate of
Designation;
(h) additional unsecured Indebtedness of the Borrower not
exceeding $10,000,000 in aggregate principal amount at any one time
outstanding; and
(i) so long as the Borrower shall have delivered to the Lender
pursuant to subsection 5.1 the financial statements of the Borrower and
its Subsidiaries in respect of the fiscal quarter ended March 31, 2000,
Exchange Debentures issued in exchange for Exchangeable Preferred Stock
in accordance with the provisions of the applicable Certificate of
Designations (as in effect on the date hereof) and the Exchange
<PAGE> 62
57
Debenture Indenture (as in effect on the date hereof); PROVIDED that at
the time of issuance of such Exchange Debentures no Default or Event of
Default shall have occurred and be continuing or would result therefrom
on a pro forma basis.
6.3 LIENS AND RELATED MATTERS.
(a) PROHIBITIONS ON LIENS. Create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or
any income or profits therefrom, except:
(i) Permitted Encumbrances;
(ii) (A) Liens securing purchase money Indebtedness
permitted pursuant to subsection 6.2(c); PROVIDED that such Liens shall
encumber only the assets purchased with the proceeds of such
Indebtedness and (B) Liens securing Capital Leases permitted under
subsection 6.2(c);
(iii) Liens granted pursuant to the Loan Documents;
(iv) Liens on assets listed on Schedule 6.2(d) securing
Indebtedness on Schedule 6.2(d), other than Liens in respect of the
Senior Subordinated Notes and the Preferred Stock.
(b) EQUITABLE LIEN IN FAVOR OF THE LENDERS. Create or assume
any Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens excepted by the provisions of this subsection, unless
the Borrower and its Subsidiaries make or cause to be made effective provision
whereby the Obligations will be secured by such Lien equally and ratably with
any and all other Indebtedness thereby secured as long as any such Indebtedness
shall be secured; PROVIDED that, notwithstanding the foregoing, this covenant
shall not be construed as a consent by the Required Lenders to any creation or
assumption of any such Lien not permitted by the provisions of this subsection.
(c) NO FURTHER NEGATIVE PLEDGES. Except with respect to
specific property encumbered to secure payment of particular Indebtedness
otherwise permitted pursuant to subsections 6.2 and 6.3 or to be sold pursuant
to an executed agreement with respect to an Asset Sale, enter into any agreement
prohibiting (i) the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired or (ii) any incurrence of any
Contingent Obligations.
(d) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO THE
BORROWER. Except as provided herein, or as required by law, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary to (a) pay dividends or
make any other distribution on any of such Subsidiary's capital stock,
partnership interests or other interests, as the case may be, owned by the
Borrower or any Subsidiary of the Borrower, (b) subject to subordination
provisions any
<PAGE> 63
58
payments in respect of any Indebtedness owed to the Borrower or any Subsidiary
of the Borrower, (c) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (d) transfer any of its property or assets to the Borrower or
any Subsidiary of the Borrower.
6.4 INVESTMENTS; JOINT VENTURES. Make or own any Investment,
directly or indirectly, in any Person including any Joint Venture, except:
(a) Investments in Cash and Cash Equivalents;
(b) Consolidated Capital Expenditures and Acquisition Capital
Expenditures otherwise permitted herein;
(c) Investments other than in a Core Business as to which the
aggregate consideration paid or to be paid by the Borrower or its
Subsidiaries shall not exceed $40,000,000;
(d) Investments in effect on the Closing Date as set forth on
Schedule 6.4(d);
(e) Investments by the Borrower in any Subsidiary Guarantor
and Investments by Subsidiaries in the Borrower and in any Subsidiary
Guarantor;
(f) any acquisition (it being understood that, as used in this
paragraph, the term "acquisition" shall mean any acquisition by means
of a purchase of stock or assets or a merger or other similar
transaction (including exercising any option to acquire assets or
Capital Stock) and shall also include a transaction in which a Loan
Party (i) enters into an LMA Agreement with the owner of a television
station, (ii) either makes a loan to, or guarantees a loan made by a
third party to, such owner secured by a Lien on the assets of such
television station and (iii) obtains an option to acquire the FCC
License covering such television station that satisfies the
requirements of clause (v)(B) of this paragraph) not otherwise
permitted under this subsection 6.4 (each such transaction referred to
herein as a "PERMITTED ACQUISITION" and collectively as the "PERMITTED
ACQUISITIONS"), on the following terms and conditions: (i) such
Permitted Acquisition involves the acquisition of a Core Business and
the aggregate consideration paid or to be paid by the Borrower or its
Subsidiaries for any individual Permitted Acquisition shall not exceed
$20,000,000, (ii) after giving effect to such Permitted Acquisition, no
Event of Default or Default shall exist; (iii) the Borrower shall
satisfy the requirements of subsections 5.10 and 5.11 in connection
therewith; (iv) such acquisition shall result in the assets so acquired
being owned by the Borrower or a wholly owned Subsidiary of the
Borrower and, if such Permitted Acquisition involves the acquisition of
a television station, the Borrower or a wholly owned Subsidiary shall
have acquired in connection therewith either (A) the FCC License held
by such Core Business or (B) an option to acquire such FCC License for
a period greater than five years and (v) if such Permitted Acquisition
involves the acquisition of a television station the FCC shall have
approved such acquisition;
<PAGE> 64
59
(g) Preapproved Acquisitions (including exercising any option
to acquire assets or stock); PROVIDED that at the time of such
acquisition no Event of Default shall have occurred and be continuing
or would result therefrom;
(h) Investments by the Borrower or any Subsidiary arising from
the acquisition of any Equivalent Assets in connection with any Asset
Swap, PROVIDED that (i) the cash portion of such Investment satisfies
the requirements for a Permitted Acquisition specified in subsection
6.4(f), (ii) after giving effect to such Investment, no Default or
Event of Default shall have occurred and be continuing or would result
therefrom and (iii) no Asset Swap shall be permitted in any calendar
year if, after giving effect thereto, all the assets transferred by the
Borrower and its Subsidiaries pursuant to Asset Swaps during such
calendar year shall have generated during the immediately preceding
calendar year an aggregate amount of Consolidated Operating Cash Flow
that exceeds 10% of Consolidated Operating Cash Flow of the Borrower
and its Subsidiaries for such immediately preceding calendar year; and
(i) Investments, made solely with Net Cash Proceeds of the
sale or issuance of equity Securities by the Borrower or any Subsidiary
which are not required to be used to make a prepayment pursuant to
subsection 2.6(a) and are not used in connection with any refinancing
of Indebtedness permitted under subsection 6.2, in Unrestricted
Subsidiaries in an aggregate amount not to exceed the sum of (i) the
aggregate amount of Net Cash Proceeds from the sale or issuance of
equity Securities by the Borrower or any Subsidiary that are not
required to be used to make a prepayment pursuant to subsection 2.6(a)
and are not used in connection with any refinancing of Indebtedness
permitted under subsection 6.2 MINUS (ii) $250,000,000, PROVIDED that
at the time of such acquisition no Default or Event of Default shall
have occurred and be continuing or would result therefrom; and
(j) Investments consisting of promissory notes or other
securities issued by a purchaser to the extent the Borrower or any
Subsidiary receives less than 100% cash consideration in an Asset Sale
as permitted by subsection 6.7(b).
6.5 CONTINGENT OBLIGATIONS. Create or become or be liable,
directly or indirectly, with respect to any Contingent Obligation except:
(a) Contingent Obligations incurred pursuant to the Loan
Documents;
(b) Contingent Obligations in respect of Interest Rate
Agreements in a notional amount not in excess of the aggregate
principal amount of the Indebtedness of the Borrower and its
Subsidiaries the interest rate on which is not fixed;
(c) Contingent Obligations resulting from the endorsement of
negotiable instruments for collection in the ordinary course of
business;
(d) Contingent Obligations in respect of Operating Leases;
<PAGE> 65
60
(e) Contingent Obligations in respect of Indebtedness
permitted under subsection 6.2; and
(f) Contingent Obligations in respect of loans by third
parties to owners or holders of options to acquire LMA Television
Stations otherwise permitted by subsection 6.4(j) and in respect of
obligations not exceeding $65,000,000 in aggregate principal amount at
any time outstanding.
6.6 RESTRICTED PAYMENTS. Declare, order, pay, make or set
apart any sum, directly or indirectly, for any Restricted Payment except, so
long as no Event of Default or Default has occurred and is continuing or would
result therefrom:
(a) so long as (i) the Borrower shall have delivered to the
Lender pursuant to subsection 5.1 the financial statements of the
Borrower and its Subsidiaries in respect of the fiscal quarter ended
March 31, 2000, (ii) no Default or Event of Default shall have occurred
and be continuing at such time and (iii) the Leverage Ratio of the
Borrower and its Subsidiaries as of the last day of the most recently
ended calendar quarter is less than 4.50:1.00, the Borrower may pay in
cash annual dividends owed to the holders of the Cumulative Preferred
Stock in accordance with the terms and conditions of the Certificate of
Designation applicable thereto;
(b) Restricted Payments with any proceeds from the issuance of
equity Securities permitted by subsection 6.7(d), which proceeds are
not required to be prepaid pursuant to subsection 2.6(a);
(c) payments under time brokerage agreements and LMA
Agreements; PROVIDED such payments are made in the ordinary course of
business and such agreements are no less favorable to the Borrower or
any Subsidiary, as the case may be, than those that would otherwise be
obtained in an arms-length transaction;
(d) any Subsidiary may make Restricted Payments to the
Borrower or any Subsidiary Guarantor;
(e) any additional redemption in an amount not to exceed
$100,000;
(f) (i) Exchange Debentures issued as interest on other
Exchange Debentures in accordance with the Exchange Debenture Indenture
and (ii) Exchangeable Preferred Stock issued as a dividend on other
Exchangeable Preferred Stock in accordance with its Certificate of
Designation; and
(g) so long as no Default or Event of Default shall have
occurred and be continuing, cash dividends to the holders of the
Cumulative Preferred Stock due on December 31, 1999 and thereafter in
accordance with the terms and conditions of its Certificate of
Designations.
<PAGE> 66
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6.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES. Alter the
corporate, partnership, capital or legal structure of the Borrower or any of its
Subsidiaries or enter into any transaction of merger, or consolidate, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any part of its
business, property or assets (including, without limitation, any of the capital
stock or partnership interests held by such Person in any of its Subsidiaries),
whether now owned or hereafter acquired (other than in the ordinary course of
business), or acquire by purchase, lease or otherwise (in one transaction or a
series of related transactions) all or any part of the business, property or
fixed assets of, or stock or other evidence of beneficial ownership of, any
Person (other than purchases or other acquisitions of inventory, leases,
materials, property and equipment in the ordinary course of business) or agree
to do any of the foregoing at any future time, except:
(a) Consolidated Capital Expenditures and Acquisition Capital
Expenditures;
(b) (i) prior to such time as the Borrower shall have
delivered to the Lender pursuant to subsection 5.1 the financial
statements of the Borrower and its Subsidiaries in respect of the
fiscal quarter ended March 31, 2000, Excluded Asset Sales and the other
Asset Sales specified in the parenthetical phrase included in
subsection 2.6(b) and (ii) thereafter, any Asset Sale so long as the
Net Cash Proceeds of such Asset Sale are applied as required by
subsection 2.6(b); PROVIDED that, in the case of clauses (i) and (ii),
(x) the consideration received shall be an amount at least equal to the
fair market value thereof; (y) at least 85% (or 75% in the case of
Asset Sales excluded from the prepayment obligations of subsection
2.6(b)) of the consideration received shall be cash or Cash
Equivalents; and (z) no Default or Event of Default shall have occurred
and be continuing or would result therefrom;
(c) Investments permitted by subsection 6.4; and
(d) the issuance of equity or debt Securities of the Borrower
and its Subsidiaries as otherwise permitted by this Agreement;
(e) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (PROVIDED that the Borrower
shall be the continuing or surviving corporation) or with or into any
wholly owned Subsidiary (PROVIDED that a wholly owned Subsidiary
Guarantor shall be the continuing or surviving corporation);
(f) any Subsidiary of the Borrower may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Borrower
or any wholly owned Subsidiary Guarantor and, in the event such
Subsidiary shall so Dispose of all of its assets, such Subsidiary may
liquidate, wind up or dissolve; and
(g) any Asset Swap, so long as (i) after giving effect thereto
no Default or Event of Default shall have occurred and be continuing,
(ii) the Borrower shall have given the Administrative Agent prior
notice thereof, (iii) the consideration received therefor shall be at
least equal to the fair market value thereof, (iv) if and to the extent
<PAGE> 67
62
that the Borrower or any Subsidiary receives consideration for the
assets transferred by it in connection with such Asset Swap that is in
addition to the Equivalent Assets received in exchange therefor, such
Asset Swap shall be deemed to be an Asset Sale and shall be permitted
only if the provisions of subsections 2.6(a) and 6.7(b)(y) shall be
complied with in connection therewith and (v) no Asset Swap shall be
permitted in any calendar year if, after giving effect thereto, all the
assets transferred by the Borrower and its Subsidiaries pursuant to
Asset Swaps during such calendar year shall have generated during the
immediately preceding calendar year an aggregate amount of Consolidated
Operating Cash Flow that exceeds 10% of Consolidated Operating Cash
Flow of the Borrower and its Subsidiaries for such immediately
preceding calendar year.
6.8 FISCAL YEAR. Change its fiscal year-end from December 31
without the consent of the Required Lenders.
6.9 SALES AND LEASE-BACKS. Become or remain liable, directly
or indirectly, as lessee or as guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real or personal or mixed) whether now owned or hereafter acquired, (i) which
the Borrower or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than the Borrower or any of its
Subsidiaries), or (ii) which the Borrower or any such Subsidiary of the Borrower
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by the Borrower or any such Subsidiary
of the Borrower to any Person (other than the Borrower or one of its
Subsidiaries) in connection with such lease.
6.10 SALE OR DISCOUNT OF RECEIVABLES. Sell, directly or
indirectly, any of their notes or accounts receivable other than in the ordinary
course of business.
6.11 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Enter into
or permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service),
directly or indirectly, with any holder (other than any Subsidiary directly or
indirectly wholly owned by the Borrower) of 5% or more of any class of equity
Securities or other interests of the Borrower or any of its Subsidiaries or with
any Affiliate of the Borrower or of any such holder, as the case may be, on
terms that, taken as a whole, are less favorable to the Borrower or any
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate.
6.12 DISPOSAL OF SUBSIDIARY STOCK. Except as permitted by
subsection 6.7:
(i) directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock,
partnership interests, or other equity securities of (or warrants,
rights or options to acquire shares or other equity securities of) any
of its Subsidiaries, except to qualify directors if required by
applicable law; or
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(ii) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or dispose of
any shares of capital stock, partnership interests, or other securities
of (or warrants, rights or options to acquire shares or other
securities of) any of its Subsidiaries, except to the Borrower, a
Subsidiary of the Borrower, or to qualify directors if required by
applicable law.
6.13 CONDUCT OF BUSINESS. Engage in any business other than
(i) a Core Business, (ii) a non Core business (but only as a result of an
Investment permitted by subsection 6.4(c)), (iii) the ownership of Unrestricted
Subsidiaries acquired in connection with Investments permitted by subsection
6.4(i) and (iv) such other lines of business as may be consented to by the Agent
and the Required Lenders; PROVIDED that in accordance with Section 5.10 neither
the Borrower nor any of its Subsidiaries (other than a License Subsidiary) shall
directly own or hold any FCC License applicable to its business, it being
understood that all such interests, if owned, shall be owned and maintained by
the License Subsidiaries. Notwithstanding anything to the contrary in this
Agreement, including, without limitation, any references to "Subsidiaries", (A)
neither the Borrower nor any of its Subsidiaries shall except as permitted by
subsection 6.4 and in accordance with Section 5.11, create or acquire any
interest in a Subsidiary after the Closing Date other than maintenance of their
interests in their respective Subsidiaries as of the Closing Date, and (B) no
License Subsidiary of the Borrower shall engage in any business or incur any
liabilities other than the ownership of its FCC Licenses and the execution,
delivery and performance of the Loan Documents and Related Documents to which it
is a party and activities necessary to the foregoing.
6.14 AMENDMENTS OR WAIVERS OF RELATED DOCUMENTS AND CHARTER
DOCUMENTS; LIMITATION ON OPTIONAL PAYMENTS.
(a) Agree to any amendment to, or waive any of its rights
under, any of the Related Documents (other than non-material amendments or
waivers which individually, or together with all other amendments, waivers or
changes made, would not be materially adverse to the Borrower or any of its
Subsidiaries or the Agent or any Lender), without obtaining the written consent,
not to be unreasonably withheld, of the Agent and the Required Lenders to such
amendment or waiver.
(b) Agree to any amendment to, or waive any of its rights
under, its articles of incorporation (including but not limited to the
Certificate of Designations), by-laws, partnership agreement or other documents
relating to its capital stock or other equity interests of the Borrower or its
Subsidiaries (other than amendments or waivers which individually, or together
with all other amendments, waivers or changes made, would not be materially
adverse to the Borrower or any of its Subsidiaries or the Agent or any Lender)
without, in each case, obtaining the written consent of the Agent and the
Required Lenders to such amendment or waiver.
(c) Other than with the Net Cash Proceeds of the sale or
issuance of equity Securities not required to be used to make a prepayment
pursuant to subsection 2.6(a) or in connection with any refinancing of
Indebtedness permitted under subsection 6.2, make any
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optional payment or prepayment on or redemption, defeasance or purchase of any
Indebtedness (excluding the Obligations, but including but not limited to the
Exchangeable Preferred Stock, Exchange Debentures, Senior Subordinated Notes or
Subordinated Debt), or amend, modify or change, or consent or agree to any
amendment, modification or change to, any of the terms relating to (i) any
Indebtedness other than the Obligations and the preferred stock (other than any
such amendment, modification or change (including, without limitation, pursuant
to a waiver) which would extend the maturity or reduce the amount of any payment
of principal thereof or which would reduce the rate or extend the date for
payment of interest thereon or pursuant to Section 8.01 of the Senior
Subordinated Note Indenture or Section 8.01 of the Exchange Debenture
Indenture), or (ii) the subordination of the Senior Subordinated Notes, the
Exchange Debentures or Subordinated Debt.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Failure of any Loan Party to pay any installment of
principal of any Loan when due in accordance with the terms hereof; or
any Loan Party shall fail to pay any interest on any Loan when due or
any other amount due pursuant to the Loan Documents within two Business
Days after the date due in accordance with the terms thereof or hereof;
or
(b) Failure of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary to pay when due (x) any
principal or interest on any Indebtedness (other than Indebtedness
referred to in paragraph (a) of this Section and intercompany debt) in
an individual principal amount of $5,000,000 or more or items of
Indebtedness with an aggregate principal amount of $5,000,000 or more
or (y) any Contingent Obligation in an individual principal amount of
$5,000,000 or more or Contingent Obligations with an aggregate
principal amount of $5,000,000 or more, in each case beyond the end of
any grace period PROVIDED therefor; or
(c) Breach or default of any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary with respect to
any other material term of (i) (x) any evidence of any Indebtedness
(other than intercompany debt) in an individual principal amount of
$5,000,000 or more or items of Indebtedness (other than intercompany
debt) with an aggregate principal amount of $5,000,000 or more or any
Contingent Obligation in an individual principal amount of $5,000,000
or more or Contingent Obligations with an aggregate principal amount of
$5,000,000 or more or (y) any loan agreement, mortgage, indenture or
other agreement relating thereto, if the effect of such failure,
default or breach is to cause, or to permit the holder or holders of
that Indebtedness or Contingent Obligation (or a trustee on behalf of
such holder or holders) then to cause, that Indebtedness or Contingent
Obligation to become or be declared due prior to its stated maturity
(or the stated maturity of any underlying obligation, as the case may
be) or (ii) the Related Documents which could reasonably be expected to
have a Material Adverse Effect; or
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(d) Failure of the Borrower to perform or comply with any term
or condition contained in subsection 5.2 or Section 6; or
(e) Any representation, warranty, certification or other
statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by any Loan Party in writing
pursuant hereto or in connection herewith or therewith, shall be false
in any material respect on the date as of which made; or
(f) Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or the other Loan
Documents, applicable to that Loan Party, other than those referred to
elsewhere in this Section 7 and such default shall not have been
remedied or waived within 30 days after the earlier of (i) receipt by
the Borrower of notice from any Lender or the Agent of such default or
(ii) the Borrower's knowledge of such default; or
(g) (i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of any Loan Party or any
of their respective Subsidiaries or any Unrestricted Subsidiary in an
involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall
be granted under any applicable federal or state law; or (ii) an
involuntary case is commenced against any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Loan
Party or any of their respective Subsidiaries or any Unrestricted
Subsidiary, or over all or a substantial part of its property, shall
have been entered; or the involuntary appointment of an interim
receiver, trustee or other custodian of any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary for all or a
substantial part of its property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part
of the property of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary, and the continuance of any
such event in clause (ii) for 60 days unless dismissed, bonded or
discharged; or
(h) Any Loan Party or any of their respective Subsidiaries or
any Unrestricted Subsidiary shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by
any Loan Party or any of their respective Subsidiaries or any
Unrestricted Subsidiary of any assignment for the benefit of creditors;
or
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(i) The inability or failure of any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary, or the
admission by any Loan Party or any of their respective Subsidiaries or
any Unrestricted Subsidiary in writing of its inability, to pay its
debts as such debts become due; or the Board of Directors (or any
committee thereof) of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary adopts any resolution or
otherwise authorizes action to approve any of the actions referred to
in this clause (i); or
(j) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in
excess of $5,000,000, or (ii) in the aggregate at any time an amount in
excess of $5,000,000, and in either case not adequately covered by
insurance as to which the insurance company has acknowledged coverage
shall be entered or filed against any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary or any of their
respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 30 days or in any event later than five days
prior to the date of any proposed sale thereunder; or
(k) Any order, judgment or decree shall be entered against any
Loan Party or any of their respective Subsidiaries decreeing a
dissolution or split-up of any Loan Party or any of their respective
Subsidiaries, and such order shall remain undischarged or unstayed for
a period in excess of 30 days; or
(l) There occurs one or more ERISA Events which singly or in
the aggregate results in liability to the Borrower or any ERISA
Affiliate in excess of $1,000,000; or there exists, as of any valuation
date for a Pension Plan, an excess of the actuarial present value
(determined on the basis of reasonable assumptions employed by the
independent actuary for such Pension Plan) of the benefit liabilities
(as defined in Section 4001(a)(16) of ERISA), whether or not vested
over the fair market value of the assets of such Pension Plan,
individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which
there is no such excess) which exceeds $1,000,000; or
(m) Any Guaranty for any reason, other than the satisfaction
in full of all Obligations, ceases to be in full force and effect
(other than in accordance with its terms) or is declared to be null and
void, or any Loan Party denies that it has any further liability,
including without limitation with respect to future advances by the
Lenders, under any Loan Document to which it is a party, or gives
notice to such effect; or
(n) Any Security Document shall, at any time, cease to be in
full force and effect (other than by reason of a release of Collateral
in accordance with the terms thereof) or shall be declared null and
void, or the validity or enforceability thereof shall be contested by
any Loan Party or the Agent shall not have or cease to have a valid and
perfected first priority security interest in the Collateral other than
the failure of the Agent or any Lender to take any action within its
control; or
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(o) Any FCC License shall be (i) canceled, terminated or
finally denied renewal for any reason; or (ii) renewed on terms which
materially adversely affect the economic or commercial value or
usefulness thereof; or
(p) Any event having a Material Adverse Effect shall occur and
such default shall not have been remedied or waived within 30 days
after receipt by the Borrower of notice from any Lender or the Agent of
such default; or
(q) The Borrower or any of its Subsidiaries shall fail to
comply in all material respects with the requirements of any FCC
consent obtained to consummate any acquisition; or
(r) Any of the following shall occur: (i) any Subsidiary of
the Borrower shall issue or have outstanding any Capital Stock (or any
security convertible into any of its Capital Stock) which is not
pledged to the Agent for the benefit of the Lenders in a manner
reasonably satisfactory to the Required Lenders, except to the extent
listed on Schedule 7(r) or waived by the Agent or the Lenders hereunder
in accordance with the terms hereof; (ii) the Borrower or a Subsidiary
of the Borrower shall fail to own and control, of record and
beneficially, 100% of the issued and outstanding Capital Stock of each
License Subsidiary free and clear of all Liens (except Liens created
pursuant to the Borrower Pledge Agreement or the Subsidiaries Pledge
Agreement), except to the extent listed on Schedule 7(r) or waived by
the Agent or the Lenders hereunder in accordance with the terms hereof;
(iii) Paxson (or, after his death, collectively, his heirs or estate or
both) shall cease to own and control, of record and beneficially,
Capital Stock of the Borrower possessing the voting power under normal
circumstances to cast 51% or more of the total votes entitled to be
cast for the election of directors of the Borrower and (iv) Paxson (or,
after his death, collectively, his heirs or estate or both) shall no
longer have the voting power or the contractual right to elect a
majority of the Borrower's directors; or
(s) if Network Start-Up shall not have occurred and be
continuing on September 1, 1998 or shall cease to exist at any time
thereafter;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraphs (g), (h) or (i) of this Section with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Required Lenders, the Agent may, or upon the request
of the Required Lenders, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Agent may, or upon the request of the Required Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
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as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
SECTION 8. THE AGENT
8.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
8.2 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
8.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
8.4 RELIANCE BY THE AGENT. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts
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69
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
8.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; PROVIDED that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
8.6 NON-RELIANCE ON THE AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
<PAGE> 75
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8.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Commitment Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Loans and all
other amounts payable hereunder.
8.8 THE AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the Agent
hereunder and under the other Loan Documents. With respect to the Loans made by
it, the Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
8.9 SUCCESSOR THE AGENT. The Agent may resign as the Agent
upon 10 days' notice to the Lenders and the Borrower and the Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to the Borrower and Agent and signed by
Required Lenders. If the Agent shall resign or be removed as the Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower, whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent, and the term
"the Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as the Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Loans. After
any retiring the Agent's resignation as the Agent, the provisions of this
Section 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under this Agreement and the other Loan
Documents.
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71
SECTION 9. MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Agent may, from time to time, (a) enter into with the
Borrower written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Agent, as the case may be, may specify
in such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; PROVIDED,
HOWEVER, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any
scheduled payment of any Loan or of any scheduled installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the aggregate amount or extend the
expiration date of any Lender's Commitments, in each case without the consent of
each Lender affected thereby, or (ii) amend, modify or waive any provision of
this subsection or reduce the percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents or
release all or substantially all of the Collateral, in each case except in
connection with any disposition of assets permitted by subsection 6.7, and in
each case without the written consent of all the Lenders, or (iii) amend, modify
or waive any provision of Section 8 without the written consent of the then
Agent. Any such waiver and any such amendment, supplement, modification or
release shall apply equally to each of the Lenders and shall be binding upon the
Borrower, the Lenders, the Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders and the Agent shall be restored to
their former positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
9.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower and the Agent, and as set forth in Schedule
1.1A in the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto:
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The Borrower: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Arthur Tek
Fax: 561-659-4252
with a copy to Anthony Morrison at the
foregoing address and to fax no: 561-659-4754
The Agent: Union Bank of California, N.A.
445 South Figueroa Street
Los Angeles, California 90071-1602
Attention: Christine P. Ball
Fax: 213-236-5747
with a copy to Bryan Petermann at the
foregoing address
PROVIDED that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 2.5, 2.6, 2.7, 2.12 or 9.6 shall not be effective
until received.
9.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
9.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to
pay or reimburse the Agent for all its reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent, (b) to pay or reimburse each
Lender and the Agent for all its costs and expenses incurred in connection with
the enforcement or preservation of any rights under this Agreement, the other
Loan Documents and any such other documents, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender and of counsel to the Agent, (c) to pay,
indemnify, and hold each Lender and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes (which are
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Non-Excluded Taxes), if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or administration
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other documents, and (d) to
pay, indemnify, and hold each Lender and the Agent harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any of
its properties or assets (all the foregoing in this clause (d), collectively,
the "indemnified liabilities"), PROVIDED, that the Borrower shall have no
obligation under this subsection 9.5 to the Agent or any Lender with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Agent or any such Lender. The agreements in this subsection shall survive
repayment of the Loans and all other amounts payable hereunder.
9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("PARTICIPANTS") participating interests in any
Loan owing to such Lender, any Commitment of such Lender or any other interest
of such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. The Borrower agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, PROVIDED that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 9.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.14, 2.15, 2.16 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; PROVIDED that, in the case of subsection
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2.15, such Participant shall have complied with the requirements of said
subsection and PROVIDED, FURTHER, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any affiliate thereof or, with the consent
of the Borrower and the Agent (which in each case shall not be unreasonably
withheld), to an additional bank or financial institution ("an ASSIGNEE") all or
any part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit H, executed by such Assignee, such assigning Lender (and, in the case of
an Assignee that is not then a Lender or an affiliate thereof, by the Borrower
and the Agent) and delivered to the Agent for its acceptance and recording in
the Register PROVIDED that (i) no such assignment to an Assignee (other than any
Lender or any affiliate thereof) shall be in an aggregate principal amount of
less than $5,000,000 (other than in the case of an assignment of all of a
Lender's interests under this Agreement) and (ii) after giving effect to any
such assignment (other than an assignment of all of a Lender's interests under
this Agreement), the assigning Lender (together with any Lender which is an
affiliate of such assigning Lender) shall retain Loans and/or Commitments
aggregating not less than $5,000,000. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this subsection, the
consent of the Borrower shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be required to be
executed and delivered by the Borrower, for any assignment which occurs at any
time when any of the events described in paragraphs (g), (h) or (i) of Section 7
shall have occurred and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at
the address of the Agent referred to in subsection 9.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amounts of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders may (and, in the case of any Loan or
other obligation hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto
<PAGE> 80
75
being made in the Register. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the Agent)
together with payment by such Lender or Assignee to the Agent of a registration
and processing fee of $2,500 the Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee that agrees to be bound by the terms and conditions of
subsection 9.15 (each, a "TRANSFEREE") and any prospective Transferee any and
all financial information in such Lender's possession concerning the Borrower
and its Affiliates which has been delivered to such Lender by or on behalf of
the Borrower pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
9.7 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED
LENDER") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in paragraphs (g), (h) or (i) of Section 7, or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, such benefitted Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
PROVIDED by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and
<PAGE> 81
76
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Agent after any such set-off and
application made by such Lender, PROVIDED that the failure to give such notice
shall not affect the validity of such set-off and application.
9.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This Agreement shall become effective when counterparts hereof shall
have been executed by each of the parties hereto. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
9.9 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such
<PAGE> 82
77
action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead
or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 9.2 or
at such other address of which the Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
9.13 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between the Agent and the Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
9.15 CONFIDENTIALITY. Each Lender agrees to keep confidential
all non-public information provided to it by the Borrower pursuant to this
Agreement that is designated by the Borrower in writing as confidential;
PROVIDED that nothing herein shall prevent any Lender from disclosing any such
information (i) to the Agent or any other Lender, (ii) to any Transferee, (iii)
to its employees, directors, agents, attorneys, accountants and other
professional advisors, (iv) upon the request or demand of any Governmental
Authority having jurisdiction over such Lender, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of
<PAGE> 83
78
Law, (vi) which has been publicly disclosed other than in breach of this
Agreement, (vii) in connection with the exercise of any remedy hereunder or
(viii) to any direct or indirect contractual counterparty in swap agreements or
such contractual counterparty's professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 9.15).
9.16 EFFECT OF AMENDMENT AND RESTATEMENT OF THE EXISTING
CREDIT AGREEMENT. On the Closing Date, the Existing Credit Agreement shall be
amended, restated and superseded in its entirety. The parties hereto acknowledge
and agree that (a) this Agreement and the other Loan Documents executed and
delivered in connection herewith do not constitute a novation, payment and
reborrowing, or termination of the "Obligations" (as defined in the Existing
Credit Agreement) under the Existing Credit Agreement as in effect prior to the
Closing Date; (b) such "Obligations" are in all respects continuing (as amended
and restated hereby) with only the terms thereof being modified as provided in
this Agreement; and (c) the Liens and security interests as granted under the
Security Documents securing payment of such "Obligations" are in all respects
continuing and in full force and effect and secure the payment of the
Obligations (as defined in this Agreement).
9.17 REDEMPTION OF SENIOR SUBORDINATED NOTES. Union Bank of
California, N.A. ("UBOC") shall communicate to the Borrower prior to April 1,
1999 the terms and conditions, if any, on which UBOC would assist the Borrower
in the refinancing of the Senior Subordinated Notes (which may occur on or about
October 1, 1999). The Borrower shall provide UBOC with any information regarding
the Borrower and its Subsidiaries reasonably requested by UBOC with regard to
such communication. Neither UBOC nor any other party shall have any obligations
or liabilities under this subsection 9.17 (nor shall the Borrower, its
Subsidiaries or any other party have any rights or remedies under this
subsection 9.17) and no provision of this subsection 9.17 nor any other
provision of this Agreement shall be deemed to constitute a commitment by any
party to provide or assist in the refinancing of the Senior Subordinated Notes
or any other financing (except for the Commitments on the terms and conditions
set forth herein).
<PAGE> 84
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PAXSON COMMUNICATIONS
CORPORATION
By:
----------------------------------------
Title:
UNION BANK OF CALIFORNIA, N.A.,
as the Agent and as a Lender
By:
----------------------------------------
Title:
<PAGE> 85
THE ING CAPITAL SENIOR SECURED HIGH
INCOME FUND, L.P.
By: ING Capital Advisors Inc.,
as Investment Advisor
By:
----------------------------------------
Title:
ARCHIMEDES FUNDING LLC
By: ING Capital Advisors Inc.,
as Collateral Manager
By:
----------------------------------------
Title:
KZH-ING 2 CORPORATION
By:
----------------------------------------
Title:
<PAGE> 86
PROTECTIVE ASSET MANAGEMENT, L.L.C.
By: , its manager
---------------------------
By:
----------------------------------------
Title:
<PAGE> 87
CITY NATIONAL BANK
By:
----------------------------------------
Title:
<PAGE> 1
Exhibit 4.6
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF [ ] OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO [ ] OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, [ ], HAS AN INTEREST
HEREIN.
CUSIP [ ]
PAXSON COMMUNICATIONS CORPORATION
No.[ ]
[ ] Shares
This certifies that [ ] is the owner of [ ] fully paid and
non-assessable shares of the 13.25% Cumulative Junior Exchangeable Preferred
Stock, par value $0.001 per share, of Paxson Communications Corporation (the
"Corporation"), a Delaware corporation. The shares represented by this
Certificate are transferable only on the stock transfer books of the Corporation
by the holder of record hereof, or by his duly authorized attorney or legal
representative, upon the surrender of this Certificate properly endorsed. This
Certificate is not valid until countersigned and registered by the Corporation's
transfer agent and registrar.
<PAGE> 2
-2-
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be executed manually or by the facsimile signatures of its duly
authorized officers and has caused its corporate seal to be hereunto affixed.
Dated: [ ], 1998
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------------------
Name:
Title:
(Seal)
By:
-------------------------------------------
Name:
Title:
Countersigned and Registered:
FIRST UNION NATIONAL BANK,
CHARLOTTE, NORTH CAROLINA,
Transfer Agent and Registrar
By:
-------------------------------------------
Authorized Signature
<PAGE> 3
-3-
PAXSON COMMUNICATIONS CORPORATION
This Certificate and the shares represented hereby are issued
and shall be subject to all the provisions of the Certificate of Incorporation
and ByLaws of the Corporation and the amendments from time to time made thereto,
copies of which are on file at the principal office of the Corporation, to all
of which the holder of this Certificate assents by acceptance hereof.
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right
of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - _______________________ Custodian ______________________
(Cust) (Minor)
under Uniform Gifts to Minors Act _______________________________________
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE> 4
-4-
FOR VALUE received, ____________________________ hereby sell,
assign and transfer unto ______________________________________________________
_______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS & ASSIGNEE
_______________________________________________________________________________
_______________________________________________________ Shares of the preferred
stock represented by the within Certificate and do hereby irrevocably constitute
and appoint ____________ _________________________________________________
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated:________________________ ____________________________________________
-------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS AGREEMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: -------------------------------------------
NOTICE: SIGNATURE(S) SHOULD BE GUARANTEED BY
A QUALIFIED MEDALLION GUARANTEE MEMBER AND
MUST CORRESPOND EXACTLY WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE.
<PAGE> 1
Exhibit 10.197
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of this day of June, 1998, (this
"Agreement") by and between Paxson Communications Corporation, a Delaware
corporation with its principal place of business at 601 Clearwater Park Road,
West Palm Beach, Florida 33401-6233 (the "Company") and Jeffrey Sagansky, an
individual, currently residing at 53 East 80th Street, New York, New York 10021
(the "Executive") (collectively, the "Parties").
WHEREAS, the Company desires to employ the Executive as President and Chief
Executive Officer ("CEO"), and the Parties desire to enter into this agreement
to secure the Executive's employment during the term hereof, all on the terms
and conditions set forth herein.
NOW, THEREFORE, the Parties agree as follows:
1. TITLE. The Company hereby employs the Executive and the Executive
agrees to serve the Company as President and CEO, headquartered
principally in the Company's West Palm Beach, Florida offices, on the
terms and conditions hereinafter set forth.
2. EMPLOYMENT TERM AND LOCATION. The Executive's employment by the Company
pursuant to this Agreement will commence May 14, 1998, and continue
through June 30, 2002, unless sooner terminated pursuant to Paragraph 8
hereof (the "Term of Employment"). During the first twelve months of
the Term of Employment, the Executive shall reside principally in the
West Palm Beach, Florida area. Following the first anniversary of this
Agreement, the Executive may reside in the New York, New York
metropolitan area but shall commute to the Company's West Palm Beach,
Florida offices on a schedule mutually acceptable to the Executive and
the Chairman.
3. DUTIES. Executive shall report directly and solely to the Chairman of
the Board of the Company (the "Chairman"). The Executive shall have all
of the power, authority and responsibilities customarily attendant to
the position of President and CEO, including the supervision and
responsibility for all operations and management of the Company, its
subsidiaries, its affiliates and any entity controlled by the Company
(the "Paxson Group"). All employees of the Paxson Group, other than the
Chairman, shall report to the Executive or to such other managers as
the Executive shall designate. Consistent with the position of
President and CEO, the Executive shall work under the direction and
control of the Chairman. (The Executive acknowledges and understands
that he will be sharing the title of President with the
<PAGE> 2
now current President and Chief Operating Officer, James B. Bocock, but
that Mr. Bocock will report directly and only to the Executive.) The
Company agrees to use its reasonable efforts to ensure that the
Executive is elected to the Board of Directors of the Company and to
the Executive Committee of the Board of Directors, if and when the
Board establishes such a committee. The Company agrees that during the
Term of Employment Mr. Bocock shall not serve as a member of the Board
of Directors unless the Executive also is a member of the Board of
Directors.
The Executive agrees to render his services under this Agreement
loyally and faithfully, to the best of his abilities and in substantial
conformance with all laws and all written Company rules and policies
which apply to senior executives and of which the Executive has notice.
Except as expressly modified herein, the Executive shall be subject to
all of the Company's policies, including conflicts of interest, as well
as the following:
(a) The Executive will comply with all Company and professional
standards governing the Executive's objectivity in the
performance of the Executive's duties. The Executive will not,
without the prior approval of the Chairman or the Compensation
Committee of the Company's Board of Directors (the
"Compensation Committee"), accept any gift, compensation, or
gratuity (which excludes business meals and entertainment
received by the Executive in the ordinary course of business)
from any person or entity with which the Paxson Group or any
of their broadcast properties is or may be in competition or
in any instance where there is a stated or implied expectation
of favorable treatment of that person or entity. The Executive
will not, without the prior written approval of the Chairman
or the Compensation Committee, take advantage of any business
opportunity or situation or engage in any enterprise or
venture of which the Paxson Group has an interest on his or
her own behalf, if said business opportunity or situation,
enterprise or venture is related in any material way to the
business of the Paxson Group.
(b) In performing his duties under this Agreement, the Executive
shall conduct himself with due regard to social conventions,
public morals and standards of decency, and will not cause or
permit any situation or occurrence which would tend to
degrade, scandalize, bring into public disrepute, or otherwise
lower the community standing of the Executive, or the
Company's public image; provided that this clause (b) shall
not apply to conduct after the date Lowell W. Paxson ceases to
own or control more than fifty percent (50%) of the
outstanding voting interests of the Company.
4. (a) BASE SALARY. The Company shall pay the Executive a base salary
(the "Base Salary"), to be paid on the same payroll cycle as
other executive officers of
2
<PAGE> 3
the Company, at an initial annual rate of $600,000. The Base
Salary shall be increased annually, effective July 1 of each
year beginning in 1999 and thereafter during the Term of
Employment, by an amount equal to 10% of the Base Salary in
effect for the most recently ended twelve months (i.e.,
cumulatively).
(b) ANNUAL BONUS. In addition to the Base Salary, the Executive
shall be eligible to earn a bonus for each of the whole or
partial calendar years during the Term of Employment, subject
to (i) the satisfaction of certain annual performance
benchmarks established by the Compensation Committee of the
Board of Directors, and (ii) the Executive being actively
employed by the Company on December 31 of such calendar year,
unless the Executive's employment has terminated due to the
Executive's death, Disability or other than for Good Cause,
pursuant to subparagraphs (a), (d) or (e) of Paragraph 8. The
bonus shall be equal to 50%, 100% or 200% of the Base Salary
paid to the Executive in the preceding calendar year, with the
applicable percentage dependent upon the attainment of certain
benchmarks. For 1998, the benchmarks shall be the Company's
attainment of total revenue, as stated in the Company's
audited financial reports, of $160 million, $170 million or
$200 million, respectively. With respect to future years, the
benchmarks established by the Compensation Committee with
respect to the bonus for the Chairman shall be applied to the
bonus for the Executive. For calendar year 2002, the
benchmarks for the period ending on June 30, 2002, shall be
50% of the benchmarks established by the Compensation
Committee with respect to the bonus for the Chairman for
calendar year 2002. The bonus will be payable within the first
six months of the calendar year following the year to which
the bonus applies, provided that the bonus for the six month
period ending June 30, 2002, shall be paid no later than July
31, 2002. In the event the Compensation Committee fails to
establish new benchmarks for the Chairman, the benchmarks for
the Executive shall remain at those last set for the Chairman.
No employee of the Company, other than the Chairman, shall be
entitled to a larger annual performance bonus from the Company
(except for calendar years 1998 and 2002). Without limiting
the foregoing, nothing shall preclude the Executive from
receiving an additional cash bonus, determined from time in
the sole discretion of the Compensation Committee of the Board
of Directors.
3
<PAGE> 4
(c) OPTIONS. The Company shall grant the Executive non-qualified
stock options for 1,200,000 shares of Class A common stock of
the Company, at an exercise price of $7.25 per share. The
options shall vest according to the following schedule: June
30, 1999 -- 30%, June 30, 2000 -- 55%, June 30, 2001 -- 80%,
and June 30, 2002 -- 100% in accordance with the terms of a
Stock Option Agreement, substantially in the form attached
hereto as Exhibit 1, and once vested shall be exercisable any
time prior to May 13, 2008. The Company shall adopt a stock
option plan under which these stock options may be granted
within ninety (90) days of the date this Agreement is
executed. The Executive agrees to execute a Stock Option
Agreement, substantially in the form attached hereto as
Exhibit 1, upon grant of the options.
(d) CARRIED INTERESTS. The Company hereby gives the Executive a
carried interest in all consideration of any kind received by
or credited to the Paxson Group (i) with respect to any and
all programming produced by or for the Company, d/b/a Pax Net,
Inc., or its successors and assigns, the production of which
is committed to development or placed in development or
ordered or committed during the Term of Employment, and (ii)
derived from such programming or any rights therein created
during or after the Term of Employment, including sequels,
subsequent seasons or partial season orders, feature film
versions, merchandising, licensing, and revenue, (iii) offset
by any returns, refunds, credits, or rebates attributable to
the revenue from such programming or rights (the "Carried
Interest Revenue"). For programming delivered by broadcast or
cable television, the carried interest shall be equal to 5% of
the difference of the Carried Interest Revenue less guild or
union residuals. For all uses of programming, other than
delivery by broadcast or cable television, the carried
interest shall be equal to 5% of the difference of the Carried
Interest Revenue less the following expenses: (i) guild or
union residuals, (ii) other contractually required payments to
talent (including producers, directors and the like), (iii)
unrelated (to Paxson Group) third party distribution fees
actually paid to or deducted by independent third parties
(including commissions and agency fees), (iv) direct
out-of-pocket costs expended by the Paxson Group to unrelated
third parties to distribute (but not to produce or finance)
said programming, and (v) state and local taxes (if any)
applicable to the distribution of such programming. This
carried interest shall have a perpetual term and shall be
nonforfeitable. The Company shall provide to the Executive not
less than twice per year, at six month accounting intervals
determined by the Company, a detailed accounting of the
Carried Interest Revenue and the allowable deductions
therefrom, together with payment of the carried interest
through the applicable accounting period. Executive shall have
the right, not more frequently than annually, to examine the
Company's books and records during normal business hours, at
the
4
<PAGE> 5
Company's headquarters or such other location mutually
acceptable to the Parties, so that the Executive can verify
the proper calculation of his carried interest payments.
(e) WITHHOLDING. The Company will have the right to withhold from
payments otherwise due and owing to the Executive, an amount
sufficient to satisfy any required federal, state, and/or local
income and payroll taxes or as required to satisfy any or court
order or lien imposed by the Internal Revenue Service.
5. EMPLOYEE BENEFITS. During the Term of Employment, the Executive shall
be eligible to participate in all employee benefit plans and
arrangements sponsored or maintained by the Company for the benefit of
its senior executive group (which for this purpose means any one or
more senior executives, excluding the Chairman), including, without
limitation, all group insurance plans (term life, medical and
disability) and retirement plans, as long as any such plan or
arrangement remains generally applicable to its senior executive group.
The Executive shall be entitled to four weeks of vacation for each
twelve month period of employment; the Executive may take vacation in
accordance with Company policy, consistent with the best interests of
the Company.
6. BUSINESS EXPENSES. The Executive shall be reimbursed for all reasonable
expenses incurred by him in the discharge of his duties, including, but
not limited to, expenses for entertainment and travel, provided the
Executive shall account for and substantiate all such expenses in
accordance with the Company's written policies for its senior executive
group (which for this purpose means any one or more senior executives,
excluding the Chairman). Executive shall be entitled to travel via
first class air transportation.
7. FREEDOM TO CONTRACT. The Executive represents and warrants that he has
the right to enter into this Agreement, is eligible for employment by
the Company and that no other written or verbal agreements exist which
would be in conflict with or prevent performance of any portion of this
Agreement. The Executive further agrees to hold the Company harmless
from any and all liability arising out of any prior contractual
obligations entered into by the Executive. The Executive represents and
warrants that he has not made and will not make any contractual or
other commitments that would conflict with or prevent his performance
of any portion of this Agreement or conflict with the full enjoyment by
the Company of the rights herein granted.
5
<PAGE> 6
8. TERMINATION. Notwithstanding the provisions of Paragraph 2 of this
Agreement, the Executive's employment under this Agreement and the Term
of Employment hereunder shall terminate on the earliest of the
following dates:
(a) DEATH. Upon the date of the Executive's death. In such event,
the Company shall pay to the Executive's legal representatives
or named beneficiaries (as the Executive may designate from
time to time in a writing delivered to the Company), (x) the
Executive's Base Salary in effect on the date of death for a
twelve (12) month period following the date of the Executive's
death (payable in accordance with the Company's normal payroll
practices during such period), plus (y) any bonus earned but
not paid as of the date of death, plus (Z) a pro rata bonus for
the calendar year in which the Executive died equal to the
bonus the Executive would have earned for such year if he had
remained actively employed with the Company through the end of
such calendar year (or through June 30, 2002, if earlier) and
had continued to receive his Base Salary through the end of
such period multiplied by a fraction, the numerator of which is
the total number of days of the year which have lapsed as of
the date of his death and the denominator of which is 365.
(b) GOOD CAUSE. Subject to the notice and cure provisions set forth
below, upon the date specified in a written notice from the
Board of Directors terminating the Executive's employment for
"Good Cause," consistent with the provisions of this
subparagraph (b). The term "Good Cause" as used in this
Agreement shall mean the occurrence of any of the following
events:
(i) the Executive's arrest for the commission of (A) a felony,
(B) any criminal act with respect to the Executive's employment
(including any criminal act involving a violation of the
Communications Act of 1934, as amended, or regulations
promulgated by the Federal Communications Commission), or (C)
any act contrary to law that materially threatens to result in
suspension, revocation, or adverse modification of any FCC
license of any broadcast station owned by the Paxson Group or
would subject any such broadcast station to fine or forfeiture;
(ii) the Executive's demonstrable gross negligence in (A)
taking any action, or (B) in omitting to take any action, and
such act or omission would cause any member of the Paxson Group
to be in default under any material contract, lease or other
agreement;
(iii) the Executive's dependence on alcohol or illegal drugs;
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(iv) the Executive's failure or refusal to perform according to
or follow the lawful policies and directives of the Chairman
(which shall be consistent with Paragraph 3);
(v) the Executive's misappropriation, conversion or
embezzlement of the assets of any member of the Paxson Group;
(vi) the Executive's material breach of this Agreement,
including engaging in action in violation of Paragraph 10; or
(vii) the Executive making any representation in this Agreement
which is false when made.
In the event of a termination for Good Cause under this
subparagraph (b), the Company shall notify the Executive of its
intention to terminate his employment and the specific
reason(s) therefore, and the Executive, on at least ten (10)
business days notice, shall have had an opportunity to respond
thereto in writing; and, provided further, if the basis for
such termination is susceptible of being cured by the
Executive, the Company shall afford the Executive a period of
at least ten (10) additional business days to cure, and the
Executive's employment may not be terminated until such period
has expired and the Executive has failed to effect such cure.
The above notwithstanding, in the event of a termination for
Good Cause under Paragraph 8(b)(i) above, the Company shall
afford the Executive a period of at least sixty (60) days,
following such notice of intention to terminate, in which to
cure, and the Executive's employment may not be terminated if
Executive cures such arrest within such sixty (60) day period,
it being acknowledged and agreed that the Executive will be
deemed to have cured such arrest only if such charges have been
dropped within such sixty (60) day period.
In the event of termination for Good Cause, the Company will be
released from all further obligation to the Executive, except
for (i) the payment of such Base Salary as may have been earned
but not paid prior to termination, (ii) payments under his
carried interest pursuant to Paragraph 4(d), (iii) his rights
to exercise any vested options, pursuant to his Stock Option
Agreement, and (iv) any accrued benefits under the Company's
employee benefit plans in accordance with the terms of those
plans.
(c) GOOD REASON. Upon the date specified in a written notice from
the Executive terminating his employment for "Good Reason",
consistent with the provisions of this subparagraph (c). For
purposes of this subparagraph (c), "Good Reason" shall mean
that (i) the Company has breached any of the
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<PAGE> 8
material terms, conditions and provisions of this Agreement, or
(ii) Lowell W. Paxson (other than by reason of his death or
disability) resigns as Chairman, is removed by the Company's
Board of Directors as Chairman or (together with his spouse)
ceases to control (and his spouse does not control) more than
fifty percent (50%) of the outstanding voting interests of the
Company (except that in the event of the death or disability of
Mr. Paxson, Mr. Paxson will be deemed to continue to control
50% of the outstanding voting interests of the Company only so
long as Mr. Paxson, his spouse and/or his children control such
voting interests). In such case, the Executive shall notify the
Company of his intentions to terminate his employment and the
specific reason(s) therefor, and the Company, on at least ten
(10) business days notice, shall have an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Company, the
Executive shall afford the Company a period of at least ten
(10) additional business days, to effect such cure, and the
Executive may not terminate his employment until such period
has expired and the Company has failed to effect such cure. In
the event of such termination for Good Reason, the Company
shall pay to the Executive (w) the Executive's Base Salary,
including annual increases therein, for the remainder of the
original Term of Employment (payable in accordance with the
Company's normal payroll practices during such period), plus
(x) any bonus earned but not paid as of the date of
termination, plus (y) any other bonus the Executive would have
earned under subparagraph 4(b) as if he remained actively
employed through the original Term of Employment (subject to
the Company's satisfaction of the benchmarks for such calendar
year), plus (z) continued coverage under any Company employee
benefit plans in which the Executive participates as of such
date of termination (on the same terms and conditions then in
effect) through the original Term of Employment.
(d) OTHER THAN GOOD CAUSE. Upon the date specified in a written
notice from the Board of Directors terminating the Executive's
employment for any reason other than "Good Cause", or the
Executive's death or the Executive's Disability (as defined in
Paragraph 8(e)) (including in the event of a change of control
of the Company), or in the event no date is specified in the
notice, upon the date on which the notice is delivered to the
Executive. In the event of the termination of the Executive's
employment pursuant to this subsection (d), the Company shall
pay to the Executive (w) the Executive's Base Salary, including
annual increases therein, for the remainder of the original
Term of Employment (payable in accordance with the Company's
normal payroll practices during such period), plus (x) any
bonus earned but not paid as of the date of termination, plus
(y) any other bonus the Executive would have earned under
subparagraph 4(b) as if he remained actively employed through
the original Term of Employment (subject to the Company's
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<PAGE> 9
satisfaction of the benchmarks for such calendar year), plus
(z) continued coverage under any Company employee benefit plans
in which the Executive participates as of such date of
termination (on the same terms and conditions then in effect)
through the original Term of Employment.
(e) DISABILITY. Upon the date specified in a written notice from
the Board of Directors terminating the Executive's employment
for "Disability." For purposes of this Agreement, the term
"Disability" shall mean that, due to illness or injury, the
Executive is unable to perform and exercise the essential
functions required of him under this Agreement, for either (i)
four consecutive months or longer, or (ii) a total of four
months or longer in any twelve month period. The Compensation
Committee shall determine whether the Executive has a
Disability based on written physician reports provided to the
Compensation Committee under the following procedures. The
Compensation Committee and the Executive shall each chose a
physician to supply a report regarding whether the Executive
should be deemed to have a Disability under the terms of this
subparagraph 8(e). If the reports of these two physicians reach
contrary conclusions regarding whether the Executive should be
deemed to have a Disability under the terms of this
subparagraph 8(e), the two physicians shall select a third
physician to prepare and provide to the Compensation Committee
another report regarding whether the Executive should be deemed
to have Disability under the terms of this subparagraph 8(e).
The Executive shall cooperate fully with each such physician
preparing a report to the Compensation Committee under the
terms of this subparagraph 8(e) by, among other things,
executing any necessary releases to grant such physician access
to any and all of Executive's medical records reasonably deemed
by such physician to be relevant to such determination,
authorizing or requiring physicians and any other health care
professionals who have treated or dealt with Executive to
consult with such physician regarding any matter reasonably
deemed by such physician to be relevant to such determination
and submitting to such physical or mental examinations or
testing as may be reasonably deemed by such physician to be
relevant to such determination. The Parties acknowledge and
agree that any determination by the Compensation Committee that
the Executive has a Disability, which is used as a basis for
termination of the Executive's employment pursuant to this
Paragraph 8(e), shall be subject to the arbitration provisions
of Paragraph 12 below. In the event of the Executive's
Disability, the Company shall pay to the Executive (x) the
Executive's Base Salary, including annual increases therein,
for the remainder of the original Term of Employment (payable
in accordance with the Company's normal payroll practices
during such period), plus (y) any bonus earned but not paid as
of the date of death, plus (Z) continued coverage under any
Company employee benefit plans in which the Executive
participates as of such date
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<PAGE> 10
of termination (on the same terms and conditions then in
effect) through the original Term of Employment.
(f) VOLUNTARILY. Upon the date the Executive voluntarily, including
in conjunction with his retirement, resigns or otherwise ceases
his employment with the Company at a time when the Company is
not in material breach of this Agreement. In the event of the
Executive's voluntary termination of his employment, the
Company will be released from all further obligation to the
Executive, except for the payment of such Base Salary as may
have been earned but not paid prior to termination. Or
(g) TERM. Upon the expiration of the Term of Employment on June 30,
2002. In the event of the termination of the Executive's
employment upon the expiration of the Term of Employment on
June 30, 2002, the Company will be released from all further
obligation to the Executive, except for such compensation as
may have been earned but not paid prior to termination.
Following the termination of the Term of Employment and the Executive's
employment under this Agreement, the Company will have no further
liability to the Executive hereunder and no further payments will be
made to him, except (i) as provided in subparagraphs (a) through (g)
above, (ii) to the extent that the Executive qualifies for benefits
under any employee benefit plan available to the Executive as provided
in Paragraph 5, (iii) for carried interest payments, pursuant to
Paragraph 4(d), and (iv) for the Executive's rights under the Stock
Option Agreement. In the event the Executive's employment is terminated
for Good Reason, other than for Good Cause or for Disability, pursuant
to subparagraphs 8(c),(d) or (e), respectively, the Executive's right
to continue to participate in any Company employee benefit plan shall
not be affected by the Executive's termination of employment, except
(i) the Company may substitute for its contribution to any
tax-qualified retirement plan on behalf of the Executive, an equivalent
contribution to a non-qualified retirement plan, and (ii) the Company
may terminate any welfare plan coverage to the extent the applicable
insurance carrier refuses to continue to provide such coverage under
the group insurance policy, in which event the Company shall have the
option of providing the Executive with comparable coverage under
individual insurance policies, to the extent such policies are
available, provided that if the Executive's employment is terminated by
the Company for other than Good Cause pursuant to Paragraph 8(d) or the
Executive terminates his employment with the Company for Good Reason
because the Company has breached any of the material terms, conditions
and provisions of this Agreement, the Company shall be obligated to
continue to provide benefits comparable to such welfare plan coverage
regardless of whether or not insurance policies are available to
provide such benefits. The Company shall not have the right to reduce
any payments the Executive is entitled to hereunder by any payments the
Executive
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receives from any other source of employment (whether before, during or
after the Term of Employment), and the Executive shall not have any
duty to mitigate the damages the Company will incur in making any
payments hereunder to the Executive following his termination of
employment with the Company. Upon the date of the termination of the
Executive's employment pursuant to subparagraph (c), (d) or (e) above,
in consideration of (i) the payments to be made to the Executive
pursuant to such subparagraph and as a condition to the payment
thereof, and (ii) the Company's undertaking to make no derogatory or
disparaging statement about the Executive to any unrelated (to the
Paxson Group) third party, the Executive acknowledges that all such
payments, if made in accordance with this Agreement, shall constitute
complete satisfaction of all obligations owed by the Company to the
Executive (other than any benefits Executive has accrued under the
Company's employee benefit plans) and shall further constitute the
Executive's sole remedy against the Company; the Executive agrees that
if this provision becomes applicable he will execute a general release
to reflect these terms.
In the event that the Term of Employment has expired, no successor
agreement has been executed by the Executive and the Company, and the
Executive continues to provide his services to the Company at the
Company's request, such employment shall be at will on such terms and
conditions as may be established by the Company and may be terminated
for any reason or no reason at any time by either Party with or without
notice.
9. INSURANCE. If the Company desires at any time or from time to time
during the Term of Employment to apply in its own name or otherwise,
but at its own expense, for life, health, accident or other insurance
covering the Executive, the Company may do so and may take out such
insurance for any sum which the Company may deem necessary to protect
its interests hereunder. The Executive will have no right, title or
interest in or to such insurance, but will, nevertheless, assist the
Company in procuring and maintaining the same by submitting from time
to time to the usual, customary medical, physical, and other
examinations and signing such applications, statements and other
instruments as may reasonably be required by the insurance company or
companies issuing such policies. The Company acknowledges that the
Executive has made no representation that he is insurable for these
purposes.
10. RESTRICTIVE COVENANTS.
(a) FCC COMPLIANCE. The Executive represents that he does not currently
have, and warrants that during the Term of Employment he will not have,
or be involved with any investment ownership interest or outside
activity (such as a board membership) which would result in either he
or the Company being in violation of
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<PAGE> 12
the rules and regulations of the Federal Communications Commission or
the Communications Act of 1934, as amended.
(b) EXCLUSIVE SERVICES. The Executive shall during the Term of
Employment, except during vacation periods, periods of illness and the
like, devote his full and undivided business time and attention to his
duties and responsibilities for the Company. During the Executive's
employment with the Company, the Executive shall not: (i) engage in any
other business activity that would interfere with his responsibilities
or the performance of his duties under this Agreement; (ii) have any
interest or involvement, directly or indirectly, in any capacity
(including as employee, director, consultant, owner, lessor, manager,
or lender), in any business enterprise that competes with the Paxson
Group or that otherwise has interests in conflict with the Paxson
Group, including without limitation, any television broadcast, cable
television network, or television programming service, provided
however, that (x) the Executive may own up to one percent (1%) of the
issued and outstanding common stock of any entity whose common stock is
traded on a nationally recognized stock exchange, and (y) the Executive
may sit on the boards of directors of other entities, with the prior
written approval of the Chairman, which approval shall not be
unreasonably withheld. The Executive will not, during the Term of
Employment solicit offers for the Executive's services, negotiate with
potential employers, enter into any oral or written agreement for the
Executive's services, give or accept any option for the Executive's
services, enter into the employment of, perform services for, or grant
or receive future rights of any kind relating to the Executive's
services to or from any person or entity whatsoever other than the
Company.
(c) NONINTERFERENCE. The Executive agrees that from the date of this
Agreement through the first anniversary of the date the Executive's
employment with the Company terminates, the Executive will not,
directly or indirectly, whether as sole proprietor, partner, lessor,
venturer, stockholder, director, officer, employee, consultant or in
any other capacity as principal or agent or through any person,
subsidiary, affiliate or employee acting as nominee or agent, engage or
participate in any of the following actions:
(i) Influencing or attempting to influence any person or
entity who is a contracting party with any member of
the Paxson Group to terminate any written or oral
agreement with such member of the Paxson Group; or
(ii) Hiring or attempting to hire for employment or as an
independent contractor any person who is actively
employed (or in the preceding six months was actively
employed) by any member of the Paxson Group or
attempting to influence any such person to terminate
employment with any member of the Paxson Group.
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(d) CONFIDENTIALITY. The Executive covenants and agrees that both
during the Term of Employment and thereafter he will not disclose to
any third party or use in any way any confidential information,
business secrets, or business opportunity of the Company, including,
without limitation, advertiser lists, rate cards, programming
information, programming plans, marketing, advertising and promotional
ideas and strategies, marketing surveys and analyses, ratings reports,
budgets, research, or financial, purchasing, planning, employment or
personnel data and information. Immediately upon termination of the
Executive's employment with the Company for any reason, or at any other
time upon the Company's request, the Executive will return to the
Company all memoranda, notes, records or other documents compiled by
the Executive or made available to the Executive during the Term of
Employment concerning the business of the Company, all other
confidential information and all personal property of the Company,
including, without limitation, all files, audio or video tapes,
recordings, records, documents, drawings, specifications, lists,
equipment, supplies, promotional material, scripts, keys, phone or
credit cards and similar items and all copies thereof or extracts
therefrom.
(e) ENFORCEMENT. The Executive agrees that the restrictive covenants
contained in this Paragraph 10 are a material part of the Executive's
obligations under this Agreement for which the Company has agreed to
compensate the Executive as provided in this Agreement. The Executive
agrees that the injury the Company will suffer in the event of the
breach by the Executive of any clause of this Paragraph 10 will cause
the Company irreparable injury that cannot be adequately compensated by
monetary damages alone. Therefore, the Executive agrees that the
Company, without limiting any other legal or equitable remedies
available to it, shall be entitled to obtain equitable relief by
injunction or otherwise from any court of competent jurisdiction,
including, without limitation, injunctive relief to prevent the
Executive's failure to comply with the terms and conditions of
Paragraph 10.
11. INTANGIBLE PROPERTY. The Executive will not at any time during or after
the Term of Employment have or claim any right, title or interest in
any trade name, trademark, or copyright belonging to or used by any
entity in the Paxson Group and, except as specifically provided in
Paragraph 4(f) hereof, shall not have or claim any right, title or
interest in any material or matter of any sort prepared for or used in
connection with the programming, advertising, broadcasting, or
promotion of any entity of the Paxson Group, whatever the Executives'
involvement with such matters may have been, and whether procured,
produced, prepared, published or broadcast in whole or in part by the
Executive, it being the intention of the Parties that the Executive
shall, and hereby does, recognize that the Paxson Group now has and
shall hereafter have and retain the sole and exclusive rights in any
and all such trade names, trademarks, copyrights (all the Executive's
work in this regard being a work
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for hire for the Company under the copyright laws of the United
States), character names, material and matter as described above. The
Executive shall cooperate fully with the Company during his employment
and thereafter in the securing of trade name, patent, trademark or
copyright protection or other similar rights in the United States and
in foreign countries and shall give evidence and testimony and execute
and deliver to the Company all papers reasonably requested by it in
connection therewith, provided however that the Company shall reimburse
the Executive for reasonable expenses related thereto.
12. ARBITRATION. Any dispute regarding this Agreement shall be decided by
arbitration in West Palm Beach, Florida, in accordance with the
Expedited Arbitration Rules of the American Arbitration Association
then obtaining unless the Parties mutually agree otherwise; and,
provided further, that both Parties will be entitled to all rights of
discovery in connection with such arbitration, including, without
limitation, all discovery rights described in the Florida Rules of
Civil Procedure. Any such arbitration shall be submitted to three
arbitrators from the Panel of Arbitrators of the American Arbitration
Association. The three arbitrators shall be selected in the following
fashion: (i) the Executive and the Company each shall select an
arbitrator from the Panel of Arbitrators of the American Arbitration
Association; and (ii) such two arbitrators by mutual agreement shall
select a third arbitrator from such Panel of Arbitrators. This
undertaking to arbitrate shall be specifically enforceable. The
decision rendered by the arbitrator will be final and judgment may be
entered upon it in accordance with appropriate laws in any court having
jurisdiction thereof. Notwithstanding the foregoing, the Company may
seek injunctive relief in accordance with Paragraph 10 of this
Agreement.
13. INDEMNIFICATION. The Company shall indemnify and hold the Executive
harmless, to the maximum extent permitted by law, against claims,
judgments, fines, amounts paid in settlement of and reasonable expenses
(including reasonable attorneys fees) incurred by the Executive in
connection with the defense of any claim, action or proceeding in which
he is a party by reason of his position with the Company, provided such
liability does not arise as a result of the Executive's gross
negligence. The Executive shall notify the Company promptly upon
learning of any claim, action or proceeding for which the Executive
intends to assert his right to indemnification under this Paragraph,
and the Company shall have the right to control the defense of any such
claim, action or proceeding on behalf of the Executive, including any
decision regarding the terms (if any) of settlement of such claim,
action or proceeding, provided that unless otherwise agreed to by the
Executive, any such settlement shall include statements that the
Executive does not admit any wrongdoing and the Company does not admit
any wrongdoing on the part of the Executive. The Company shall not
agree to any settlement of a claim, action or
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proceeding for which it is indemnifying the Executive until it first
has informed and consulted with the Executive regarding the terms of
such settlement, but the Company shall not need the consent of the
Executive to such settlement (so long as the settlement complies with
the immediately preceding sentence). The Company's indemnification of
the Executive under this Paragraph shall indefinitely survive the
termination or expiration of this Agreement.
14. MISCELLANEOUS.
(a) WAIVER OR MODIFICATION. Any waiver by either Party of a breach
of any provision of this Agreement shall not operate as, or to
be, construed to be a waiver of any other breach of such
provision of this Agreement. The failure of a Party to insist
upon strict adherence to any term of this Agreement on one or
more occasions shall not be considered a waiver or deprive that
Party of the right thereafter to insist upon strict adherence
to that term or any other term of this Agreement. Neither this
Agreement nor any part of it may be waived, changed or
terminated orally, and any waiver, amendment or modification
must be in writing and signed by each of the Parties. Any
waiver of any right of the Company hereunder or any amendment
hereof shall require the approval of the Chairman or the
Compensation Committee of the Board of Directors. Until such
approval or waiver has been obtained, no such waiver or
amendment shall be effective.
(b) SUCCESSORS AND ASSIGNS. The rights and obligations of the
Company under this Agreement shall be binding on and inure to
the benefit of the Company, its successors and permitted
assigns. The rights and obligations of the Executive under this
Agreement shall be binding on and inure to the benefit of the
heirs and legal representatives of the Executive. Neither Party
may assign this Agreement without the prior written consent of
the other.
(c) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall, when executed, be deemed to
be an original and all of which shall be deemed to be one and
the same instrument.
(d) GOVERNING LAW. This Agreement will be governed and construed
and enforced in accordance with the laws of the State of
Florida, without regard to its conflicts of law rules.
(e) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the Parties relating to the subject matter of
this Agreement and supersedes all other prior written or oral
agreements, understandings or arrangements. The Executive and
the Company each acknowledges that, in entering into this
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Agreement, he/it does not rely on any statements or
representations not contained in this Agreement.
(f) SEVERABILITY. Any term or provision of this Agreement which is
determined to be invalid or unenforceable by any court of
competent jurisdiction in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction and such
invalid or unenforceable provision shall be modified by such
court so that it is enforceable to the extent permitted by
applicable law.
(g) NOTICES. Except as otherwise specifically provided in this
Agreement, all notices and other communications required or
permitted to be given under this Agreement shall be in writing
and delivery thereof shall be deemed to have been made (i)
three business days following the date when such notice shall
have been deposited in first class mail, postage prepaid,
return receipt requested, to any comparable or superior postal
or air courier service then in effect, or (ii) transmitted by
hand delivery to, or (iii) transmitted by telegram, telex,
telecopier or facsimile transmission (with receipt confirmed by
telephone), to the party entitled to receive the same, at the
address indicated below or at such other address as such party
shall have specified by written notice to the other party
hereto given in accordance herewith:
if to the Company: Lowell W. Paxson
Chairman
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
(tel) (561) 659-4122
(fax) (561) 655-9424
with a copy to: John R. Feore, Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
(tel) (202) 776-2000
(fax) (202) 776-2222
if to the Executive: Jeffrey Sagansky
53 East 80th Street
New York, New York 10021
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(tel) (212) 833-4921
(fax) (212) 833-5545
with a copy to: Jeffrey Mandell, Esq.
Gang, Tyre, Ramer & Brown, Inc.
132 South Rodeo Drive
Beverly Hills, California 90212-2425
(tel) (310) 777-4800
(fax) (310) 777-4801
(h) TITLES. The titles and headings of any paragraphs in this
Agreement are for reference only and shall not be used in
construing the terms of this Agreement.
(i) NO THIRD PARTY BENEFICIARIES. This Agreement does not create,
and shall not be construed as creating, any rights enforceable
by any person not a party to this Agreement.
(j) SURVIVAL. The covenants, agreements, representations and
warranties contained in this Agreement shall survive the
termination of the Term of Employment and the Executive's
termination of employment with the Company for any reason.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the first date written above.
JEFFREY SAGANSKY
--------------------------------
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------
Lowell W. Paxson
Chairman
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<PAGE> 1
Exhibit 10.198
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made as of this _____ day of _________________, 1998,
(this "Agreement") by and between Paxson Communications Corporation, a Delaware
corporation with its principal place of business at 601 Clearwater Park Road,
West Palm Beach, Florida 33401-6233 ("Company") and James B. Bocock an
individual, currently residing at the address set forth under such individual's
signature below (the "Executive") (collectively, the "Parties").
WHEREAS, Company desires to employ Executive as Co-President and the Parties
desire to enter into this agreement to secure Executive's employment as
Co-President and Chief Operating Officer during the term hereof, all on the
terms and conditions set forth herein.
NOW, THEREFORE, the Parties agree as follows:
1. The Company agrees to employ the Executive and the Executive agrees to
serve the Company as Co-President and Chief Operating Officer, based
primarily at the Company's West Palm Beach, Florida offices, on the
terms and conditions hereinafter set forth.
2. Employment of the Executive by the Company pursuant to this Agreement
will be for a five (5) year period commencing effective January 1,
1998, unless sooner terminated, pursuant to Paragraph 7 hereof (the
"Term of Employment").
3. Subject to the direction and control of the Chairman of the Board and
Chief Executive Officer, and such other senior executive officer as the
Chairman of the Board may direct to whom Executive will report, the
Executive shall have all of the power and authority inherent in the
position of Co-President and Chief Operating Officer, and shall
supervise and be responsible for the operations and management of the
Company and its subsidiaries. The Executive shall also have such other
executive powers and duties, consistent with his responsibilities as
Co-President and Chief Operating Officer as may, from time to time, be
prescribed by the Chairman of the Board and Chief Executive Officer.
The Executive agrees to render his services under this Agreement
loyally and faithfully, to the best of his abilities and in substantial
conformance with all laws, rules and Company policies,
<PAGE> 2
and in connection therewith, will not improperly or without good cause,
in the best interest of the Company, disclose any trade secrets or
other confidential information of the Company. Without limiting the
foregoing, except as expressly modified herein, Executive shall be
subject to all of the Company's policies including payola, plugola and
conflicts of interests, as well as the following:
(a) Executive will comply with all the Company and professional
standards governing Executive's objectivity in the performance
of Executive's duties, including restrictions on outside
activities, investments, business interests, or other
involvements which could compromise Executive's objectivity or
create an impression of conflict of interest. Executive will
not, without the prior approval of the Chairman of the Board
or the Chief Executive Officer , accept any gift,
compensation, or gratuity (which excludes business meals and
entertainment received by Executive in the ordinary course of
business) from any person or entity with which the Company or
any of its broadcast properties is or may be in competition or
in any instance where there is a stated or implied expectation
of favorable treatment of that person or entity. Executive
will not, without the prior written approval of the Chairman
of the Board or the Chief Executive Officer, take advantage of
any business opportunity or situation or engage in any
enterprise or venture of which the the Company may have an
interest on his or her own behalf, if said business
opportunity or situation, enterprise or venture is related in
any way to or is similar to the business of the Company.
(b) In performing Executive's duties under this Agreement,
Executive shall conduct himself with due regard to social
conventions, public morals and standards of decency, and will
not cause or permit any situation or occurrence which would
tend to degrade, scandalize, bring into public disrepute, or
otherwise lower the community standing of Executive or the
Company's public image.
4. Company will pay the Executive a base salary (the "Base Salary"), to be
paid on the same payroll cycle as other salaried employees of the
Company, at an annual rate for 1998 of $341,250, which Base Salary
shall be increased annually, effective January 1 of each year
thereafter during the Term of Employment, by an amount
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<PAGE> 3
equal to not less than 10% of the Base Salary in effect for the most
recently ended calendar year.
In addition to the Base Salary, the Executive agrees to participate in
the Company's Executive Bonus Plan and receive bonus awards from time
thereunder, subject to the satisfaction of the terms and conditions set
forth therein. Without limiting the foregoing, nothing shall preclude
Executive from receiving special cash bonus awards not included within
the Executive Bonus Plan, as determined from time in the sole
discretion of the Company. In addition to Executive's Base Salary and
participation in the Executive Bonus Plan, Executive may, as determined
from time to time, in the sole discretion of the Company, be eligible
to receive or participate in various non-cash compensation programs,
including, without limitation, annual and special non-cash bonus
awards, grants of stock options, restricted stock, "phantom-equity" and
stock appreciation rights (collectively, "Non-Cash Bonus Awards").
Employee's rights in respect of any Non-Cash Compensation shall be
governed under the terms of a separate document or documents, if any
Non-Cash Compensation is to be awarded to Employee.
The Company will have the right to withhold from payments otherwise due
and owing to Executive or to require the Executive to remit to the
Company in cash upon demand an amount sufficient to satisfy any federal
(including FICA and FUTA amounts), state, and/or local withholding tax
requirements at the time the Executive recognizes income for federal,
state, and/or local tax purposes with respect to any payments to
Executive under the terms hereof or under any other compensation
arrangements, including, Non-Cash Compensation. If any excise tax
withholding by the Company is required pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") on an "excess
parachute payment," as this term is defined in Section 4999 of the
Code, in connection with any payments made under the terms hereof, or
under any other compensation arrangements, including, the Executive
Bonus Plan and any Non-Cash Compensation, the Company will be required
to pay compensation to the Executive ("Gross-Up Payment") in an amount
equal to the excise tax withholding required to be withheld by the
Company on such amounts paid to Executive and the Gross-Up Payment
itself. The Company then will withhold the Gross-Up Payment to satisfy
this withholding obligation. Except as otherwise provided by this
Paragraph 4, the Company will not be liable to
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<PAGE> 4
Executive for any tax consequences incurred by Executive with respect
to payments to Executive under the terms hereof or under any other
compensation arrangements, including, Non-Cash Compensation.
5. During the Term of Employment, the Executive shall be eligible to
participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established, which are generally
available to other senior executives of the Company, including, without
limitation, all life, group insurance and medical plans and all
disability, retirement and other employee benefit plans of the Company,
as long as any such plan or arrangement remains generally applicable to
other senior executives of the Company.
6. The Executive shall be reimbursed for all reasonable expenses incurred
by him in the discharge of his duties, including, but not limited to,
expenses for entertainment and travel. The Executive shall account to
the Company for all such expenses.
7. Notwithstanding the provisions of Paragraph 2 of this Agreement, the
Executive's Term of Employment pursuant to this Agreement shall
terminate on the earliest of the following dates:
(a) The date of the Executive's death. In such event, the Company
shall pay to the Executive's legal representatives or named
beneficiaries (as the Executive may designate from time to
time in a writing delivered to the Company) the Executive's
Base Salary for a one (1) year period following the date of
the Executive's death;
(b) If the Board of Directors chooses to give the Executive notice
of termination of his employment due to his disability, as
defined in the Company's Long Term Disability Plan, a date
specified in the notice which shall be not less than thirty
(30) days after the date on which the notice is received by
the Executive. In the event that the Executive's employment is
terminated due to his disability under this subparagraph (b),
the Executive or the Executive's legal representative shall
continue to be paid the Executive's Base Salary then in effect
for the remaining Term of Employment. If, prior to the
specified termination date in such notice by the Company, the
Executive's illness or disability has terminated and the
Executive has resumed his duties under
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<PAGE> 5
this Agreement, the Executive shall be entitled to resume
employment under this Agreement as though such notice had not
been given. The opinion of the Executive's physician as to
disability shall be deemed presumptively valid;
(c) If the Board of Directors chooses to give the Executive notice
of termination of his employment for "good cause", a date
specified in the notice, consistent with the provisions of
subparagraph (c). The term "good cause" as used in this
Agreement shall mean the occurrence of any of the following
events:
(i) Executive's arrest for the commission of (A) a
felony, (B) any criminal act with respect to
Executive's employment (including any criminal act
involving a violation of the Communications Act of
1934, as amended, or regulations promulgated by the
Federal Communications Commission), or (C) any act
that materially threatens to result in suspension,
revocation, or adverse modification of any FCC
license of any broadcast station owned by any
affiliate of the Company or would subject any such
broadcast station to fine or forfeiture;
(ii) Executive's taking of any action or inaction which
would cause the Company to be in default under any
material contract, lease or other agreement;
(iii) Executive's dependence on alcohol or illegal drugs;
(iv) Failure or refusal to perform according to or follow
the lawful policies and directives of the Chairman of
the Board or the Chief Executive Officer;
(v) Executive's misappropriation, conversion or
embezzlement of the assets of the Company or any
affiliate of the Company;
(vi) A material breach of this Agreement by Executive,
including engaging in action in violation of
Paragraph 8 of this Agreement; or
(vii) Any representation of Executive in Paragraph 9 of
this Agreement being false when made; or
(viii) The Executive voluntarily, including retirement,
ceases his employ with the Company at a time when the
Company is not in material breach of this Agreement.
In the event of a termination under this subparagraph (c),
other than pursuant to clause (c)(vIII), the Company shall
notify the Executive of
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<PAGE> 6
its intentions to terminate his employment and the specific
reason(s) therefore, and the Executive, on at least ten (10)
business days notice, shall have had an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Executive,
the Company shall afford the Executive a reasonable period,
not to exceed 60 days, to effect such cure, and the
Executive's employment may not be terminated during said
period.
In the event of termination for good cause, the Company will
be released from all further obligation to the Executive under
this Agreement, except for such salary as may have been earned
or bonus award made but not paid prior to the termination;
(d) The date on which the Board of Directors chooses to notify the
Executive that the Board of Directors, in its sole discretion,
has determined that it is in the best interest of the Company
to terminate the Executive's employment. In the event of such
termination, the Executive will continue to be paid the
Executive's Base Salary then in effect for the remaining Term
of Employment;
(e) On the date that the Executive terminates his employment for
Good Reason. For purposes of this subparagraph (e), "Good
Reason" shall mean that the Company has breached any of the
material terms, conditions and provisions of this Agreement.
In such case, the Executive shall notify the Company of his
intentions to terminate his employment and the specific
reason(s) therefor, and the Company, on at least ten (10)
business days notice, shall have an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Company, the
Executive shall afford the Company a reasonable period, not to
exceed 60 days, to effect such cure, and the Executive may not
terminate his employment during said 60 day period. In the
event of such termination, the Executive will continue to be
paid Executive's Base Salary then in effect for the remaining
Term of Employment;
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<PAGE> 7
(f) If, within one year after a Change of Control (as defined
below), the Company terminates Executive's employment with the
Company without Cause, the Executive will continue to be paid
Executive's Base Salary then in effect for the remaining Term
of Employment. For purposes of this Agreement:
(i) A "Change of Control" will occur if (a) none of
Lowell W. Paxson, his estate, his wife, his lineal
descendants, or any trust created for the sole
benefit of any one or more of them during their
lifetimes, or any combination of any of the
foregoing, shall (i) own, directly or indirectly, at
least 35 percent of the issued and outstanding
capital stock of the Company or (ii) have voting
control, directly or indirectly, equal to at least 51
percent of the issued and outstanding capital stock
of the Company entitled to vote in the election of
Board of Directors of the Company; (b) the approval
by the shareholders of the Company of a
reorganization, merger, or consolidation, in each
case, with respect to which persons who were
shareholders of the Company immediately prior to this
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50 percent of
the combined voting power entitled to vote generally
in the election of directors of the reorganized,
merged or consolidated company's (or any successor
entity's) then outstanding securities; or (c) a
liquidation or dissolution of the Company or of the
sale of all or at least 80 percent of the Company's
assets.
(g) The expiration of the Term of Employment as described in
Paragraph 2 of this Agreement.
Following the termination of the Executive's employment under
this Agreement upon the original stated Term of Employment,
the Company will have no further liability to the Executive
hereunder and no further payments will be made to him, except
as provided in subparagraphs (a) through (f) above or any
bonus awards not paid as of such termination, and except to
the extent that the Executive qualifies for benefits under any
employee benefit plan available to the Executive as provided
in Paragraph 5.
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<PAGE> 8
8. Executive agrees that from the date of this Agreement until the
Covenant Termination Date (as defined in Paragraph 8(a) below),
Executive will not, directly or indirectly, whether as sole proprietor,
partner, lessor, venturer, stockholder, director, officer, employee,
consultant or in any other capacity as principal or agent or through
any person, subsidiary, affiliate or employee acting as nominee or
agent, engage or participate in any of the following actions:
(i) Owning, leasing, managing, operating, controlling or
providing financial assistance (other than (i) in
connection with services provided by Executive as the
employee of a commercial or investment bank or
similar financial services business or consulting
business which extends credit to, makes investments
in, or provides financial advice or consulting
services to, broadcasting companies;
(ii) as an attorney in a practice of law) to any national
(e.g. reaching more than 30% of nationwide television
households) broadcast or cable television network or
television programming service; (ii) Influencing or
attempting to influence any person or entity who is a
contracting party with the Company or any subsidiary
thereof (the "Paxson Group") to terminate any written
or oral agreement with such member of the Paxson
Group; or
(iii) Hiring or attempting to hire for employment any
person who is employed by any member of the Paxson
Group or attempting to influence any such person to
terminate employment with any member of the Paxson
Group.
Nothing herein shall prohibit Executive from investing in any broadcast
company where such investment does not cause Executive to be an
"affiliate" of such entity under the terms of the Securities Act of
1993.
(a) "COVENANT TERMINATION DATE" means:
(i) If Executive's employment is terminated pursuant toa
termination for good reason pursuant to Paragraph
7(e), the earlier of (i) the last day of the 6th full
calendar month after the termination of employment
and (ii) the expiration of the Term of Employment.
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<PAGE> 9
(ii) If Executive's employment is terminated pursuant to a
termination for good cause under Paragraph 7(c) or a
change of control under Paragraph 7(f), the last day
of the 12th full calendar month after the date on
which Executive's employment is terminated.
(iii) If Executive's employment is terminated pursuant to a
termination for any reason other than by Executive
under Paragraph 7(e), or by Company under Paragraphs
7(c) and 7(f), the date on which Executive's
employment is terminated.
(b) Executive agrees that the Covenant Not to Compete is a
material part of Executive's obligations under this Agreement
for which the Company has agreed to compensate Executive as
provided in this Agreement. Accordingly, if Executive at any
time materially breaches this Covenant Not to Compete and the
Company is in compliance with all of its obligations hereunder
and under any other compensation agreements or arrangements
with Executive, then all rights of Executive to compensation
under this Agreement shall immediately terminate, Company
shall have no further liability to Executive and no further
payments (if any are otherwise required to be made hereunder)
shall be required to be made to Executive.
(c) Executive expressly agrees that the services (s)he will render
are of a special and extraordinary character that gives them a
unique value; that the loss of such services could not be
reasonably or adequately compensated by an action for damages;
and that the Company may enforce this non compete covenant
without proof of actual damages. Executive expressly agrees
that his(her) services have special and unique value to the
Company and that the Company would be irreparably injured by a
breach of this Paragraph 8. Further, Executive acknowledges
the legitimate business interest of the Company in the
protection of its trade secrets, confidential business lists
and records, listener/client goodwill and the training
provided during employment. Necessarily, then, any
relationship of Executive with another broadcast entity in the
markets enumerated above during this non-compete period would
involve the transfer of one or all of these items to that
entity. The Executive agrees that the provisions in these
paragraphs of Paragraph 8 are reasonably necessary for the
protection of the Company's
9
<PAGE> 10
business; that they are not unreasonably restrictive of
his(her) rights; and that (s)he feels that any of these
restrictions placed upon him(her) are not prejudicial to the
public interest.
(d) If the covenant in this Paragraph 8 is held to be
unenforceable in any jurisdiction because of the duration or
scope thereof, the court making such determination shall have
the power to reduce the duration and/or scope of the provision
or covenant, and the provision or covenant in its reduced form
shall be enforceable; provided, however, that the
determination of such court shall not affect the
enforceability of this Paragraph 8 in any other jurisdiction.
9. To induce the Company to enter into this Agreement and to employ
Executive, Executive represents and warrants to the Company as of the
date hereof and as of each date of payment of any compensation under
the terms hereof as follows:
(a) The execution, delivery and performance of this Agreement by
Executive does not conflict with result in a breach of, or
constitute a default under any covenant not to compete or any
other agreement, instrument, or license, to which Executive is
a party or by which Executive is bound.
(b) Executive has not:
(i) Been convicted of any felony;
(ii) Committed any criminal act with respect to
Executive's current or any prior employment
(including any criminal act involving a violation of
the Communication Act of 1934, as amended, or
regulations promulgated by the FCC), or
(iii) Committed any act that materially threatened to
result in suspension, revocation, or adverse
modification of any FCC license of any broadcast
station or which subjected any broadcast station to
fine or forfeiture.
(c) Executive is not dependent on alcohol or illegal drugs.
Executive recognizes that the Company shall have the right to
conduct random drug testing of its employees and that
Executive may be called upon in such a manner.
10. Any dispute regarding this Agreement shall be decided by arbitration by
a single arbitrator in West Palm Beach, Florida, in accordance with the
Expedited Arbitration Rules of the American Arbitration Association
then obtaining unless the Parties
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<PAGE> 11
mutually agree otherwise; and, provided further, that both Parties will
be entitled to all rights of discovery in connection with such
arbitration, including, without limitation, all discovery rights
described in the Florida Rules of Civil Procedure. This undertaking to
arbitrate shall be specifically enforceable. The decision rendered by
the arbitrator will be final and judgment may be entered upon it in
accordance with appropriate laws in any court having jurisdiction
thereof. During any arbitration proceeding initiated by the Executive,
the Company agrees, to the extent that it may legally do so, to
continue the Executive in the Company's long-term disability, life and
medical insurance plans.
11. Both during and after the Term of Employment, neither Party will
disclose the financial terms of this Agreement to persons not involved
in the operations of the business of the Company, except as required by
applicable law, regulation, the rules or regulations of a stock
exchange or association on which securities of the Company or any
parent company thereof are listed or legal process (including, without
limitation, oral questions, interrogatories, requests for information
or documents, subpoenas, civil investigative demands, orders, judgments
or decrees). As to persons involved in the operations of the business
of the Company, disclosure of such terms may be made only on a
need-to-know basis. This restriction shall not apply to members of the
Executive's immediate family nor to the Executive's professional
advisers, lenders and investors, provided such persons agree to keep
the financial terms confidential and not disclose them to third
parties.
12. Any waiver by either Party of a breach of any provision of this
Agreement shall not operate as to be construed to be a waiver of any
other breach of such provision of this Agreement. The failure of a
Party to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that
Party of the right thereafter to insist upon strict adherence to that
term or any other term of this Agreement. Neither this Agreement nor
any part of it may be waived, changed or terminated orally, and any
amendment or modification must be in writing and signed by each of the
Parties. Any waiver of any right of the Company hereunder or any
amendment hereof shall require the approval of the members of the
Compensation Committee of the Board of Directors who are not employees
of the Company or, if the Company does not have a Compensation
Committee or the Compensation Committee does not have any members who
are
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<PAGE> 12
not employees of the Company, by the members of the Board of Directors
who are not employees of the Company. Until such approval or waiver has
been obtained, no such waiver or amendment shall be effective.
13. The obligations and rights of the Executive under this Agreement shall
inure to the benefit of and shall be binding upon the heirs and legal
representatives of the Executive. Neither Party may assign this
Agreement without the prior written consent of the other.
14. This Agreement may be executed in any number of counterparts, each of
which shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
14. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained herein or made pursuant hereto.
15. This Agreement will be governed and construed and enforced in
accordance with the laws of the State of Florida.
16. This Agreement contains the entire understanding of the Parties
relating to the subject matter of this Agreement and supersedes all
other prior written or oral agreements. The Executive acknowledges
that, in entering into this Agreement, he does not rely on any
statements or representations not contained in this Agreement.
17. Any term or provision of this Agreement which is determined to be
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
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<PAGE> 13
18. Except as otherwise specifically provided in this Agreement, all
notices and other communications required or permitted to be given
under this Agreement shall be in writing and delivery thereof shall be
deemed to have been made when such notice shall have been either (i)
deposited in first class mail, postage prepaid, return receipt
requested, or any comparable or superior postal or air courier service
then in effect, or (ii) transmitted by hand delivery, telegram, telex,
telecopier or facsimile transmission, to the party entitled to receive
the same at the address indicated below or at such other address as
such party shall have specified by written notice to the other party
hereto given in accordance herewith:
if to the Company: Lowell W. Paxson
Chairman and CEO
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
if to the Executive: address below Executive's signature below
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the first date written above.
Name: James B. Bocock
Address:
----------------------------
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------
Name:
------------------------------
Title:
-----------------------------
13
<PAGE> 1
Exhibit 10.199
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made as of this _____ day of _________________, 1998,
(this "Agreement") by and between Paxson Communications Corporation, a Delaware
corporation with its principal place of business at 601 Clearwater Park Road,
West Palm Beach, Florida 33401-6233 ("Company") and Dean M. Goodman, an
individual, currently residing at the address set forth under such individual's
signature below (the "Executive") (collectively, the "Parties").
WHEREAS, Company desires to employ Executive as President of PAX NET Television
and the Parties desire to enter into this agreement to secure Executive's
employment as President of PAX NET Television during the term hereof, all on the
terms and conditions set forth herein.
NOW, THEREFORE, the Parties agree as follows:
1. The Company agrees to employ the Executive and the Executive agrees to
serve the Company as President of PAX NET Television, based primarily
at the Company's West Palm Beach, Florida offices, on the terms and
conditions hereinafter set forth.
2. Employment of the Executive by the Company pursuant to this Agreement
will be for a five (5) year period commencing effective January 1, 1998
unless sooner terminated, pursuant to Paragraph 7 hereof (the "Term of
Employment").
3. Subject to the direction and control of the Chairman of the Board and
Chief Executive Officer, and such other senior executive officer as the
Chairman of the Board may direct to whom Executive will report, the
Executive shall have all of the power and authority inherent in the
position of President of PAX NET Television and shall supervise and be
responsible for the operations and management of the Company and its
subsidiaries. The Executive shall also have such other executive powers
and duties, consistent with his responsibilities as PAX NET Television,
as may, from time to time, be prescribed by the Chairman of the Board
and Chief Executive Officer. The Executive agrees to render his
services under this Agreement loyally and faithfully, to the best of
his abilities and in substantial conformance with all laws, rules and
Company policies, and in connection
<PAGE> 2
therewith, will not improperly or without good cause, in the best
interest of the Company, disclose any trade secrets or other
confidential information of the Company. Without limiting the
foregoing, except as expressly modified herein, Executive shall be
subject to all of the Company's policies including payola, plugola and
conflicts of interests, as well as the following:
(a) Executive will comply with all the Company and professional
standards governing Executive's objectivity in the performance
of Executive's duties, including restrictions on outside
activities, investments, business interests, or other
involvements which could compromise Executive's objectivity or
create an impression of conflict of interest. Executive will
not, without the prior approval of the Chairman of the Board
or the Chief Executive Officer , accept any gift,
compensation, or gratuity (which excludes business meals and
entertainment received by Executive in the ordinary course of
business) from any person or entity with which the Company or
any of its broadcast properties is or may be in competition or
in any instance where there is a stated or implied expectation
of favorable treatment of that person or entity. Executive
will not, without the prior written approval of the Chairman
of the Board or the Chief Executive Officer, take advantage of
any business opportunity or situation or engage in any
enterprise or venture of which the Company may have an
interest on his or her own behalf, if said business
opportunity or situation, enterprise or venture is related in
any way to or is similar to the business of the Company.
(b) In performing Executive's duties under this Agreement,
Executive shall conduct himself with due regard to social
conventions, public morals and standards of decency, and will
not cause or permit any situation or occurrence which would
tend to degrade, scandalize, bring into public disrepute, or
otherwise lower the community standing of Executive or the
Company's public image.
4. Company will pay the Executive a base salary (the "Base Salary"), to be
paid on the same payroll cycle as other salaried employees of the
Company, at an annual rate for 1998 of $315,000, which Base Salary
shall be increased annually, effective January 1 of each year
thereafter during the Term of Employment, by an amount
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<PAGE> 3
equal to not less than 10% of the Base Salary in effect for the most
recently ended calendar year.
In addition to the Base Salary, the Executive agrees to participate in
the Company's Executive Bonus Plan and receive bonus awards from time
thereunder, subject to the satisfaction of the terms and conditions set
forth therein. Without limiting the foregoing, nothing shall preclude
Executive from receiving special cash bonus awards not included within
the Executive Bonus Plan, as determined from time in the sole
discretion of the Company. In addition to Executive's Base Salary and
participation in the Executive Bonus Plan, Executive may, as determined
from time to time, in the sole discretion of the Company, be eligible
to receive or participate in various non-cash compensation programs,
including, without limitation, annual and special non-cash bonus
awards, grants of stock options, restricted stock, "phantom-equity" and
stock appreciation rights (collectively, "Non-Cash Bonus Awards").
Employee's rights in respect of any Non-Cash Compensation shall be
governed under the terms of a separate document or documents, if any
Non-Cash Compensation is to be awarded to Employee.
The Company will have the right to withhold from payments otherwise due
and owing to Executive or to require the Executive to remit to the
Company in cash upon demand an amount sufficient to satisfy any federal
(including FICA and FUTA amounts), state, and/or local withholding tax
requirements at the time the Executive recognizes income for federal,
state, and/or local tax purposes with respect to any payments to
Executive under the terms hereof or under any other compensation
arrangements, including, Non-Cash Compensation. If any excise tax
withholding by the Company is required pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") on an "excess
parachute payment," as this term is defined in Section 4999 of the
Code, in connection with any payments made under the terms hereof, or
under any other compensation arrangements, including, the Executive
Bonus Plan and any Non-Cash Compensation, the Company will be required
to pay compensation to the Executive ("Gross-Up Payment") in an amount
equal to the excise tax withholding required to be withheld by the
Company on such amounts paid to Executive and the Gross-Up Payment
itself. The Company then will withhold the Gross-Up Payment to satisfy
this withholding obligation. Except as otherwise provided by this
Paragraph 4, the Company will not be liable to
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<PAGE> 4
Executive for any tax consequences incurred by Executive with respect
to payments to Executive under the terms hereof or under any other
compensation arrangements, including, Non-Cash Compensation.
5. During the Term of Employment, the Executive shall be eligible to
participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established, which are generally
available to other senior executives of the Company, including, without
limitation, all life, group insurance and medical plans and all
disability, retirement and other employee benefit plans of the Company,
as long as any such plan or arrangement remains generally applicable to
other senior executives of the Company.
6. The Executive shall be reimbursed for all reasonable expenses incurred
by him in the discharge of his duties, including, but not limited to,
expenses for entertainment and travel. The Executive shall account to
the Company for all such expenses.
7. Notwithstanding the provisions of Paragraph 2 of this Agreement, the
Executive's Term of Employment pursuant to this Agreement shall
terminate on the earliest of the following dates:
(a) The date of the Executive's death. In such event, the Company
shall pay to the Executive's legal representatives or named
beneficiaries (as the Executive may designate from time to
time in a writing delivered to the Company) the Executive's
Base Salary for a one (1) year period following the date of
the Executive's death;
(b) If the Board of Directors chooses to give the Executive notice
of termination of his employment due to his disability, as
defined in the Company's Long Term Disability Plan, a date
specified in the notice which shall be not less than thirty
(30) days after the date on which the notice is received by
the Executive. In the event that the Executive's employment is
terminated due to his disability under this subparagraph (b),
the Executive or the Executive's legal representative shall
continue to be paid the Executive's Base Salary then in effect
for the lesser of (i) two years and (ii) the remaining Term of
Employment. If, prior to the specified termination date in
such notice by the Company, the Executive's illness or
disability has terminated and the
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<PAGE> 5
Executive has resumed his duties under this Agreement, the
Executive shall be entitled to resume employment under this
Agreement as though such notice had not been given. The
opinion of the Executive's physician as to disability shall be
deemed presumptively valid;
(c) If the Board of Directors chooses to give the Executive notice
of termination of his employment for "good cause", a date
specified in the notice, consistent with the provisions of
subparagraph (c). The term "good cause" as used in this
Agreement shall mean the occurrence of any of the following
events:
(i) Executive's arrest for the commission of (A) a
felony, (B)any criminal
act with respect to Executive's employment (including
any criminal act involving a violation of the
Communications Act of 1934, as amended, or
regulations promulgated by the Federal Communications
Commission), or (C) any act that materially threatens
to result in suspension, revocation, or adverse
modification of any FCC license of any broadcast
station owned by any affiliate of the Company or
would subject any such broadcast station to fine or
forfeiture;
(ii) Executive's taking of any action or inaction which
would cause the Company to be in default under any
material contract, lease or other agreement;
(iii) Executive's dependence on alcohol or illegal drugs;
(iv) Failure or refusal to perform according to or follow
the lawful policies and directives of the Chairman of
the Board or the Chief Executive Officer;
(v) Executive's misappropriation, conversion or
embezzlement of the assets of the Company or any
affiliate of the Company;
(vi) A material breach of this Agreement by Executive,
including engaging in action in violation of
Paragraph 8 of this Agreement; or
(vii) Any representation of Executive in Paragraph 9 of
this Agreement being false when made; or
(viii) The Executive voluntarily, including retirement,
ceases his employ with the Company at a time when the
Company is not in material breach of this Agreement.
In the event of a termination under this subparagraph (c),
other than pursuant to clause (c)(vIII), the Company shall
notify the Executive of its
5
<PAGE> 6
intentions to terminate his employment and the specific
reason(s) therefore, and the Executive, on at least ten (10)
business days notice, shall have had an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Executive,
the Company shall afford the Executive a reasonable period,
not to exceed 60 days, to effect such cure, and the
Executive's employment may not be terminated during said
period.
In the event of termination for good cause, the Company will
be released from all further obligation to the Executive under
this Agreement, except for such salary as may have been earned
or bonus award made but not paid prior to the termination;
(d) The date on which the Board of Directors chooses to notify the
Executive that the Board of Directors, in its sole discretion,
has determined that it is in the best interest of the Company
to terminate the Executive's employment. In the event of such
termination, the Executive will continue to be paid the
Executive's Base Salary then in effect for the remaining Term
of Employment;
(e) On the date that the Executive terminates his employment for
Good Reason. For purposes of this subparagraph (e), "Good
Reason" shall mean that the Company has breached any of the
material terms, conditions and provisions of this Agreement.
In such case, the Executive shall notify the Company of his
intentions to terminate his employment and the specific
reason(s) therefor, and the Company, on at least ten (10)
business days notice, shall have an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Company, the
Executive shall afford the Company a reasonable period, not to
exceed 60 days, to effect such cure, and the Executive may not
terminate his employment during said 60 day period. In the
event of such termination, the Executive will continue to be
paid Executive's Base Salary then in effect for the remaining
Term of Employment;
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<PAGE> 7
(f) If, within one year after a Change of Control (as defined
below), the Company terminates Executive's employment with the
Company without Cause, the Executive will continue to be paid
Executive's Base Salary then in effect for the remaining Term
of Employment. For purposes of this Agreement:
(i) A "Change of Control" will occur if (a) none of
Lowell W. Paxson, his estate, his wife, his lineal
descendants, or any trust created for the sole
benefit of any one or more of them during their
lifetimes, or any combination of any of the
foregoing, shall (i) own, directly or indirectly, at
least 35 percent of the issued and outstanding
capital stock of the Company or (ii) have voting
control, directly or indirectly, equal to at least 51
percent of the issued and outstanding capital stock
of the Company entitled to vote in the election of
Board of Directors of the Company; (b) the approval
by the shareholders of the Company of a
reorganization, merger, or consolidation, in each
case, with respect to which persons who were
shareholders of the Company immediately prior to this
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50 percent of
the combined voting power entitled to vote generally
in the election of directors of the reorganized,
merged or consolidated company's (or any successor
entity's) then outstanding securities; or (c) a
liquidation or dissolution of the Company or of the
sale of all or at least 80 percent of the Company's
assets.
(g) The expiration of the Term of Employment as described in
Paragraph 2 of this Agreement.
Following the termination of the Executive's employment under
this Agreement upon the original stated Term of Employment,
the Company will have no further liability to the Executive
hereunder and no further payments will be made to him, except
as provided in subparagraphs (a) through (f) above or any
bonus awards not paid as of such termination, and except to
the extent that the Executive qualifies for benefits under any
employee benefit plan available to the Executive as provided
in Paragraph 5.
7
<PAGE> 8
8. Executive agrees that from the date of this Agreement until the
Covenant Termination Date (as defined in Paragraph 8(a) below),
Executive will not, directly or indirectly, whether as sole proprietor,
partner, lessor, venturer, stockholder, director, officer, employee,
consultant or in any other capacity as principal or agent or through
any person, subsidiary, affiliate or employee acting as nominee or
agent, engage or participate in any of the following actions:
(i) Owning, leasing, managing, operating, controlling or
providing financial assistance (other than (i) in
connection with services provided by Executive as the
employee of a commercial or investment bank or
similar financial services business or consulting
business which extends credit to, makes investments
in, or provides financial advice or consulting
services to, broadcasting companies;
(ii) as an attorney in a practice of law) to any national
(e.g. reaching more than 30% of nationwide television
households) broadcast or cable television network or
television programming service; (ii) Influencing or
attempting to influence any person or entity who is a
contracting party with the Company or any subsidiary
thereof (the "Paxson Group") to terminate any written
or oral agreement with such member of the Paxson
Group; or
(iii) Hiring or attempting to hire for employment any
person who is employed by any member of the Paxson
Group or attempting to influence any such person to
terminate employment with any member of the Paxson
Group.
Nothing herein shall prohibit Executive from investing in any broadcast
company where such investment does not cause Executive to be an
"affiliate" of such entity under the terms of the Securities Act of
1993.
(a) "COVENANT TERMINATION DATE" means:
(i) If Executive's employment is terminated pursuant toa
termination for good reason pursuant to Paragraph
7(e), the earlier of (i) the last day of the 6th full
calendar month after the termination of employment
and (ii) the expiration of the Term of Employment.
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<PAGE> 9
(ii) If Executive's employment is terminated pursuant to a
termination for good cause under Paragraph 7(c) or a
change of control under Paragraph 7(f), the last day
of the 12th full calendar month after the date on
which Executive's employment is terminated.
(iii) If Executive's employment is terminated pursuant to a
termination for any reason other than by Executive
under Paragraph 7(e), or by Company under Paragraphs
7(c) and 7(f), the date on which Executive's
employment is terminated.
(b) Executive agrees that the Covenant Not to Compete is a
material part of Executive's obligations under this Agreement
for which the Company has agreed to compensate Executive as
provided in this Agreement. Accordingly, if Executive at any
time materially breaches this Covenant Not to Compete and the
Company is in compliance with all of its obligations hereunder
and under any other compensation agreements or arrangements
with Executive, then all rights of Executive to compensation
under this Agreement shall immediately terminate, Company
shall have no further liability to Executive and no further
payments (if any are otherwise required to be made hereunder)
shall be required to be made to Executive.
(c) Executive expressly agrees that the services (s)he will render
are of a special and extraordinary character that gives them a
unique value; that the loss of such services could not be
reasonably or adequately compensated by an action for damages;
and that the Company may enforce this non compete covenant
without proof of actual damages. Executive expressly agrees
that his(her) services have special and unique value to the
Company and that the Company would be irreparably injured by a
breach of this Paragraph 8. Further, Executive acknowledges
the legitimate business interest of the Company in the
protection of its trade secrets, confidential business lists
and records, listener/client goodwill and the training
provided during employment. Necessarily, then, any
relationship of Executive with another broadcast entity in the
markets enumerated above during this non-compete period would
involve the transfer of one or all of these items to that
entity. The Executive agrees that the provisions in these
paragraphs of Paragraph 8 are reasonably necessary for the
protection of the Company's
9
<PAGE> 10
business; that they are not unreasonably restrictive of
his(her) rights; and that (s)he feels that any of these
restrictions placed upon him(her) are not prejudicial to the
public interest.
(d) If the covenant in this Paragraph 8 is held to be
unenforceable in any jurisdiction because of the duration or
scope thereof, the court making such determination shall have
the power to reduce the duration and/or scope of the provision
or covenant, and the provision or covenant in its reduced form
shall be enforceable; provided, however, that the
determination of such court shall not affect the
enforceability of this Paragraph 8 in any other jurisdiction.
9. To induce the Company to enter into this Agreement and to employ
Executive, Executive represents and warrants to the Company as of the
date hereof and as of each date of payment of any compensation under
the terms hereof as follows:
(a) The execution, delivery and performance of this Agreement by
Executive does not conflict with result in a breach of, or
constitute a default under any covenant not to compete or any
other agreement, instrument, or license, to which Executive is
a party or by which Executive is bound.
(b) Executive has not:
(i) Been convicted of any felony;
(ii) Committed any criminal act with respect to
Executive's current or any prior employment
(including any criminal act involving a violation of
the Communication Act of 1934, as amended, or
regulations promulgated by the FCC), or
(iii) Committed any act that materially threatened to
result in suspension, revocation, or adverse
modification of any FCC license of any broadcast
station or which subjected any broadcast station to
fine or forfeiture.
(c) Executive is not dependent on alcohol or illegal drugs.
Executive recognizes that the Company shall have the right to
conduct random drug testing of its employees and that
Executive may be called upon in such a manner.
10. Any dispute regarding this Agreement shall be decided by arbitration by
a single arbitrator in West Palm Beach, Florida, in accordance with the
Expedited Arbitration Rules of the American Arbitration Association
then obtaining unless the Parties
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<PAGE> 11
mutually agree otherwise; and, provided further, that both Parties will
be entitled to all rights of discovery in connection with such
arbitration, including, without limitation, all discovery rights
described in the Florida Rules of Civil Procedure. This undertaking to
arbitrate shall be specifically enforceable. The decision rendered by
the arbitrator will be final and judgment may be entered upon it in
accordance with appropriate laws in any court having jurisdiction
thereof. During any arbitration proceeding initiated by the Executive,
the Company agrees, to the extent that it may legally do so, to
continue the Executive in the Company's long-term disability, life and
medical insurance plans.
11. Both during and after the Term of Employment, neither Party will
disclose the financial terms of this Agreement to persons not involved
in the operations of the business of the Company, except as required by
applicable law, regulation, the rules or regulations of a stock
exchange or association on which securities of the Company or any
parent company thereof are listed or legal process (including, without
limitation, oral questions, interrogatories, requests for information
or documents, subpoenas, civil investigative demands, orders, judgments
or decrees). As to persons involved in the operations of the business
of the Company, disclosure of such terms may be made only on a
need-to-know basis. This restriction shall not apply to members of the
Executive's immediate family nor to the Executive's professional
advisers, lenders and investors, provided such persons agree to keep
the financial terms confidential and not disclose them to third
parties.
12. Any waiver by either Party of a breach of any provision of this
Agreement shall not operate as to be construed to be a waiver of any
other breach of such provision of this Agreement. The failure of a
Party to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that
Party of the right thereafter to insist upon strict adherence to that
term or any other term of this Agreement. Neither this Agreement nor
any part of it may be waived, changed or terminated orally, and any
amendment or modification must be in writing and signed by each of the
Parties. Any waiver of any right of the Company hereunder or any
amendment hereof shall require the approval of the members of the
Compensation Committee of the Board of Directors who are not employees
of the Company or, if the Company does not have a Compensation
Committee or the Compensation Committee does not have any members who
are
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<PAGE> 12
not employees of the Company, by the members of the Board of Directors
who are not employees of the Company. Until such approval or waiver has
been obtained, no such waiver or amendment shall be effective.
13. The obligations and rights of the Executive under this Agreement shall
inure to the benefit of and shall be binding upon the heirs and legal
representatives of the Executive. Neither Party may assign this
Agreement without the prior written consent of the other.
14. This Agreement may be executed in any number of counterparts, each of
which shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
15. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained herein or made pursuant hereto.
16. This Agreement will be governed and construed and enforced in
accordance with the laws of the State of Florida.
17. This Agreement contains the entire understanding of the Parties
relating to the subject matter of this Agreement and supersedes all
other prior written or oral agreements. The Executive acknowledges
that, in entering into this Agreement, he does not rely on any
statements or representations not contained in this Agreement.
18. Any term or provision of this Agreement which is determined to be
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
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<PAGE> 13
19. Except as otherwise specifically provided in this Agreement, all
notices and other communications required or permitted to be given
under this Agreement shall be in writing and delivery thereof shall be
deemed to have been made when such notice shall have been either (i)
deposited in first class mail, postage prepaid, return receipt
requested, or any comparable or superior postal or air courier service
then in effect, or (ii) transmitted by hand delivery, telegram, telex,
telecopier or facsimile transmission, to the party entitled to receive
the same at the address indicated below or at such other address as
such party shall have specified by written notice to the other party
hereto given in accordance herewith:
if to the Company: Lowell W. Paxson
Chairman and CEO
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
if to the Executive: address below Executive's signature below
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the first date written above.
Name: Dean M. Goodman
Address:
-------------------------
PAXSON COMMUNICATIONS CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
13
<PAGE> 1
Exhibit 10.200
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made as of this _____ day of _________________, 1998,
(this "Agreement") by and between Paxson Communications Corporation, a Delaware
corporation with its principal place of business at 601 Clearwater Park Road,
West Palm Beach, Florida 33401-6233 ("Company") and J. Jay Hoker an individual,
currently residing at the address set forth under such individual's signature
below (the "Executive") (collectively, the "Parties").
WHEREAS, Company desires to employ Executive as President - Paxson Television
Station Group, and the Parties desire to enter into this agreement to secure
Executive's employment as President - Paxson Television Station Group during the
term hereof, all on the terms and conditions set forth herein.
NOW, THEREFORE, the Parties agree as follows:
1. The Company agrees to employ the Executive and the Executive agrees to
serve the Company as President - Paxson Television Station Group, based
primarily at the Company's West Palm Beach, Florida offices, on the
terms and conditions hereinafter set forth.
2. Employment of the Executive by the Company pursuant to this Agreement
will be for a five (5) year period commencing effective January 1,
1998, unless sooner terminated, pursuant to Paragraph 7 hereof (the
"Term of Employment").
3. Subject to the direction and control of the Chairman of the Board and
Chief Executive Officer, and such other senior executive officer as the
Chairman of the Board may direct to whom Executive will report, the
Executive shall have all of the power and authority inherent in the
position of President - Paxson Television Station Group and shall
supervise and be responsible for the operations and management of the
Company and its subsidiaries. The Executive shall also have such other
executive powers and duties, consistent with his responsibilities as
President - Paxson Television Station Group as may, from time to time,
be prescribed by the Chairman of the Board and Chief Executive Officer.
The Executive agrees to render his services under this Agreement
loyally and faithfully, to the best of his abilities and in substantial
conformance with all laws, rules and
<PAGE> 2
Company policies, and in connection therewith, will not improperly or
without good cause, in the best interest of the Company, disclose any
trade secrets or other confidential information of the Company. Without
limiting the foregoing, except as expressly modified herein, Executive
shall be subject to all of the Company's policies including payola,
plugola and conflicts of interests, as well as the following:
(a) Executive will comply with all the Company and professional
standards governing Executive's objectivity in the performance
of Executive's duties, including restrictions on outside
activities, investments, business interests, or other
involvements which could compromise Executive's objectivity or
create an impression of conflict of interest. Executive will
not, without the prior approval of the Chairman of the Board
or the Chief Executive Officer , accept any gift,
compensation, or gratuity (which excludes business meals and
entertainment received by Executive in the ordinary course of
business) from any person or entity with which the the Company
or any of its broadcast properties is or may be in competition
or in any instance where there is a stated or implied
expectation of favorable treatment of that person or entity.
Executive will not, without the prior written approval of the
Chairman of the Board or the Chief Executive Officer, take
advantage of any business opportunity or situation or engage
in any enterprise or venture of which the the Company may have
an interest on his or her own behalf, if said business
opportunity or situation, enterprise or venture is related in
any way to or is similar to the business of the the Company.
(b) In performing Executive's duties under this Agreement,
Executive shall conduct himself with due regard to social
conventions, public morals and standards of decency, and will
not cause or permit any situation or occurrence which would
tend to degrade, scandalize, bring into public disrepute, or
otherwise lower the community standing of Executive or the
Company's public image.
4. Company will pay the Executive a base salary (the "Base Salary"), to be
paid on the same payroll cycle as other salaried employees of the
Company, at an annual rate for 1998 of $315,000, which Base Salary
shall be increased annually, effective January 1 of each year
thereafter during the Term of Employment, by an amount
2
<PAGE> 3
equal to not less than 10% of the Base Salary in effect for the most
recently ended calendar year.
In addition to the Base Salary, the Executive agrees to participate in
the Company's Executive Bonus Plan and receive bonus awards from time
thereunder, subject to the satisfaction of the terms and conditions set
forth therein. Without limiting the foregoing, nothing shall preclude
Executive from receiving special cash bonus awards not included within
the Executive Bonus Plan, as determined from time in the sole
discretion of the Company. In addition to Executive's Base Salary and
participation in the Executive Bonus Plan, Executive may, as determined
from time to time, in the sole discretion of the Company, be eligible
to receive or participate in various non-cash compensation programs,
including, without limitation, annual and special non-cash bonus
awards, grants of stock options, restricted stock, "phantom-equity" and
stock appreciation rights (collectively, "Non-Cash Bonus Awards").
Employee's rights in respect of any Non-Cash Compensation shall be
governed under the terms of a separate document or documents, if any
Non-Cash Compensation is to be awarded to Employee.
The Company will have the right to withhold from payments otherwise due
and owing to Executive or to require the Executive to remit to the
Company in cash upon demand an amount sufficient to satisfy any federal
(including FICA and FUTA amounts), state, and/or local withholding tax
requirements at the time the Executive recognizes income for federal,
state, and/or local tax purposes with respect to any payments to
Executive under the terms hereof or under any other compensation
arrangements, including, Non-Cash Compensation. If any excise tax
withholding by the Company is required pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") on an "excess
parachute payment," as this term is defined in Section 4999 of the
Code, in connection with any payments made under the terms hereof, or
under any other compensation arrangements, including, the Executive
Bonus Plan and any Non-Cash Compensation, the Company will be required
to pay compensation to the Executive ("Gross-Up Payment") in an amount
equal to the excise tax withholding required to be withheld by the
Company on such amounts paid to Executive and the Gross-Up Payment
itself. The Company then will withhold the Gross-Up Payment to satisfy
this withholding obligation. Except as otherwise provided by this
Paragraph 4, the Company will not be liable to
3
<PAGE> 4
Executive for any tax consequences incurred by Executive with respect
to payments to Executive under the terms hereof or under any other
compensation arrangements, including, Non-Cash Compensation.
5. During the Term of Employment, the Executive shall be eligible to
participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established, which are generally
available to other senior executives of the Company, including, without
limitation, all life, group insurance and medical plans and all
disability, retirement and other employee benefit plans of the Company,
as long as any such plan or arrangement remains generally applicable to
other senior executives of the Company.
6. The Executive shall be reimbursed for all reasonable expenses incurred
by him in the discharge of his duties, including, but not limited to,
expenses for entertainment and travel. The Executive shall account to
the Company for all such expenses.
7. Notwithstanding the provisions of Paragraph 2 of this Agreement, the
Executive's Term of Employment pursuant to this Agreement shall
terminate on the earliest of the following dates:
(a) The date of the Executive's death. In such event, the Company
shall pay to the Executive's legal representatives or named
beneficiaries (as the Executive may designate from time to
time in a writing delivered to the Company) the Executive's
Base Salary for a one (1) year period following the date of
the Executive's death;
(b) If the Board of Directors chooses to give the Executive notice
of termination of his employment due to his disability, as
defined in the Company's Long Term Disability Plan, a date
specified in the notice which shall be not less than thirty
(30) days after the date on which the notice is received by
the Executive. In the event that the Executive's employment is
terminated due to his disability under this subparagraph (b),
the Executive or the Executive's legal representative shall
continue to be paid the Executive's Base Salary then in effect
for the lesser of (i) two years and (ii) the remaining Term of
Employment. If, prior to the specified termination date in
such notice by the Company, the Executive's illness or
disability has terminated and the
4
<PAGE> 5
Executive has resumed his duties under this Agreement, the
Executive shall be entitled to resume employment under this
Agreement as though such notice had not been given. The
opinion of the Executive's physician as to disability shall be
deemed presumptively valid;
(c) If the Board of Directors chooses to give the Executive notice
of termination of his employment for "good cause", a date
specified in the notice, consistent with the provisions of
subparagraph (c). The term "good cause" as used in this
Agreement shall mean the occurrence of any of the following
events:
(i) Executive's arrest for the commission of (A) a
felony, (B) any criminal act with respect to
Executive's employment (including any criminal act
involving a violation of the Communications Act of
1934, as amended, or regulations promulgated by the
Federal Communications Commission), or (C) any act
that materially threatens to result in suspension,
revocation, or adverse modification of any FCC
license of any broadcast station owned by any
affiliate of the Company or would subject any such
broadcast station to fine or forfeiture;
(ii) Executive's taking of any action or inaction which
would cause the Company to be in default under any
material contract, lease or other agreement;
(iii) Executive's dependence on alcohol or illegal drugs;
(iv) Failure or refusal to perform according to or follow
the lawful policies and directives of the Chairman of
the Board or the Chief Executive Officer;
(v) Executive's misappropriation, conversion or
embezzlement of the assets of the Company or any
affiliate of the Company;
(vi) A material breach of this Agreement by Executive,
including engaging in action in violation of
Paragraph 8 of this Agreement; or
(vii) Any representation of Executive in Paragraph 9 of
this Agreement being false when made; or
(viii) The Executive voluntarily, including retirement,
ceases his employ with the Company at a time when the
Company is not in material breach of this Agreement.
In the event of a termination under this subparagraph (c),
other than pursuant to clause (c)(vIII), the Company shall
notify the Executive of its
5
<PAGE> 6
intentions to terminate his employment and the specific
reason(s) therefore, and the Executive, on at least ten (10)
business days notice, shall have had an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Executive,
the Company shall afford the Executive a reasonable period,
not to exceed 60 days, to effect such cure, and the
Executive's employment may not be terminated during said
period.
In the event of termination for good cause, the Company will
be released from all further obligation to the Executive under
this Agreement, except for such salary as may have been earned
or bonus award made but not paid prior to the termination;
(d) The date on which the Board of Directors chooses to notify the
Executive that the Board of Directors, in its sole discretion,
has determined that it is in the best interest of the Company
to terminate the Executive's employment. In the event of such
termination, the Executive will continue to be paid the
Executive's Base Salary then in effect for the remaining Term
of Employment;
(e) On the date that the Executive terminates his employment for
Good Reason. For purposes of this subparagraph (e), "Good
Reason" shall mean that the Company has breached any of the
material terms, conditions and provisions of this Agreement.
In such case, the Executive shall notify the Company of his
intentions to terminate his employment and the specific
reason(s) therefor, and the Company, on at least ten (10)
business days notice, shall have an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Company, the
Executive shall afford the Company a reasonable period, not to
exceed 60 days, to effect such cure, and the Executive may not
terminate his employment during said 60 day period. In the
event of such termination, the Executive will continue to be
paid Executive's Base Salary then in effect for the remaining
Term of Employment;
6
<PAGE> 7
(f) If, within one year after a Change of Control (as defined
below), the Company terminates Executive's employment with the
Company without Cause, the Executive will continue to be paid
Executive's Base Salary then in effect for the remaining Term
of Employment. For purposes of this Agreement:
(i) A "Change of Control" will occur if (a) none of
Lowell W. Paxson, his estate, his wife, his lineal
descendants, or any trust created for the sole
benefit of any one or more of them during their
lifetimes, or any combination of any of the
foregoing, shall (i) own, directly or indirectly, at
least 35 percent of the issued and outstanding
capital stock of the Company or (ii) have voting
control, directly or indirectly, equal to at least 51
percent of the issued and outstanding capital stock
of the Company entitled to vote in the election of
Board of Directors of the Company; (b) the approval
by the shareholders of the Company of a
reorganization, merger, or consolidation, in each
case, with respect to which persons who were
shareholders of the Company immediately prior to this
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50 percent of
the combined voting power entitled to vote generally
in the election of directors of the reorganized,
merged or consolidated company's (or any successor
entity's) then outstanding securities; or (c) a
liquidation or dissolution of the Company or of the
sale of all or at least 80 percent of the Company's
assets.
(g) The expiration of the Term of Employment as described in
Paragraph 2 of this Agreement.
Following the termination of the Executive's employment under
this Agreement upon the original stated Term of Employment,
the Company will have no further liability to the Executive
hereunder and no further payments will be made to him, except
as provided in subparagraphs (a) through (f) above or any
bonus awards not paid as of such termination, and except to
the extent that the Executive qualifies for benefits under any
employee benefit plan available to the Executive as provided
in Paragraph 5.
7
<PAGE> 8
8. Executive agrees that from the date of this Agreement until the
Covenant Termination Date (as defined in Paragraph 8(a) below),
Executive will not, directly or indirectly, whether as sole proprietor,
partner, lessor, venturer, stockholder, director, officer, employee,
consultant or in any other capacity as principal or agent or through
any person, subsidiary, affiliate or employee acting as nominee or
agent, engage or participate in any of the following actions:
(i) Owning, leasing, managing, operating, controlling or
providing financial assistance (other than (i) in
connection with services provided by Executive as the
employee of a commercial or investment bank or
similar financial services business or consulting
business which extends credit to, makes investments
in, or provides financial advice or consulting
services to, broadcasting companies;
(ii) as an attorney in a practice of law) to any national
(e.g. reaching more than 30% of nationwide television
households) broadcast or cable television network or
television programming service; (ii) Influencing or
attempting to influence any person or entity who is a
contracting party with the Company or any subsidiary
thereof (the "Paxson Group") to terminate any written
or oral agreement with such member of the Paxson
Group; or
(iii) Hiring or attempting to hire for employment any
person who is employed by any member of the Paxson
Group or attempting to influence any such person to
terminate employment with any member of the Paxson
Group.
Nothing herein shall prohibit Executive from investing in any broadcast
company where such investment does not cause Executive to be an
"affiliate" of such entity under the terms of the Securities Act of
1993.
(a) "COVENANT TERMINATION DATE" means:
(i) If Executive's employment is terminated pursuant toa
termination for good reason pursuant to Paragraph
7(e), the earlier of (i) the last day of the 6th full
calendar month after the termination of employment
and (ii) the expiration of the Term of Employment.
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<PAGE> 9
(ii) If Executive's employment is terminated pursuant to a
termination for good cause under Paragraph 7(c) or a
change of control under Paragraph 7(f), the last day
of the 12th full calendar month after the date on
which Executive's employment is terminated.
(iii) If Executive's employment is terminated pursuant to a
termination for any reason other than by Executive
under Paragraph 7(e), or by Company under Paragraphs
7(c) and 7(f), the date on which Executive's
employment is terminated.
(b) Executive agrees that the Covenant Not to Compete is a
material part of Executive's obligations under this Agreement
for which the Company has agreed to compensate Executive as
provided in this Agreement. Accordingly, if Executive at any
time materially breaches this Covenant Not to Compete and the
Company is in compliance with all of its obligations hereunder
and under any other compensation agreements or arrangements
with Executive, then all rights of Executive to compensation
under this Agreement shall immediately terminate, Company
shall have no further liability to Executive and no further
payments (if any are otherwise required to be made hereunder)
shall be required to be made to Executive.
(c) Executive expressly agrees that the services (s)he will render
are of a special and extraordinary character that gives them a
unique value; that the loss of such services could not be
reasonably or adequately compensated by an action for damages;
and that the Company may enforce this non compete covenant
without proof of actual damages. Executive expressly agrees
that his(her) services have special and unique value to the
Company and that the Company would be irreparably injured by a
breach of this Paragraph 8. Further, Executive acknowledges
the legitimate business interest of the Company in the
protection of its trade secrets, confidential business lists
and records, listener/client goodwill and the training
provided during employment. Necessarily, then, any
relationship of Executive with another broadcast entity in the
markets enumerated above during this non-compete period would
involve the transfer of one or all of these items to that
entity. The Executive agrees that the provisions in these
paragraphs of Paragraph 8 are reasonably necessary for the
protection of the Company's
9
<PAGE> 10
business; that they are not unreasonably restrictive of
his(her) rights; and that (s)he feels that any of these
restrictions placed upon him(her) are not prejudicial to the
public interest.
(d) If the covenant in this Paragraph 8 is held to be
unenforceable in any jurisdiction because of the duration or
scope thereof, the court making such determination shall have
the power to reduce the duration and/or scope of the provision
or covenant, and the provision or covenant in its reduced form
shall be enforceable; provided, however, that the
determination of such court shall not affect the
enforceability of this Paragraph 8 in any other jurisdiction.
9. To induce the Company to enter into this Agreement and to employ
Executive Executive, Executive represents and warrants to the Company
as of the date hereof and as of each date of payment of any
compensation under the terms hereof as follows:
(a) The execution, delivery and performance of this Agreement by
Executive does not conflict with result in a breach of, or
constitute a default under any covenant not to compete or any
other agreement, instrument, or license, to which Executive is
a party or by which Executive is bound.
(b) Executive has not:
(i) Been convicted of any felony;
(ii) Committed any criminal act with respect to
Executive's current or any prior employment
(including any criminal act involving a violation of
the Communication Act of 1934, as amended, or
regulations promulgated by the FCC), or
(iii) Committed any act that materially threatened to
result in suspension, revocation, or adverse
modification of any FCC license of any broadcast
station or which subjected any broadcast station to
fine or forfeiture.
(c) Executive is not dependent on alcohol or illegal drugs.
Executive recognizes that the Company shall have the right to
conduct random drug testing of its employees and that
Executive may be called upon in such a manner.
10. Any dispute regarding this Agreement shall be decided by arbitration by
a single arbitrator in West Palm Beach, Florida, in accordance with the
Expedited Arbitration
10
<PAGE> 11
Rules of the American Arbitration Association then obtaining unless the
Parties mutually agree otherwise; and, provided further, that both
Parties will be entitled to all rights of discovery in connection with
such arbitration, including, without limitation, all discovery rights
described in the Florida Rules of Civil Procedure. This undertaking to
arbitrate shall be specifically enforceable. The decision rendered by
the arbitrator will be final and judgment may be entered upon it in
accordance with appropriate laws in any court having jurisdiction
thereof. During any arbitration proceeding initiated by the Executive,
the Company agrees, to the extent that it may legally do so, to
continue the Executive in the Company's long-term disability, life and
medical insurance plans.
11. Both during and after the Term of Employment, neither Party will
disclose the financial terms of this Agreement to persons not involved
in the operations of the business of the Company, except as required by
applicable law, regulation, the rules or regulations of a stock
exchange or association on which securities of the Company or any
parent company thereof are listed or legal process (including, without
limitation, oral questions, interrogatories, requests for information
or documents, subpoenas, civil investigative demands, orders, judgments
or decrees). As to persons involved in the operations of the business
of the Company, disclosure of such terms may be made only on a
need-to-know basis. This restriction shall not apply to members of the
Executive's immediate family nor to the Executive's professional
advisers, lenders and investors, provided such persons agree to keep
the financial terms confidential and not disclose them to third
parties.
12. Any waiver by either Party of a breach of any provision of this
Agreement shall not operate as to be construed to be a waiver of any
other breach of such provision of this Agreement. The failure of a
Party to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that
Party of the right thereafter to insist upon strict adherence to that
term or any other term of this Agreement. Neither this Agreement nor
any part of it may be waived, changed or terminated orally, and any
amendment or modification must be in writing and signed by each of the
Parties. Any waiver of any right of the Company hereunder or any
amendment hereof shall require the approval of the members of the
Compensation Committee of the Board of Directors who are not employees
of the Company or, if the Company does not have a Compensation
11
<PAGE> 12
Committee or the Compensation Committee does not have any members who
are not employees of the Company, by the members of the Board of
Directors who are not employees of the Company. Until such approval or
waiver has been obtained, no such waiver or amendment shall be
effective.
13. The obligations and rights of the Executive under this Agreement shall
inure to the benefit of and shall be binding upon the heirs and legal
representatives of the Executive. Neither Party may assign this
Agreement without the prior written consent of the other.
14. This Agreement may be executed in any number of counterparts, each of
which shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
15. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained herein or made pursuant hereto.
16. This Agreement will be governed and construed and enforced in
accordance with the laws of the State of Florida.
17. This Agreement contains the entire understanding of the Parties
relating to the subject matter of this Agreement and supersedes all
other prior written or oral agreements. The Executive acknowledges
that, in entering into this Agreement, he does not rely on any
statements or representations not contained in this Agreement.
18. Any term or provision of this Agreement which is determined to be
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
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<PAGE> 13
19. Except as otherwise specifically provided in this Agreement, all
notices and other communications required or permitted to be given
under this Agreement shall be in writing and delivery thereof shall be
deemed to have been made when such notice shall have been either (i)
deposited in first class mail, postage prepaid, return receipt
requested, or any comparable or superior postal or air courier service
then in effect, or (ii) transmitted by hand delivery, telegram, telex,
telecopier or facsimile transmission, to the party entitled to receive
the same at the address indicated below or at such other address as
such party shall have specified by written notice to the other party
hereto given in accordance herewith:
if to the Company: Lowell W. Paxson
Chairman
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
if to the Executive: address below Executive's signature below
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the first date written above.
Name: J. Jay Hoker
Address:
--------------------------
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
13
<PAGE> 1
Exhibit 10.201
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made as of this _____ day of _________________, 1998,
(this "Agreement") by and between Paxson Communications Corporation, a Delaware
corporation with its principal place of business at 601 Clearwater Park Road,
West Palm Beach, Florida 33401-6233 ("Company") and Arthur D. Tek, an
individual, currently residing at the address set forth under such individual's
signature below (the "Executive") (collectively, the "Parties").
WHEREAS, Company desires to employ Executive as Vice President, Treasurer and
Chief Financial Officer, and the Parties desire to enter into this agreement to
secure Executive's employment as Vice President, Treasurer and Chief Financial
Officer during the term hereof, all on the terms and conditions set forth
herein.
NOW, THEREFORE, the Parties agree as follows:
1. The Company agrees to employ the Executive and the Executive agrees to
serve the Company as Vice President, Treasurer and Chief Financial
Officer based primarily at the Company's West Palm Beach, Florida
offices, on the terms and conditions hereinafter set forth.
2. Employment of the Executive by the Company pursuant to this Agreement
will be for a five (5) year period commencing effective January 1,
1998, unless sooner terminated, pursuant to Paragraph 7 hereof (the
"Term of Employment").
3. Subject to the direction and control of the Chairman of the Board and
Chief Executive Officer, and such other senior executive officer as the
Chairman of the Board may direct to whom Executive will report, the
Executive shall have all of the power and authority inherent in the
position of Vice President, Treasurer and Chief Financial Officer and
shall supervise and be responsible for the operations and management of
the Company and its subsidiaries. The Executive shall also have such
other executive powers and duties, consistent with his responsibilities
as Vice President, Treasurer and Chief Financial Officer, as may, from
time to time, be prescribed by the Chairman of the Board and Chief
Executive Officer. The Executive agrees to render his services under
this Agreement loyally and faithfully, to the best of his abilities and
in substantial conformance with all laws, rules and
<PAGE> 2
Company policies, and in connection therewith, will not improperly or
without good cause, in the best interest of the Company, disclose any
trade secrets or other confidential information of the Company. Without
limiting the foregoing, except as expressly modified herein, Executive
shall be subject to all of the Company's policies including payola,
plugola and conflicts of interests, as well as the following:
(a) Executive will comply with all the Company and professional
standards governing Executive's objectivity in the performance
of Executive's duties, including restrictions on outside
activities, investments, business interests, or other
involvements which could compromise Executive's objectivity or
create an impression of conflict of interest. Executive will
not, without the prior approval of the Chairman of the Board
or the Chief Executive Officer , accept any gift,
compensation, or gratuity (which excludes business meals and
entertainment received by Executive in the ordinary course of
business) from any person or entity with which the the Company
or any of its broadcast properties is or may be in competition
or in any instance where there is a stated or implied
expectation of favorable treatment of that person or entity.
Executive will not, without the prior written approval of the
Chairman of the Board or the Chief Executive Officer, take
advantage of any business opportunity or situation or engage
in any enterprise or venture of which the the Company may have
an interest on his or her own behalf, if said business
opportunity or situation, enterprise or venture is related in
any way to or is similar to the business of the the Company.
(b) In performing Executive's duties under this Agreement,
Executive shall conduct himself with due regard to social
conventions, public morals and standards of decency, and will
not cause or permit any situation or occurrence which would
tend to degrade, scandalize, bring into public disrepute, or
otherwise lower the community standing of Executive or the
Company's public image.
4. Company will pay the Executive a base salary (the "Base Salary"), to be
paid on the same payroll cycle as other salaried employees of the
Company, at an annual rate for 1998 of $236,250, which Base Salary
shall be increased annually, effective January 1 of each year
thereafter during the Term of Employment, by an amount
2
<PAGE> 3
equal to not less than 10% of the Base Salary in effect for the most
recently ended calendar year.
In addition to the Base Salary, the Executive agrees to participate in
the Company's Executive Bonus Plan and receive bonus awards from time
thereunder, subject to the satisfaction of the terms and conditions set
forth therein. Without limiting the foregoing, nothing shall preclude
Executive from receiving special cash bonus awards not included within
the Executive Bonus Plan, as determined from time in the sole
discretion of the Company. In addition to Executive's Base Salary and
participation in the Executive Bonus Plan, Executive may, as determined
from time to time, in the sole discretion of the Company, be eligible
to receive or participate in various non-cash compensation programs,
including, without limitation, annual and special non-cash bonus
awards, grants of stock options, restricted stock, "phantom-equity" and
stock appreciation rights (collectively, "Non-Cash Bonus Awards").
Employee's rights in respect of any Non-Cash Compensation shall be
governed under the terms of a separate document or documents, if any
Non-Cash Compensation is to be awarded to Employee.
The Company will have the right to withhold from payments otherwise due
and owing to Executive or to require the Executive to remit to the
Company in cash upon demand an amount sufficient to satisfy any federal
(including FICA and FUTA amounts), state, and/or local withholding tax
requirements at the time the Executive recognizes income for federal,
state, and/or local tax purposes with respect to any payments to
Executive under the terms hereof or under any other compensation
arrangements, including, Non-Cash Compensation. If any excise tax
withholding by the Company is required pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") on an "excess
parachute payment," as this term is defined in Section 4999 of the
Code, in connection with any payments made under the terms hereof, or
under any other compensation arrangements, including, the Executive
Bonus Plan and any Non-Cash Compensation, the Company will be required
to pay compensation to the Executive ("Gross-Up Payment") in an amount
equal to the excise tax withholding required to be withheld by the
Company on such amounts paid to Executive and the Gross-Up Payment
itself. The Company then will withhold the Gross-Up Payment to satisfy
this withholding obligation. Except as otherwise provided by this
Paragraph 4, the Company will not be liable to
3
<PAGE> 4
Executive for any tax consequences incurred by Executive with respect
to payments to Executive under the terms hereof or under any other
compensation arrangements, including, Non-Cash Compensation.
5. During the Term of Employment, the Executive shall be eligible to
participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established, which are generally
available to other senior executives of the Company, including, without
limitation, all life, group insurance and medical plans and all
disability, retirement and other employee benefit plans of the Company,
as long as any such plan or arrangement remains generally applicable to
other senior executives of the Company.
6. The Executive shall be reimbursed for all reasonable expenses incurred
by him in the discharge of his duties, including, but not limited to,
expenses for entertainment and travel. The Executive shall account to
the Company for all such expenses.
7. Notwithstanding the provisions of Paragraph 2 of this Agreement, the
Executive's Term of Employment pursuant to this Agreement shall
terminate on the earliest of the following dates:
(a) The date of the Executive's death. In such event, the Company
shall pay to the Executive's legal representatives or named
beneficiaries (as the Executive may designate from time to
time in a writing delivered to the Company) the Executive's
Base Salary for a one (1) year period following the date of
the Executive's death;
(b) If the Board of Directors chooses to give the Executive notice
of termination of his employment due to his disability, as
defined in the Company's Long Term Disability Plan, a date
specified in the notice which shall be not less than thirty
(30) days after the date on which the notice is received by
the Executive. In the event that the Executive's employment is
terminated due to his disability under this subparagraph (b),
the Executive or the Executive's legal representative shall
continue to be paid the Executive's Base Salary then in effect
for the lesser of (i) two years and (ii) the remaining Term of
Employment. If, prior to the specified termination date in
such notice by the Company, the Executive's illness or
disability has terminated and the
4
<PAGE> 5
Executive has resumed his duties under this Agreement, the
Executive shall be entitled to resume employment under this
Agreement as though such notice had not been given. The
opinion of the Executive's physician as to disability shall be
deemed presumptively valid;
(c) If the Board of Directors chooses to give the Executive notice
of termination of his employment for "good cause", a date
specified in the notice, consistent with the provisions of
subparagraph (c). The term "good cause" as used in this
Agreement shall mean the occurrence of any of the following
events:
(i) Executive's arrest for the commission of (A) a
felony, (B) any criminal act with respect to
Executive's employment (including any criminal act
involving a violation of the Communications Act of
1934, as amended, or regulations promulgated by the
Federal Communications Commission), or (C) any act
that materially threatens to result in suspension,
revocation, or adverse modification of any FCC
license of any broadcast station owned by any
affiliate of the Company or would subject any such
broadcast station to fine or forfeiture;
(ii) Executive's taking of any action or inaction which
would cause the Company to be in default under any
material contract, lease or other agreement;
(iii) Executive's dependence on alcohol or illegal drugs;
(iv) Failure or refusal to perform according to or follow
the lawful policies and directives of the Chairman of
the Board or the Chief Executive Officer;
(v) Executive's misappropriation, conversion or
embezzlement of the assets of the Company or any
affiliate of the Company;
(vi) A material breach of this Agreement by Executive,
including engaging in action in violation of
Paragraph 8 of this Agreement; or
(vii) Any representation of Executive in Paragraph 9 of
this Agreement being false when made; or
(viii) The Executive voluntarily, including retirement,
ceases his employ with the Company at a time when the
Company is not in material breach of this Agreement.
In the event of a termination under this subparagraph (c),
other than pursuant to clause (c)(vIII), the Company shall
notify the Executive of its
5
<PAGE> 6
intentions to terminate his employment and the specific
reason(s) therefore, and the Executive, on at least ten (10)
business days notice, shall have had an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Executive,
the Company shall afford the Executive a reasonable period,
not to exceed 60 days, to effect such cure, and the
Executive's employment may not be terminated during said
period.
In the event of termination for good cause, the Company will
be released from all further obligation to the Executive under
this Agreement, except for such salary as may have been earned
or bonus award made but not paid prior to the termination;
(d) The date on which the Board of Directors chooses to notify the
Executive that the Board of Directors, in its sole discretion,
has determined that it is in the best interest of the Company
to terminate the Executive's employment. In the event of such
termination, the Executive will continue to be paid the
Executive's Base Salary then in effect for the lesser of (i)
two years and (ii) the remaining Term of Employment;
(e) On the date that the Executive terminates his employment for
Good Reason. For purposes of this subparagraph (e), "Good
Reason" shall mean that the Company has breached any of the
material terms, conditions and provisions of this Agreement.
In such case, the Executive shall notify the Company of his
intentions to terminate his employment and the specific
reason(s) therefor, and the Company, on at least ten (10)
business days notice, shall have an opportunity to respond
thereto; and, provided further, if the basis for such
termination is susceptible of being cured by the Company, the
Executive shall afford the Company a reasonable period, not to
exceed 60 days, to effect such cure, and the Executive may not
terminate his employment during said 60 day period. In the
event of such termination, the Executive will continue to be
paid Executive's Base Salary then in effect for the lesser of
(i) two years and (ii) the remaining Term of Employment;
6
<PAGE> 7
(f) If, within one year after a Change of Control (as defined
below), the Company terminates Executive's employment with the
Company without Cause, the Executive will continue to be paid
Executive's Base Salary then in effect for the lesser of (i)
two years and (ii) the remaining Term of Employment. For
purposes of this Agreement:
(i) A "Change of Control" will occur if (a) none of
Lowell W. Paxson, his estate, his wife, his lineal
descendants, or any trust created for the sole
benefit of any one or more of them during their
lifetimes, or any combination of any of the
foregoing, shall (i) own, directly or indirectly, at
least 35 percent of the issued and outstanding
capital stock of the Company or (ii) have voting
control, directly or indirectly, equal to at least 51
percent of the issued and outstanding capital stock
of the Company entitled to vote in the election of
Board of Directors of the Company; (b) the approval
by the shareholders of the Company of a
reorganization, merger, or consolidation, in each
case, with respect to which persons who were
shareholders of the Company immediately prior to this
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50 percent of
the combined voting power entitled to vote generally
in the election of directors of the reorganized,
merged or consolidated company's (or any successor
entity's) then outstanding securities; or (c) a
liquidation or dissolution of the Company or of the
sale of all or at least 80 percent of the Company's
assets.
(g) The expiration of the Term of Employment as described in
Paragraph 2 of this Agreement.
Following the termination of the Executive's employment under
this Agreement upon the original stated Term of Employment,
the Company will have no further liability to the Executive
hereunder and no further payments will be made to him, except
as provided in subparagraphs (a) through (f) above or any
bonus awards not paid as of such termination, and except to
the extent that the Executive qualifies for benefits under any
employee benefit plan available to the Executive as provided
in Paragraph 5.
7
<PAGE> 8
8. Executive agrees that from the date of this Agreement until the
Covenant Termination Date (as defined in Paragraph 8(a) below),
Executive will not, directly or indirectly, whether as sole proprietor,
partner, lessor, venturer, stockholder, director, officer, employee,
consultant or in any other capacity as principal or agent or through
any person, subsidiary, affiliate or employee acting as nominee or
agent, engage or participate in any of the following actions:
(i) Owning, leasing, managing, operating, controlling or
providing financial assistance (other than (i) in
connection with services provided by Executive as the
employee of a commercial or investment bank or
similar financial services business or consulting
business which extends credit to, makes investments
in, or provides financial advice or consulting
services to, broadcasting companies;
(ii) as an attorney in a practice of law) to any national
(e.g. reaching more than 30% of nationwide television
households) broadcast or cable television network or
television programming service; (ii) Influencing or
attempting to influence any person or entity who is a
contracting party with the Company or any subsidiary
thereof (the "Paxson Group") to terminate any written
or oral agreement with such member of the Paxson
Group; or
(iii) Hiring or attempting to hire for employment any
person who is employed by any member of the Paxson
Group or attempting to influence any such person to
terminate employment with any member of the Paxson
Group.
Nothing herein shall prohibit Executive from investing in any broadcast
company where such investment does not cause Executive to be an
"affiliate" of such entity under the terms of the Securities Act of
1993.
(a) "COVENANT TERMINATION DATE" means:
(i) If Executive's employment is terminated pursuant toa
termination for good reason pursuant to Paragraph
7(e), the earlier of (i) the last day of the 6th full
calendar month after the termination of employment
and (ii) the expiration of the Term of Employment.
8
<PAGE> 9
(ii) If Executive's employment is terminated pursuant to a
termination for good cause under Paragraph 7(c) or a
change of control under Paragraph 7(f), the last day
of the 12th full calendar month after the date on
which Executive's employment is terminated.
(iii) If Executive's employment is terminated pursuant to a
termination for any reason other than by Executive
under Paragraph 7(e), or by Company under Paragraphs
7(c) and 7(f), the date on which Executive's
employment is terminated.
(b) Executive agrees that the Covenant Not to Compete is a
material part of Executive's obligations under this Agreement
for which the Company has agreed to compensate Executive as
provided in this Agreement. Accordingly, if Executive at any
time materially breaches this Covenant Not to Compete and the
Company is in compliance with all of its obligations hereunder
and under any other compensation agreements or arrangements
with Executive, then all rights of Executive to compensation
under this Agreement shall immediately terminate, Company
shall have no further liability to Executive and no further
payments (if any are otherwise required to be made hereunder)
shall be required to be made to Executive.
(c) Executive expressly agrees that the services (s)he will render
are of a special and extraordinary character that gives them a
unique value; that the loss of such services could not be
reasonably or adequately compensated by an action for damages;
and that the Company may enforce this non compete covenant
without proof of actual damages. Executive expressly agrees
that his(her) services have special and unique value to the
Company and that the Company would be irreparably injured by a
breach of this Paragraph 8. Further, Executive acknowledges
the legitimate business interest of the Company in the
protection of its trade secrets, confidential business lists
and records, listener/client goodwill and the training
provided during employment. Necessarily, then, any
relationship of Executive with another broadcast entity in the
markets enumerated above during this non-compete period would
involve the transfer of one or all of these items to that
entity. The Executive agrees that the provisions in these
paragraphs of Paragraph 8 are reasonably necessary for the
protection of the Company's
9
<PAGE> 10
business; that they are not unreasonably restrictive of
his(her) rights; and that (s)he feels that any of these
restrictions placed upon him(her) are not prejudicial to the
public interest.
(d) If the covenant in this Paragraph 8 is held to be
unenforceable in any jurisdiction because of the duration or
scope thereof, the court making such determination shall have
the power to reduce the duration and/or scope of the provision
or covenant, and the provision or covenant in its reduced form
shall be enforceable; provided, however, that the
determination of such court shall not affect the
enforceability of this Paragraph 8 in any other jurisdiction.
9. To induce the Company to enter into this Agreement and to employ
Executive Executive, Executive represents and warrants to the Company
as of the date hereof and as of each date of payment of any
compensation under the terms hereof as follows:
(a) The execution, delivery and performance of this Agreement by
Executive does not conflict with result in a breach of, or
constitute a default under any covenant not to compete or any
other agreement, instrument, or license, to which Executive is
a party or by which Executive is bound.
(b) Executive has not:
(i) Been convicted of any felony;
(ii) Committed any criminal act with respect to
Executive's current or any prior employment
(including any criminal act involving a violation of
the Communication Act of 1934, as amended, or
regulations promulgated by the FCC), or
(iii) Committed any act that materially threatened to
result in suspension, revocation, or adverse
modification of any FCC license of any broadcast
station or which subjected any broadcast station to
fine or forfeiture.
(c) Executive is not dependent on alcohol or illegal drugs.
Executive recognizes that the Company shall have the right to
conduct random drug testing of its employees and that
Executive may be called upon in such a manner.
10. Any dispute regarding this Agreement shall be decided by arbitration by
a single arbitrator in West Palm Beach, Florida, in accordance with the
Expedited Arbitration Rules
10
<PAGE> 11
of the American Arbitration Association then obtaining unless the
Parties mutually agree otherwise; and, provided further, that both
Parties will be entitled to all rights of discovery in connection with
such arbitration, including, without limitation, all discovery rights
described in the Florida Rules of Civil Procedure. This undertaking to
arbitrate shall be specifically enforceable. The decision rendered by
the arbitrator will be final and judgment may be entered upon it in
accordance with appropriate laws in any court having jurisdiction
thereof. During any arbitration proceeding initiated by the Executive,
the Company agrees, to the extent that it may legally do so, to
continue the Executive in the Company's long-term disability, life and
medical insurance plans.
11. Both during and after the Term of Employment, neither Party will
disclose the financial terms of this Agreement to persons not involved
in the operations of the business of the Company, except as required by
applicable law, regulation, the rules or regulations of a stock
exchange or association on which securities of the Company or any
parent company thereof are listed or legal process (including, without
limitation, oral questions, interrogatories, requests for information
or documents, subpoenas, civil investigative demands, orders, judgments
or decrees). As to persons involved in the operations of the business
of the Company, disclosure of such terms may be made only on a
need-to-know basis. This restriction shall not apply to members of the
Executive's immediate family nor to the Executive's professional
advisers, lenders and investors, provided such persons agree to keep
the financial terms confidential and not disclose them to third
parties.
12. Any waiver by either Party of a breach of any provision of this
Agreement shall not operate as to be construed to be a waiver of any
other breach of such provision of this Agreement. The failure of a
Party to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that
Party of the right thereafter to insist upon strict adherence to that
term or any other term of this Agreement. Neither this Agreement nor
any part of it may be waived, changed or terminated orally, and any
amendment or modification must be in writing and signed by each of the
Parties. Any waiver of any right of the Company hereunder or any
amendment hereof shall require the approval of the members of the
Compensation Committee of the Board of Directors who are not employees
of the Company or, if the Company does not have a Compensation
11
<PAGE> 12
Committee or the Compensation Committee does not have any members who
are not employees of the Company, by the members of the Board of
Directors who are not employees of the Company. Until such approval or
waiver has been obtained, no such waiver or amendment shall be
effective.
13. The obligations and rights of the Executive under this Agreement shall
inure to the benefit of and shall be binding upon the heirs and legal
representatives of the Executive. Neither Party may assign this
Agreement without the prior written consent of the other.
14. This Agreement may be executed in any number of counterparts, each of
which shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
15. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained herein or made pursuant hereto.
16. This Agreement will be governed and construed and enforced in
accordance with the laws of the State of Florida.
17. This Agreement contains the entire understanding of the Parties
relating to the subject matter of this Agreement and supersedes all
other prior written or oral agreements. The Executive acknowledges
that, in entering into this Agreement, he does not rely on any
statements or representations not contained in this Agreement.
18. Any term or provision of this Agreement which is determined to be
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
12
<PAGE> 13
19. Except as otherwise specifically provided in this Agreement, all
notices and other communications required or permitted to be given
under this Agreement shall be in writing and delivery thereof shall be
deemed to have been made when such notice shall have been either (i)
deposited in first class mail, postage prepaid, return receipt
requested, or any comparable or superior postal or air courier service
then in effect, or (ii) transmitted by hand delivery, telegram, telex,
telecopier or facsimile transmission, to the party entitled to receive
the same at the address indicated below or at such other address as
such party shall have specified by written notice to the other party
hereto given in accordance herewith:
if to the Company: Lowell W. Paxson
Chairman
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
if to the Executive: address below Executive's signature below
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the first date written above.
Name: Arthur D. Tek
Address:
-------------------------------
PAXSON COMMUNICATIONS CORPORATION
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
13
<PAGE> 1
EXHIBIT 12
PAXSON COMMUNICATIONS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED YEARS ENDED DECEMBER 31,
MARCH 31, MARCH 31, ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------ ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)..................... $ 2,642 $(8,459) $214,690 $(26,219) $(33,473) $ (4,762) $(11,409)
Equity in loss of unconsolidated
investment.......................... 1,290 -- 430 -- -- -- --
Loss (income) from discontinued
operations.......................... -- 736 (251,193) (4,217) 142 (3,979) 4,671
Extraordinary items and cumulative
effect of a change in accounting
principle........................... -- -- -- -- 10,626 -- 457
Provision (benefit) for income
taxes............................... 1,557 -- (21,879) -- (1,280) (1,680) 2,960
------- ------- -------- -------- -------- -------- --------
5,489 (7,723) (57,952) (30,436) (23,985) (10,421) (3,321)
------- ------- -------- -------- -------- -------- --------
Fixed charges:
Interest expense...................... $10,506 $ 8,749 $ 39,163 $ 31,609 $ 17,251 $ 6,216 $ 2,052
Appropriate portion ( 1/3) of rental
expense............................. 481 356 1,422 1,791 1,466 802 406
------- ------- -------- -------- -------- -------- --------
Total fixed charges................... 10,987 9,105 40,585 33,400 18,717 7,018 2,458
------- ------- -------- -------- -------- -------- --------
Earnings before income taxes and fixed
charges............................. $16,476 1,382 $(17,367) $ 2,964 $ (5,268) $ (3,403) $ (863)
======= ======= ======== ======== ======== ======== ========
Preferred dividend requirements....... $ 7,082 $ 6,272 $ 26,277 $ 19,258 $ 8,568 $ 2,565 $ 113
Ratio of pre-tax income to net
income.............................. 1.59 1.00 1.00 1.00 1.00 1.00 1.00
------- ------- -------- -------- -------- -------- --------
Preferred dividend factor............. $11,256 $ 6,272 $ 26,277 $ 19,258 $ 8,568 $ 2,565 $ 113
------- ------- -------- -------- -------- -------- --------
Total fixed charges and
prefund dividends........... $22,243 $15,377 $ 66,862 $ 52,658 $ 27,285 $ 9,583 $ 2,571
======= ======= ======== ======== ======== ======== ========
Ratio of earnings to combined fixed
charges and preferred dividends..... 0.74 0.09 (0.26) 0.06 (0.19) (0.36) (0.34)
======= ======= ======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Paxson Communications Corporation of our
report dated March 13, 1998 relating to the financial statements of Paxson
Communications Corporation, which appears in such Prospectus. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
PRICEWATERHOUSECOOPERS LLP
Fort Lauderdale, Florida
July 15, 1998
<PAGE> 1
Exhibit 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
NEW YORK 13-5160382
(State of incorporation (I.R.S. Employer
if not a U.S. National Bank) Identification No.)
48 WALL STREET, NEW YORK, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------
PAXSON COMMUNICATIONS CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 59-3212788
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 Clearwater Park Road
West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip code)
----------------------
13-1/4% Exchange Debentures due 2006
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State Of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 15th day of July, 1998.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
--------------------------------
Name: Remo J. Reale
Title: Assistant Vice President
-4-
<PAGE> 5
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ............................... $ 6,397,993
Interest-bearing balances ........................................................ 1,138,362
Securities:
Held-to-maturity securities ...................................................... 1,062,074
Available-for-sale securities .................................................... 4,167,240
Federal funds sold and Securities purchased under agreements to resell.............. 391,650
Loans and lease financing receivables:
Loans and leases, net of unearned income ......................................... 36,538,242
LESS: Allowance for loan and lease losses ........................................ 631,725
LESS: Allocated transfer risk reserve............................................. 0
Loans and leases, net of unearned income, allowance, and reserve.................. 35,906,517
Assets held in trading accounts .................................................... 2,145,149
Premises and fixed assets (including capitalized leases) ........................... 663,928
Other real estate owned ............................................................ 10,895
Investments in unconsolidated subsidiaries and associated companies ................ 237,991
Customers' liability to this bank on acceptances outstanding ....................... 992,747
Intangible assets .................................................................. 1,072,517
Other assets ....................................................................... 1,643,173
-----------
Total assets ....................................................................... $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices .............................................................. $24,849,054
Noninterest-bearing .............................................................. 10,011,422
Interest-bearing ................................................................. 14,837,632
In foreign offices, Edge and Agreement subsidiaries, and IBFs .................... 15,319,002
Noninterest-bearing .............................................................. 707,820
Interest-bearing ................................................................. 14,611,182
Federal funds purchased and Securities sold under agreements to repurchase.......... 1,906,066
Demand notes issued to the U.S. Treasury ........................................... 215,985
Trading liabilities ................................................................ 1,591,288
Other borrowed money:
With remaining maturity of one year or less ...................................... 1,991,119
With remaining maturity of more than one year through three years................. 0
With remaining maturity of more than three years ................................. 25,574
Bank's liability on acceptances executed and outstanding ........................... 998,145
Subordinated notes and debentures .................................................. 1,314,000
Other liabilities .................................................................. 2,421,281
-----------
Total liabilities .................................................................. 50,631,514
-----------
EQUITY CAPITAL
Common stock ....................................................................... 1,135,284
Surplus ............................................................................ 731,319
Undivided profits and capital reserves ............................................. 3,328,050
Net unrealized holding gains (losses) on available-for-sale securities ............. 40,198
Cumulative foreign currency translation adjustments ................................ (36,129)
-----------
Total equity capital ............................................................... 5,198,722
-----------
Total liabilities and equity capital ............................................... $55,830,236
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
