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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. 3)1
Paxson Communications Corporation
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(Name of Issuer)
Class A Common Stock
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(Title of Class of Securities)
704231 10 9
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(CUSIP Number)
Anthony L. Morrison, Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
(561) 659-4122
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 15, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
/ /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 pages)
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1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 704231 10 9 Page 2 of 7
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1 Names of Reporting Person:
LOWELL W. PAXSON
I.R.S. Identification No. of Above Person (entity only)
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2 Check the Appropriate Box if a Member of a Group*
(a) [ ]
NOT APPLICABLE (b) [ ]
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3 SEC use only
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4 Source of Funds*
NOT APPLICABLE
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5 Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6 Citizenship or Place of Organization
United States Citizen
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7 Sole voting power
31,551,282
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Number of shares 8 Shared voting power
beneficially
Owned by each -0-
Reporting person
with ---------------------------------------------------
9 Sole dispositive power
31,551,282
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10 Shared dispositive power
-0-
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
31,551,282
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12 Check box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
NOT APPLICABLE
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13 Percent of Class Represented by Amount in Row (11) [ ]
51.1%
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14 Type of Reporting Person*
IN
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CUSIP No. 704231 10 9 Page 3 of 7
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ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities to which this statement
relates is the Class A Common Stock, par value $0.001 per share, issued by
Paxson Communications Corporation, a Delaware corporation (the "Company"). The
address of the principal executive office of the Company is 601 Clearwater Park
Road, West Palm Beach, Florida 33401.
ITEM 2. IDENTITY AND BACKGROUND.
ITEM 2.(a) The person filing this statement is Mr. Lowell W.
Paxson.
ITEM 2.(b) The business address of Mr. Paxson is 601 Clearwater
Park Road, West Palm Beach, Florida 33401.
ITEM 2.(c) The present principal occupation of Mr. Paxson is
Chairman of the Board of the Company.
ITEM 2.(d) During the last five years, Mr. Paxson has not been
convicted in a criminal proceeding.
ITEM 2.(e) During the last five years, Mr. Paxson has not
been a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction as a
result of which Mr. Paxson was or is subject to any
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or
finding any violation with respect to such laws.
ITEM 2.(f) Mr. Paxson is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
NOT APPLICABLE
ITEM 4. PURPOSE OF TRANSACTION.
On September 15, 1999 (the "Issue Date"), the Company entered into an
Investment Agreement (the "Investment Agreement") with National Broadcasting
Company, Inc. ("NBC") pursuant to which, on September 16, 1999, wholly-owned
subsidiaries of NBC purchased shares of convertible exchangeable preferred stock
and common stock purchase warrants from the Company for an aggregate purchase
price of $415 million. In connection with the Investment Agreement, NBC Palm
Beach Investment II, a wholly-owned subsidiary of NBC ("NBC Sub"), entered into
an agreement with Mr. Paxson and certain entities controlled by him pursuant to
which NBC Sub was granted the right (the "Call Right") to purchase all (but not
less than all) 8,311,639 shares of Class B Common Stock of the Company
beneficially owned by Mr. Paxson, which shares are entitled to ten votes per
share on all matters submitted to a vote of the Company's stockholders and are
convertible into an equal number of shares of Class A Common Stock, at a price
equal to the higher of (i) the average of the closing sale prices of the Class A
Common Stock for the 45 consecutive trading days ending on the trading day
immediately preceding the exercise of the Call Right (provided that such price
shall not be more than 17.5% higher or 17.5% lower than the six month trailing
average closing sale prices), and (ii) $22.50 per share for any exercise of the
Call Right on or prior to the third
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CUSIP No. 704231 10 9 Page 4 of 7
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anniversary of the Issue Date and $20.00 per share for any exercise of the Call
Right thereafter. Mr. Paxson and his affiliates may not transfer the shares
which are subject to the Call Right prior to the sixth anniversary of the Issue
Date, and may not convert such shares into any other securities of the Company
(including shares of Class A Common Stock). This description of the Call
Agreement is not complete and is qualified in its entirety by reference to the
Call Agreement, which is included as Exhibit 1.
NBC, the Company, Mr. Paxson and certain entities controlled by Mr.
Paxson also entered into a Stockholder Agreement (the "Stockholder Agreement")
concurrently with the Investment Agreement, pursuant to which, if permitted by
the Communications Act of 1934, as amended, and the rules and regulations of the
Federal Communications Commission (the "FCC"), the Company may nominate persons
named by NBC for election to the Company's board of directors and Mr. Paxson and
his affiliates will vote their shares of Common Stock in favor of the election
of such persons as directors of the Company. Should no NBC nominee be serving as
a member of the Company's board of directors, then NBC may appoint two observers
to attend all board meetings. Mr. Paxson and his affiliates have also agreed to
vote their shares of Common Stock in favor of certain proposals expected to be
submitted for a vote of the stockholders of the Company at its next annual
stockholders meeting prior to May 15, 2000. These proposals will include
amendments to the Company's certificate of incorporation to provide for a
classified board of directors serving three year terms and the authorization of
additional shares of non-voting common stock sufficient to permit the Company to
reserve such shares for issuance to NBC and its assignees should they exercise
their rights to convert shares of convertible preferred stock and exercise
warrants for such non-voting shares of common stock in lieu of shares of Class A
Common Stock. This description of the Stockholder Agreement is not complete and
is qualified in its entirety by reference to the Stockholder Agreement, which is
included as Exhibit 2.
The Investment Agreement includes provisions requiring the Company,
subject to certain conditions, to obtain the consent of NBC or its permitted
transferee with respect to certain corporate actions, including the approval of
annual budgets, expenditures materially in excess of budgeted amounts, certain
programming acquisitions, material amendments to the Company's certificate of
incorporation or bylaws, sale of a Company television station serving any of the
top 20 markets or as a result of which the national household coverage of the
Company's PAX TV network would fall below 70%, material asset sales or
purchases, any business combination transaction where the Company would not be
the surviving corporation or as a result of which there would be a change of
control of the Company, issuance or sale of any capital stock (subject to
certain agreed exceptions) or stock split or recombination, any transaction with
Mr. Paxson or any of his affiliates which is not an arm's length transaction or
involves in excess of $100,000, any employment agreement becoming effective
after January 1, 2001 which provides for annual compensation in excess of an
agreed amount, any increase in the size of the Company's board of directors
(other than an increase of up to two directors resulting from provisions of the
Company's outstanding preferred stock), entering into any joint sales, joint
services, time brokerage, local marketing or similar agreement as a result of
which Company stations with national household coverage of 20% or more would be
subject to such agreements, and other matters.
NBC was also granted certain rights with respect to the broadcast
television operations of the Company, including, among other things, the right
to require the conversion of Company television stations to NBC network
affiliates (subject to certain conditions and to the Company's right to decline
such conversion if as a result the national household coverage of the Company's
PAX TV network would fall below 70%), a right of first refusal on a proposed
sale of a Company television station, the right to require Company television
stations to carry NBC network programming which is preempted by NBC network
affiliates, and the right to negotiate on behalf of the Company to acquire
interests in new media companies in exchange for advertising airtime on Company
stations.
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CUSIP No. 704231 10 9 Page 5 of 7
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The exercise of these rights is subject to certain conditions and limitations,
and these rights are not transferable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
ITEM 5.(a) Mr. Paxson beneficially owns an aggregate of
31,551,282 shares of Class A Common Stock, which is
the class of securities identified pursuant to Item 1
above. Pursuant to Rule 13d-3(d)(1) of the Act, the
above number and other references herein to the
number of shares of Class A Common Stock Mr. Paxson
beneficially owns generally includes 8,311,639 shares
of Class B Common Stock of the Company beneficially
owned by Mr. Paxson, which may be converted to an
equal number of shares of Class A Common Stock at any
time.
The Company's Quarterly Report on Form 10Q for the
Quarter Ended June 30, 1999, filed August 16, 1999,
reports that as of July 31, 1999, there were
53,477,372 shares of Class A Common Stock and
8,311,639 shares of Class B Common Stock issued and
outstanding. Accordingly, Mr. Paxson beneficially
owns approximately 51.1% of the Company's outstanding
Class A Common Stock (which includes 8,311,639 shares
of Class B Common Stock).
ITEM 5.(b) Mr. Paxson has sole power to vote or direct the
vote of, and sole power to dispose or direct the
disposition of 31,551,282 shares of Class A Common
Stock. No shares are held with shared voting or
dispositive power.
ITEM 5.(c) Not Applicable
ITEM 5.(d) Not Applicable
ITEM 5.(e) Not Applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The response to Item 4 hereof is incorporated herein by reference.
Pursuant to the Investment Agreement, wholly-owned subsidiaries of NBC
acquired $415 million aggregate liquidation preference of a new series of the
Company's convertible exchangeable preferred stock (the "Series B Convertible
Preferred Stock"), a warrant to purchase up to 13,065,507 shares of Class A
Common Stock at an exercise price of $12.60 per share ("Warrant A") and a
warrant to purchase up to 18,966,620 shares of Class A Common Stock ("Warrant
B") at an exercise price equal to the average of the closing sale prices of the
Class A Common Stock for the 45 consecutive trading days ending on the trading
day immediately preceding the warrant exercise date (provided that such price
shall not be more than 17.5% higher or 17.5% lower than the six month trailing
average closing sale price), subject to a minimum exercise price during the
three years after the Issue Date of $22.50 per share. Warrant A and Warrant B
(the "Warrants") are exercisable for ten years from the Issue Date, and will
expire 30 days after any transfer thereof (or, in the case of Warrant B, 30 days
after it first becomes exercisable as described in the following sentence).
Warrant B may not be exercised until Warrant A has been exercised in full, and
may not be exercised prior to February 1, 2002, to the extent that, after giving
effect to such exercise, Mr. Paxson or any of his affiliates (including family
members) would not constitute the "Single Majority
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CUSIP No. 704231 10 9 Page 6 of 7
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Stockholder" of the Company under applicable FCC rules (generally defined as the
possession of the right to vote securities having more than 50% of the total
voting power of all outstanding common stock and voting common stock
equivalents) (the "FCC Single Majority Stockholder"). After February 1, 2002,
Warrant B may not be exercised to the extent that, after giving effect to such
exercise, Mr. Paxson or any of his affiliates (including family members) would
not constitute the FCC Single Majority Stockholder of the Company unless Warrant
B is exercised in full and concurrently with such exercise the Call Right has
also been exercised. Should NBC or its affiliates holding Warrants determine
that they are prevented under FCC rules from holding shares of Class A Common
Stock upon exercise of the Warrants, the Warrants shall be exercisable for an
equal number of shares of non-voting common stock of the Company.
Pursuant to the Stockholder Agreement, the Company has certain rights
to consent to any proposed transfer by NBC or its permitted transferee of its
rights under the Investment and Stockholder Agreements and, if such consent is
given, Mr. Paxson and his affiliates have "tag along" rights to participate in
any sale of Company securities in connection with the transfer of the Investor
Rights. Mr. Paxson and his affiliates have agreed, subject to certain
limitations, not to transfer any voting stock held by them prior to the earlier
of (i) the date NBC is permitted under FCC rules to own all of the shares of
Class A Common Stock issuable upon conversion of the Series B Convertible
Preferred Stock, exercise of the Warrants and exercise of the Call Right, or
(ii) six years after the Issue Date, unless after giving effect to such transfer
Mr. Paxson or an affiliate or family member of Mr. Paxson continues to be the
FCC Single Majority Stockholder of the Company. Mr. Paxson and his affiliates
have also agreed to grant NBC a right of first refusal with respect to any
shares of Company common stock proposed to be transferred by any of them to any
person other than another affiliate of Mr. Paxson, other than shares sold in the
open market and up to an additional 2,000,000 shares of Class A Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Call Agreement, dated as of September 15, 1999, by and among
Lowell W. Paxson, Second Crystal Diamond Limited Partnership,
Paxson Enterprises, Inc. and NBC Palm Beach Investment II,
Inc.
2. Stockholder Agreement, dated as of September 15, 1999, among
Paxson Communications Corporation, National Broadcasting
Company, Inc., Lowell W. Paxson, Second Crystal Diamond
Limited Partnership and Paxson Enterprises, Inc.
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CUSIP No. 704231 10 9 Page 7 of 7
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 24, 1999.
/s/ Lowell W. Paxson
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Lowell W. Paxson
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name of and any title of each person who signs the statement shall be typed
or printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
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Exhibit 1
CALL AGREEMENT
CALL AGREEMENT, dated as of September 15, 1999 (this "Agreement"), by
and among , MR. LOWELL W. PAXSON, SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, a
Nevada limited partnership, and PAXSON ENTERPRISES, INC., a Nevada corporation
(collectively, the "Call Stockholders") and NBC PALM BEACH INVESTMENT II, INC.,
a California corporation (together, with its permitted transferees, the
"Investor").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Paxson Communications Corporation, a Delaware corporation (the
"Company") and the National Broadcasting Company, Inc., a Delaware corporation,
have entered into an Investment Agreement, dated as of September 15, 1999 (the
"Investment Agreement"); and
WHEREAS, the Call Stockholders are the record and beneficial owners of
8,311,639 shares of Class B Common Stock, par value $0.001 per share, of the
Company; and
WHEREAS, the Call Stockholders have agreed to grant the Investor the
right to purchase the Call Shares subject to certain terms and conditions.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. Unless otherwise defined herein, capitalized
terms defined in the Investment Agreement are used herein as defined therein.
As used in this Agreement, the following terms shall have the meanings set
forth below:
"Call Shares" shall mean the 8,311,639 shares of Class B
Common Stock, par value $0.001 per share, of the Company, and any
shares of Common Stock or other
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securities that may be received by the Call Stockholders with respect
to such Call Shares (x) as a result of a stock dividend on or split of
Call Shares or (y) on account of Call Shares in a merger, combination,
recapitalization or other transaction involving the Company.
ARTICLE II
CALL RIGHT
Section 2.1 Call Right. (a) The Call Stockholders hereby grant to the
Investor an irrevocable option to (i) purchase from the Call Stockholders all
of the Call Shares on the terms and conditions set forth herein and (ii) to
designate a nominee to purchase from the Call Stockholders all of the Call
Shares on the terms and conditions set forth herein (the "Call Right").
(b) At any time on or after February 1, 2002 or, if sooner, the
triggering of the Investor's right to effect an Accelerated Buyout, provided
the Investor has exercised in full Warrant B, the Investor may exercise the
Call Right, in whole but not in part, and purchase the Call Shares for a
purchase price (the "Call Price") equal to the greater of (i) $22.50 per share,
if the Call Right is exercised by delivery of the Call Notice (as defined
below) on or prior to the third anniversary of the Closing Date, or $20.00 per
share, if the Call Right is exercised by delivery of the Call Notice after the
third anniversary of the Closing Date or in the event of an Accelerated Buyout
(the "Call Floor Price") and (ii) the average of the closing prices of the
Class A Common Stock on the American Stock Exchange (or other applicable
exchange), for the 45 consecutive trading days ending on the trading date
immediately preceding the date of the Call Notice; provided that
notwithstanding the foregoing, in the case of clause (ii) the Call Price shall
not be lower than 17.5% below, or higher than 17.5% above, the average of the
closing sales prices of the Common Stock for the six-month period ending on the
trading date immediately preceding the date of the Call Notice. The Call Price
(and the reference to $22.50 and $20.00) shall be subject to adjustment in the
same manner as the Exercise Price is adjusted in Section 9 of Warrant A.
Section 2.2 Call Notice. Notice of the exercise of the Call Right (the
"Call Notice") shall be sent to the Call Stockholders at the addresses provided
for in Section 5.1. The Call Notice shall state the Call Price and the manner,
time and place at which payment for the Call Shares will be
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made. The Investor shall fix the date for the exercise of the Call Right (the
"Call Date") no earlier than thirty (30) but not more than sixty (60) days
after the Call Notice is sent, unless otherwise agreed to by the Investor and
the Call Stockholders.
Section 2.3 Closing. The closing ("Call Closing")of the exercise of
the Call Right shall take place on the Call Date at the place designated by the
Investor and set forth in the Call Notice. At the Call Closing (i) the Call
Stockholders shall deliver to the Investor, or its nominee, certificates
representing all of the Call Shares, duly endorsed in blank or accompanied by
stock powers duly executed in blank, with all necessary stock transfer stamps
affixed thereto and (ii) the Investor, or its nominee, shall pay the aggregate
Call Price by wire transfer in immediately available funds to the account or
accounts specified by the Call Stockholders three days prior to the date of the
Call Closing. The obligation of the Investor to pay the Call Price shall be
subject to the receipt of all the Call Shares free and clear of any Lien.
Section 2.4 Limitation on Transfer of the Call Shares. The Call
Stockholders shall not Transfer any of the Call Shares except as specifically
permitted pursuant to this Section 2.4. Prior to the sixth anniversary of the
date hereof, the Call Stockholders may not Transfer the Call Shares. If the
Investor has not exercised the Call Right prior to the sixth anniversary of the
Closing Date, then thereafter (i) upon ninety (90) days' prior written notice
to the Investor and (ii) subject to the restrictions on Transfer set forth in
Section 4.2 of the Stockholder Agreement, the Call Stockholders may transfer
any or all of the Call Shares; provided, however, that during such ninety day
notice period, the Investor may exercise the Call Right pursuant to this
Agreement. Upon any permitted transfer of the Call Shares pursuant to this
section 2.4, such transferred Call Shares shall no longer be subject to the
Call Right.
Section 2.5 Conversion of Call Shares. The Call Stockholders shall not
convert any of the Call Shares into any other security of the Company.
Section 2.6 Legends. The Call Stockholders agree to the imprinting,
for so long as appropriate, of substantially the following legends on
certificates representing any of the Call Shares:
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER 15, 1999, AMONG PAXSON
COMMUNICATIONS CORPORATION, LOWELL W. PAXSON, SECOND CRYSTAL DIAMOND
LIMITED PARTNERSHIP, PAXSON ENTERPRISES AND NATIONAL BROADCASTING
COMPANY, INC.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A CALL AGREEMENT DATED AS OF SEPTEMBER 15, 1999, AMONG SECOND CRYSTAL
DIAMOND LIMITED PARTNERSHIP, PAXSON ENTERPRISES, INC. AND NATIONAL
BROADCASTING COMPANY, INC.
Section 2.7 Expiration of the Call Right. The Call Right shall expire
on the earlier of (i) the termination of the Investor Rights pursuant to
Section 10.12 of the Investment Agreement and (ii) the tenth anniversary of the
date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Call Stockholders.
Each Call Stockholder represents and warrants to the Investor as follows:
(a) Corporate Existence; Compliance with Law. Such Call
Stockholder, if not an individual, (i) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; (ii) is duly qualified to conduct business and is in
good standing in each jurisdiction where the conduct of its affairs
requires such qualification; (iii) has the requisite corporate,
partnership, trust or other power and authority and the legal right to
own, pledge, mortgage or otherwise encumber its properties, and to
conduct its affairs as now, heretofore and proposed to be conducted;
(iv) is in compliance with its charter, by-laws and other
organizational documents; and (vi) is in compliance with all
applicable provisions of law (including, without limitation, the
Communications Act), except where the failure to comply, individually
or in the aggregate, (x) could not reasonably be expected to have a
material adverse effect on such Call Stockholder (y) or would not have
an adverse effect on the ability of such Call Stockholder to perform
its obligations hereunder.
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(b) Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by such Call Stockholder of
this Agreement and its obligations hereunder: (i) are within its
corporate, partnership, trust or other power; (ii) have been duly
authorized by all necessary or proper corporate, partnership, trust
and shareholder or other action; (iii) do not contravene any provision
of its charter, bylaws or other organizational documents; (iv) do not
violate any law or regulation, or any order or decree of any court or
governmental entity applicable to it; (v) do not conflict with or
result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by,
any material indenture, mortgage, deed of trust, lease, agreement or
other instrument to which such Person is a party or by which it or any
of its property is bound; (vi) do not result in the creation or
imposition of any material lien upon any of its property; and (vii) do
not require the consent or approval of any other Person, except (A)
the filing of all notices, reports and other documents required by,
and the expiration of all waiting periods under, the HSR Act, and (B)
the filing of all notices, reports and other documents required by the
rules and regulations promulgated by the FCC. This Agreement is duly
executed and delivered by such Call Stockholder and this Agreement
constitutes the legal, valid and binding obligation of such Call
Stockholder enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditor's rights
generally and subject to the availability of equitable remedies.
(c) Capitalization; Ownership. As of the date hereof and upon
delivery of and payment for the Call Shares at the Call Closing as
provided herein, the Investor will acquire good title to the Call
Shares, free and clear of all Liens (other than any Lien created by
the Investor). Such Call Stockholder is not a party to, and none of
them have any knowledge of any, voting trusts, proxies or any other
agreements or understandings with respect to the Call Shares. Upon
delivery to the Investor, and payment for the Call Shares pursuant to
the Call Agreement, the Investor shall own all of the outstanding
shares of Class B Common Stock.
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Section 3.2 Survival of Representations and Warranties. All
representations and warranties made herein or in any certificates delivered in
connection with the Call Closing shall survive for a period of three years
after the Call Closing.
ARTICLE IV
OTHER AGREEMENTS
Section 4.1 Governmental Filings. Each of the Call Stockholders and
the Investor will make as promptly as practicable after notice to such effect
by the Investor to the Call Stockholders, all filings required to be made, if
any, by it under the Communications Act or the rules and regulations related
thereto with regard to the transactions which are the subject of this Agreement
(including, without limitation, the purchase of shares pursuant to the Call
Agreement and the holding of the Call Shares) and each of them will take all
reasonable steps within its control (including providing information to the
FCC) to obtain any required consents or approvals as promptly as practicable.
The Call Stockholders and the Investor will each provide information and
cooperate in all other respects to assist the other of them in making its
filings under the Communications Act.
ARTICLE V
MISCELLANEOUS
Section 5.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
NBC PALM BEACH INVESTMENT II, INC.
c/o National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Fax: 212-664-2648
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with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John W. Carr
Fax: (212) 455-2502
(b) If to the Call Stockholders, to:
Lowell W. Paxson
601 Clearwater Park Road
West Palm Beach, Florida 33401
Fax: 561-655-9424
or to such other address or addresses as shall be designated in writing.
All notices shall be effective when received.
Section 5.2 Entire Agreement; Amendment. This Agreement and the
Stockholder Agreement and the documents described herein and therein or
attached or delivered pursuant hereto or thereto set forth the entire agreement
between the parties hereto with respect to the transactions contemplated by
this Agreement. Any provision of this Agreement may be amended or modified in
whole or in part at any time by an agreement in writing between the parties
hereto executed in the same manner as this Agreement. No failure on the part of
any party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any
other right.
Section 5.3 Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such instrument.
Section 5.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original, but
all of which together shall constitute one and the same document.
Section 5.5 Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed and construed in accordance with the laws of the
State of New York applicable
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<PAGE> 8
to contracts executed and performed within such state, and each party hereby
submits to the jurisdiction of any state or U.S. federal court sitting within
the County of New York. The parties hereto waive all right to trial by jury in
any action, suit or proceeding brought to enforce or defend any rights or
remedies under this agreement.
Section 5.6 Successors and Assigns; Third Party Beneficiaries. The
Call Stockholders may not assign any of their rights or delegate any of its
duties under this Agreement without the prior written consent of the Investor.
Subject to applicable law and the following sentence, the Investor may assign
its rights under this Agreement in whole or in part only in accordance with the
Stockholder Agreement or to any Affiliate of the Investor, but no such
assignment shall relieve the Investor of its obligations hereunder. The
Investor shall not assign any rights under this Agreement unless such assignee
expressly assumes all of the obligations of the Investor associated with the
rights proposed to be assigned. Any purported assignment in violation of this
Section shall be void. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any Person other than the parties hereto
and their respective successors, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and their respective
successors, and for the benefit of no other Person.
Section 5.7 Arbitration. Any controversy, dispute or claim arising out
of, in connection with or in relation to the interpretation, performance or
breach of this Agreement, shall be determined, at the request of any party, by
arbitration in a city mutually agreeable to the parties to such controversy,
dispute or claim, or, failing such agreement, in New York, New York, before and
in accordance with the then-existing Rules for Commercial Arbitration of the
American Arbitration Association, and any judgment or award rendered by the
arbitrator will be final, binding and unappealable and judgment may be entered
by any state or Federal court having jurisdiction thereof. the pre-trial
discovery procedures of the Federal Rules of Civil Procedure shall apply to any
arbitration under this Section 4.7. Any controversy concerning whether a
dispute is an arbitrable dispute or as to the interpretation or enforceability
of this Section 4.7 shall be determined by the arbitrator. The arbitrator shall
be a retired or former United States District Judge or other person acceptable
to each of the parties,
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<PAGE> 9
provided such individual has substantial professional experience with regard to
corporate or partnership legal matters. The parties intend that this agreement
to arbitrate be valid, enforceable and irrevocable.
Section 5.8 Remedies. No right, power or remedy conferred upon the
Investor in this Agreement shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power or
remedy whether conferred in this Agreement or now or hereafter available at law
or in equity or by statute or otherwise. No course of dealing between the
Investor, the Company and the Call Stockholders and no delay in exercising any
right, power or remedy conferred in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall operate as a waiver or
otherwise prejudice any such right, power or remedy. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in addition to any other remedy to which they are entitled at law or
in equity.
Section 5.9 Further Assurances. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or appropriate to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
Section 5.10 Headings, Captions and Table of Contents. The section
headings, captions and table of contents contained in this agreement are for
reference purposes only, are not part of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
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<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto or by their respective duly authorized representative all as of the date
first above stated.
SECOND CRYSTAL DIAMOND LIMITED
PARTNERSHIP
By: Paxson Enterprises, Inc.
By:
-----------------------------------
Name:
Title:
PAXSON ENTERPRISES, INC.
By:
-----------------------------------
Name:
Title:
NBC PALM BEACH INVESTMENT II,
INC.
By:
-----------------------------------
Name:
Title:
MR. LOWELL W. PAXSON
By:
-----------------------------------
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<PAGE> 1
EXHIBIT 2
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 15, 1999, among PAXSON
COMMUNICATIONS CORPORATION, a Delaware corporation (together with its
successors, the "Company"), NATIONAL BROADCASTING COMPANY, INC., a Delaware
corporation (together with its successors, "Investor") and Mr. LOWELL W. PAXSON,
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, a Nevada limited partnership, and
PAXSON ENTERPRISES, INC., a Nevada corporation (the "Paxson Stockholders").
W I T N E S S E T H :
WHEREAS, the Company and Investor have entered into an Investment
Agreement, dated as of September 15, 1999 (the "Investment Agreement"), pursuant
to which the Investor has agreed to purchase shares of Convertible Exchangeable
Preferred Stock and warrants to purchase Common Stock of the Company; and
WHEREAS, as an integral part of the transactions contemplated by the
Investment Agreement, the parties hereto deem it in their best interests and in
the best interests of the Company to provide for certain matters with respect to
the governance of the Company and desire to enter into this Agreement in order
to effectuate that purpose.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Additional Offered Securities" shall have the meaning set
forth in subsection 4.1(c).
<PAGE> 2
Stockholder Agreement
"Affiliate" shall mean, with respect to any Person, any other
Person that controls, is controlled by, or is under common control
with, such Person, including the executive officers and directors of
such Person. As used in this definition, "control" (including its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Agreement" shall mean this Agreement, as from time to time
amended, modified or supplemented.
"Ancillary Documents" shall mean the Certificate of
Designation, the Warrants, the Call Agreement, the Stockholder
Agreement, the Registration Rights Agreement, the Letter Agreements and
the Time Brokerage Agreements.
"Beneficially Own" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Board of Directors" shall mean the Board of Directors of the
Company as from time to time constituted.
"Business Day" shall mean any day, other than a Saturday,
Sunday or a day on which commercial banks in New York, New York are
authorized or obligated by law or executive order to close.
"Call Agreement" shall mean the Call Agreement, dated as of
the date hereof, between the Investor and the Paxson Stockholders, as
from time to time amended, modified or supplemented.
"Call Price" shall have the meaning set forth in the Call
Agreement.
"Call Right" shall have the meaning set forth in Section 2.1
of the Call Agreement.
"Call Shares" shall mean the shares of Common Stock that are
subject to purchase by the Investor under the Call Agreement.
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<PAGE> 3
Stockholder Agreement
"Certificate of Designation" shall mean the Certificate of
Designation of the Preferred Stock of the Company, filed with the
Secretary of State of the State of Delaware on or prior to the date
hereof.
"Change of Control" shall mean, with respect to the
Company,(i) any Person (including a Person's Affiliate), other than a
Permitted Holder, Beneficially Owning 50% or more of the Total Voting
Power, (ii) any Person (including a Person's Affiliate), other than a
Permitted Holder, Beneficially Owning more than 33 1/3% of the Total
Voting Power, and the Permitted Holders Beneficially Owning, in the
aggregate, a lesser percentage of the Total Voting Power than such
other Person and not having the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the Board of Directors, (iii) the consummation of a consolidation or
merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which the Common Stock is
converted into cash, securities or other property, other than a
consolidation or merger of the Company in which the holders of Common
Stock of the Company outstanding immediately prior to the consolidation
or merger hold, directly or indirectly, at least a majority of the
total voting power of the common stock of the surviving corporation
immediately after such consolidation or merger, (iv) during any period
of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors (together with any new
directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Company has been approved by a
majority of the directors then still in office who either were
directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to
constitute a majority of the Board of Directors or (v) any "change of
control" occurs (as defined at such time) with respect to any
outstanding preferred stock or indebtedness of the Company.
"Class A Common Stock" shall mean the shares of Class A Common
Stock, par value $0.001 per share, of the Company.
"Class B Common Stock" shall mean the shares of Class B Common
Stock, par value $0.001 per share, of the Company.
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<PAGE> 4
Stockholder Agreement
"Common Stock" shall mean the Class A Common Stock, Class B
Common Stock and Class C Common Stock, par value $0.001 per share, and
any other class of common stock of the Company hereafter created and
any securities of the Company into which such Common Stock may be
reclassified, exchanged or converted.
"Communications Act" shall have the meaning set forth in the
Investment Agreement.
"Company" shall have the meaning set forth in the preamble
hereto.
"Company Sale" shall have the meaning set forth in the
Investment Agreement.
"Conversion Shares" shall mean the 31,896,032 shares of Common
Stock (subject to adjustment under the terms of the Certificate of
Designation) that the Preferred Stock are convertible into in
accordance with the terms and conditions set forth in the Certificate
of Designation.
"DMA" shall have the meaning set forth in the Investment
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Existing Preferred Stock" shall have the meaning set forth in
the Investment Agreement.
"FCC" shall mean the Federal Communications Commission and any
successor governmental entity performing functions similar to those
performed by the Federal Communications Commission on the date hereof.
"FCC Single Majority Stockholder" shall mean a Person who
holds or has the right to vote shares of Voting Stock having more than
50% of the Total Voting Power of all of the outstanding Voting Stock
and voting capital stock equivalents of the Company, whether such
shares of Voting Stock are issued to such Person or such Person's
Affiliate.
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<PAGE> 5
Stockholder Agreement
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Entity" shall have the meaning set forth in the
Investment Agreement.
"Investment Agreement" shall have the meaning set forth in the
recitals hereto, as such agreement may from time to time be amended,
modified or supplemented.
"Investor" shall have the meaning set forth in the preamble
hereto.
"Investor Offer Notice" shall have the meaning set forth in
subsection 4.1(a).
"Investor Offer Price" shall have the meaning set forth in
subsection 4.1(a).
"Investor Offered Securities" shall have the meaning set forth
in subsection 4.1(a).
"Investor Participant" shall have the meaning set forth in
subsection 4.2(c).
"Investor Rights" shall mean the rights of the Investor set
forth herein and in Article IV of the Investment Agreement.
"Investor Third Party" shall have the meaning set forth in
subsection 4.1(a).
"Investor Transfer" shall have the meaning set forth in
subsection 4.1(a).
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or security
agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement or
any financing lease having substantially the same effect as any of the
foregoing).
"Material Adverse Effect" shall mean a material adverse effect
on (i) with respect to the Company, the business, assets, operations or
financial or other condition of the Company and the Company
Subsidiaries
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<PAGE> 6
Stockholder Agreement
taken as a whole or (ii) with respect to any party to this Agreement or
any Ancillary Document, the ability of such party to perform its
obligations under this Agreement or any Ancillary Document to which it
is a party.
"Minimum Investment" shall have the meaning set forth in the
Investment Agreement.
"NBC Nominee" shall mean any individual nominated by the
Investor for election to the Board of Directors, which individual shall
not have an attributable interest in the Investor or any entity having
an attributable interest in a broadcast license for purposes of the
FCC, provided that notwithstanding the foregoing, the parties agree
that there is no express or implied agreement that any NBC Nominee
shall be elected to the Board of Directors.
"Observers" shall have the meaning set forth in subsection
2.1(a).
"Operating Rights" shall mean the rights of the Investor set
forth in Article VII of the Investment Agreement or in any other
agreement entered between the Investor and the Company which by its
terms provides that it or any part thereof shall constitute Operating
Rights for purposes of this definition.
"Options" shall mean stock options to purchase Common Stock.
"Parent" shall have the meaning set forth in the Investment
Agreement.
"Paxson" shall mean Mr. Lowell W. Paxson.
"Paxson Call Shares" shall have the meaning set forth in
subsection 4.2(a).
"Paxson Estate Planning Affiliates" shall mean all limited
partners of Second Crystal Diamond Limited Partnership, other than
Paxson or Paxson Enterprises, Inc.
"Paxson Non-Estate Planning Affiliates" shall mean Affiliates
(including family members) of Paxson other than the Paxson Estate
Planning Affiliates who acquire
6
<PAGE> 7
Stockholder Agreement
shares of Common Stock from a Paxson Stockholder after the date hereof,
and agree in writing to become subject to this Agreement, as a Paxson
Stockholder.
"Paxson Offer Notice" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Offer Price" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Offered Securities" shall have the meaning set forth
in subsection 4.2(b).
"Paxson Participant" shall have the meaning set forth in
subsection 4.1(d).
"Paxson Shares" shall have the meaning set forth in subsection
5.3(c).
"Paxson Stockholders" shall have the meaning set forth in the
preamble hereto and any other stockholders that become parties to this
Agreement pursuant to Section 6.11 after the date hereof.
"Paxson Third Party" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Transfer" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Transferor" shall have the meaning set forth in
subsection 4.2(b).
"Permitted Holders" shall mean, collectively, Paxson, his
spouse, children or other lineal descendants (whether adoptive or
biological) and any revocable or irrevocable inter vivos or
testamentary trust or the probate estate of any such individual, so
long as one or more of the foregoing individuals is the principal
beneficiary of such trust or probate estate.
"Permitted Liens" shall have the meaning set forth in the
Investment Agreement.
"Person" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in subsection 13(d)(3) of
the Exchange Act), trust, joint stock company, joint venture, business
7
<PAGE> 8
Stockholder Agreement
trust or unincorporated organization, limited liability company, any
governmental entity or any other entity of whatever nature.
"Preferred Stock" shall mean the Convertible Exchangeable
Preferred Stock, par value $0.001 per share, of the Company.
"Same Market Station" shall have the meaning set forth in the
Investment Agreement.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Subordinated Notes Indenture" shall have the meaning
set forth in the Investment Agreement.
"Stockholders Meeting" shall mean the first annual meeting of
the stockholders of the Company occurring after the date of this
Agreement, which meeting the Company shall hold and convene no later
than May 15, 2000 in order to vote on certain matters including, but
not limited to, the Stockholder Proposals, and any adjournment thereof
or action or approval by stockholder consent with respect to all or any
part of the Stockholder Proposals.
"Stockholder Proposals" shall mean the proposals to be
submitted to the stockholders of the Company for approval of: (i) an
amendment to the Company's certificate of incorporation providing for
three-year staggered terms of the members of the Board of Directors;
(ii) the issuance of the Underlying Shares if and to the extent
required to satisfy conditions to the listing thereof under applicable
rules of the American Stock Exchange, if required; (iii) an amendment
to the certificate of incorporation of the Company to provide for a new
series of non-voting common stock such that in the event that the
Investor, in its sole discretion, determines that FCC regulations
prevent the Investor from holding Class A Common Stock upon conversion
of the Preferred Stock and exercise of the Warrants, the Investor will
have the option to acquire such new series of non-voting common stock
in place of Class A Common
8
<PAGE> 9
Stockholder Agreement
Stock; and (iv) any other matters necessary to consummate the
transactions contemplated by this Agreement and the Ancillary
Documents.
"Subject Securities" shall mean the Preferred Stock, Warrant
A, Warrant B, the Call Right, and the Underlying Shares.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company, joint venture or other entity
of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned,
directly or indirectly through one or more intermediaries (including,
without limitation, other Subsidiaries), or both, by such Person.
"Total Voting Power" shall mean, with respect to any
corporation, the total number of votes which may be cast in the
election of directors of such corporation if all securities entitled to
vote in the election of such directors (excluding shares of preferred
stock that are entitled to elect directors only upon the occurrence of
customary events of default) are present and voted.
"Transfer" shall mean, with respect to any shares of capital
stock, any direct or indirect sale, assignment, pledge, offer or other
transfer or disposal of any interest in such capital stock.
"Underlying Shares" shall mean the shares of Common Stock into
which the shares of Preferred Stock are convertible and the shares of
Common Stock issuable upon exercise of the Warrants, as such shares may
be subject to adjustment from time to time and any securities into
which such shares may be reclassified, exchanged or converted.
"Voting Stock" shall mean shares of the capital stock and any
other securities of the Company having the ordinary power to vote in
the election of directors of the Company.
9
<PAGE> 10
Stockholder Agreement
"Warrant A" shall have the meaning set forth in the Investment
Agreement.
"Warrant B" shall have the meaning set forth in the Investment
Agreement.
"Warrants" shall mean Warrant A and Warrant B.
ARTICLE II
Certain Investor Rights
Section 2.1 Board of Directors.
(a) If at any time no NBC Nominees serve as members of the Board of
Directors, by notice to such effect to the Company, the Investor may appoint two
representatives ("Observers") to receive notice of and have the right to attend
all meetings of the Board of Directors and any of its committees and receive
copies of all materials distributed to members of the Board of Directors at the
same time such materials are distributed to members of the Board of Directors.
Such Observers shall have no right to vote on any matters presented to the Board
of Directors.
(b) If, at any time, in the Investor's reasonable determination, the
Communications Act and the rules and regulations promulgated by the FCC permit
the Investor to have board appointment or similar rights, at the request of the
Investor, (i) the Company shall have the right to nominate NBC Nominees for
election or appointment to the Board of Directors as part of the management
slate that is included in the proxy statement (or consent solicitation or
similar document) of the Company relating to the election of directors, and
shall provide the same support for the election of each such NBC Nominee as it
provides to other persons standing for election as directors of the Company as
part of the Company's management slate, (ii) the Paxson Stockholders will vote
their shares of Voting Stock to elect the NBC Nominees to the Board of
Directors, (iii) the Company shall not permit the removal of, and the Paxson
Stockholders shall not vote their shares of Voting Stock to remove, any of the
NBC Nominees from the Board of Directors without the approval of the Investor,
and (iv) unless otherwise agreed to by the Investor, (A) at least one NBC
Nominee may attend all meetings of the Audit Committee and the Compensation
Committee of the Board of Directors, but
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<PAGE> 11
Stockholder Agreement
shall not be a voting member of such committees and (B) each other committee of
the Board of Directors shall contain a number of NBC Nominees (to the extent
available), rounded upward to the nearest whole number, equal to the total
number of directors on such committee multiplied by the percentage of the entire
Board of Directors who are NBC Nominees.
Section 2.2 Reimbursement of Expenses; Attendance at Board Meetings;
Indemnification. The Company shall reimburse each NBC Nominee that serves as a
director for all reasonable costs and expenses (including travel expenses)
incurred in connection with such director's attendance at meetings of the Board
of Directors or any committee of the Board of Directors upon which such director
serves. The Company will not pay such director annual or other fees for
attending Board or committee meetings. The Company shall indemnify and provide
directors and officers liability insurance for each such director to the same
extent it indemnifies and provides such insurance for its other directors
pursuant to its organizational documents, applicable law or otherwise. The
Company may purchase such additional policies or endorsements to existing
insurance policies as are necessary to provide continuous directors and officers
liability insurance coverage, notwithstanding the acquisition by the Investor,
its Affiliates or their transferees of a majority of the Total Voting Power,
including coverage for claims asserted up to six years after the termination of
such a policy that arise out of matters occurring prior to such policy
terminations.
ARTICLE III
Certain Agreements
Section 3.1 Financial Statements and Other Reports.
The Company shall deliver, or cause to be delivered to the
Investor:
(a) Monthly Financials: as soon as practicable and in any event within
30 days after the end of each calendar month of the Company, copies of the
monthly sales pacing reports and operating cash flow statements for each
operating property for such month, and copies of the consolidated and
consolidating income statement, operating cash flow statement and
performance to budget analysis for the Company and its consolidated
Subsidiaries for and as of the end of such month;
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Stockholder Agreement
(b) Quarterly Financials: as soon as practicable and in any event
within 45 days after the end of each fiscal quarter of the Company, a
consolidated balance sheet of the Company and its consolidated Subsidiaries
as at the end of such period, and the related unaudited consolidated
statements of income and of cash flows, as contained in the Form 10-Q for
such fiscal quarter provided by the Company to the SEC, and if such Form
10-Q is no longer required to be so provided by the Company, then the
Company shall provide the Investor with comparable financial statements,
certified by the chief financial officer of the Company that they fairly
present the financial condition and results of operations of the Company
and its consolidated Subsidiaries, as appropriate, as at the end of such
periods and for such periods, subject to changes resulting from audit and
normal year-end adjustments;
(c) Year-End Financials: as soon as practicable and in any event
within 90 days after the end of each fiscal year of the Company, the
audited consolidated balance sheet of the Company and its consolidated
Subsidiaries, as at the end of such year, and the related consolidated
statements of income, shareholders' equity and cash flows of the Company
and its consolidated Subsidiaries for such fiscal year, (1) accompanied by
a report thereon of independent certified public accountants of recognized
national standing selected by the Company and reasonably satisfactory to
the Investor, which report shall state that the examination by such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards without any
limitations being imposed on the scope of such examination and (2)
certified by the chief financial officer of the Company that they fairly
present the financial condition and results of operations of the Company
and its consolidated Subsidiaries, as at the dates and for the periods
indicated, as appropriate;
(d) Reconciliation Statement: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the financial statements, the financial statements of the Company and its
consolidated Subsidiaries delivered pursuant to subsections (b), (c) or (f)
of this Section 3.1 will differ in any material respect from the financial
statements that would have been delivered pursuant to such subsections had
no such change in accounting
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Stockholder Agreement
principles and policies been made, then, together with the first delivery
of financial statements pursuant to subsection (b), (c) or (f) following
such change, financial statements of the Company and its consolidated
Subsidiaries prepared on a pro forma basis, for (1) the current year to the
effective date of such change and (2) the one full fiscal year immediately
preceding the fiscal year in which such change is made, as if such change
had been in effect during such period;
(e) Accountants' Certification: so long as not contrary to the then
current recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant to this
Section 3.1 shall be accompanied by a written statement of the Company's
independent certified public accountants that in making the examination
necessary for certification of such financial statements nothing has come
to their attention which would lead them to believe that the Company is not
in compliance with the terms of the instruments governing its outstanding
debt and Preferred Stock or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly for any failure to
obtain knowledge of any such violation.
(f) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all significant
reports submitted to the Company by independent public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company made by such accountants, including, without
limitation, the comment letter submitted by such accountants to management
in connection with their annual audit;
(g) Reports and Filings: within five days after the same are sent,
copies of all financial statements and reports which the Company sends to
its stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Company may make to, or file
with, the SEC;
(h) Events of Default etc.: promptly upon, but in any event no later
than two Business Days after, any executive officer of the Company
obtaining knowledge (1) of any condition or event that constitutes a
violation or
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<PAGE> 14
Stockholder Agreement
default, or becoming aware that any lender has given any notice or taken
any other action with respect to a claimed violation or default under the
instruments governing its outstanding debt and Preferred Stock, (2) that
any Person has given any notice to the Company or any of its Subsidiaries
or taken any other action with respect to a claimed default or event or
condition that would be required to be disclosed in a current report filed
by the Company with the SEC on Form 8-K (Items 1, 2, 4 and 5 of such Form
as in effect on the date hereof) or (3) of any condition or event which has
had or could reasonably be expected to have a Material Adverse Effect, an
officer's certificate specifying the nature and period of existence of such
condition or event, or specifying the notice given or action taken by such
holder or Person and the nature of such claimed violation, default, event
or condition, and what action the Company has taken, is taking and proposes
to take with respect thereto;
(i) Litigation: promptly upon any executive officer of the Company
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company
or any Company Subsidiary not previously disclosed by the Company to the
Investor or (2) any material adverse development in any such action, suit,
proceeding, governmental investigation or arbitration that, in any case
involves claims in excess of $5,000,000 in the aggregate or would
reasonably be expected to cause a Material Adverse Effect, the Company
shall promptly give notice thereof to the Investor and provide such other
information as may be reasonably available to them to enable the Investor
and their counsel to evaluate such matters;
(j) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event (as defined in the Investment
Agreement) in connection with any Employee Benefit Plan (as defined in the
Investment Agreement) or any trust created thereunder, with a written
notice specifying the nature thereof, what action the Company or ERISA
Affiliate (as defined in the Investment Agreement) has taken, is taking or
proposes to take with respect thereto and, when known, any action taken or
threatened by the IRS, the Department of Labor or the PBGC (as defined in
the Investment Agreement) with respect thereto;
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Stockholder Agreement
(k) ERISA Notices: with reasonable promptness, copies of (1) all
notices received by the Company or any of its ERISA Affiliates from the
Pension Benefit Guarantee Corporation ("PBGC") relating to an ERISA Event,
(2) each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by the Company or any of its ERISA Affiliates with the IRS
with respect to each Pension Plan (as defined in the Investment Agreement),
if any, and (3) all notices received by the Company or any of its ERISA
Affiliates from a Multiemployer Plan (as defined in the Investment
Agreement) sponsor concerning an ERISA Event;
(l) Financial Plans: as soon as practicable and in any event no later
than 30 days after the end of any fiscal year of the Company, a budget and
financial forecast for the Company and the Company Subsidiaries including,
(1) a forecasted operating cash flows statement of the Company and the
Company Subsidiaries for the next succeeding fiscal year, (2) forecasted
operating cash flows statement of the Company and the Company Subsidiaries
for each fiscal quarter of the next succeeding fiscal year and (3) such
other information and projections as the Investor may reasonably request,
in each case, in a format satisfactory to the Investor; and
(m) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of its Subsidiaries
or Affiliates as from time to time may be reasonably requested by the
Investor.
Section 3.2 Certain Other Matters. The Company agrees that except with
the prior written consent of the Investor, it and its Subsidiaries shall not,
directly or indirectly:
(i) adopt any shareholders rights plan, or amend any of its
organizational documents or issue any capital stock or other securities or
enter into any agreement that is material to the Company and the Company
Subsidiaries taken as a whole, the provisions of which, upon the
acquisition of capital securities of the Company by the Investor or its
Affiliates: (A) would be violated or breached, would require a consent or
approval thereunder, or would result in a default thereof (or an event
which, with notice or lapse of time or both, would constitute a default),
(B) would result in the termination thereof or accelerate the performance
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Stockholder Agreement
required thereby, or result in a right of termination or acceleration
thereunder, (C) would result in the creation of any Lien (except Permitted
Liens) upon any of the properties or assets of the Company or any Company
Subsidiary thereunder, (D) would disadvantage the Investor or its
Affiliates relative to other stockholders on the basis of the size of their
shareholdings, or (E) would otherwise restrict or impede the ability of the
Investor and its Affiliates to acquire additional shares of capital stock,
or dispose of such capital stock, in any manner permitted by Section 4.1;
provided that the Company may (x) enter into senior loan agreements that
contain customary provisions permitting acceleration of the related
indebtedness upon a change of control and (y) issue debt securities or
preferred stock that contain customary change of control provisions
permitting the holders of such debt securities or preferred stock to demand
repurchase of their debt securities or preferred stock upon a change of
control of the Company to any party other than to Parent or its wholly
owned domestic Subsidiary.
(ii) take any action that would cause any ownership interest in any of
the following to be attributable to the Investor or any of its Affiliates
for purposes of FCC regulations: (A) a U.S. broadcast radio or television
station (other than the Same Market Stations), (B) a U.S. cable television
system, (C) a U.S. "daily newspaper" (as such term is defined in Section
73.3555 of the rules and regulations of the Federal Communications
Commission, as the same may be amended from time to time), (D) any U.S.
communications facility operated pursuant to a license granted by the FCC
and subject to the provisions of Section 310(b) of the Communications Act,
or (E) any other business which is subject to FCC regulations under which
the ownership of a Person may be subject to limitation or restriction as a
result of the interest in such business being attributed to such Person.
Section 3.3 Agreement to Vote Stock. At the Stockholder Meeting, each
of the Paxson Stockholders irrevocably agrees that it shall vote (or cause to be
voted) all of the Voting Stock that it has the power to vote on the record date
of any such vote or action (i) in favor of the approval of each of the
Stockholder Proposals and (ii) prior to the Stockholder Meeting and the approval
of the Stockholder Proposals, against any proposal that would upon consummation
result in a Change of Control. The Paxson Stockholders shall
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Stockholder Agreement
not take, or commit or agree to take, any action inconsistent with the
foregoing.
Section 3.4 Company Sale. If at any time the Investor exercises its
rights under Section 9.5 of the Investment Agreement to cause the Company to
consummate a Company Sale, the Paxson Stockholders agree to take all necessary
and reasonably desirable actions to enable the Company to effectuate such
Company Sale pursuant to Section 9.5. Without limiting the generality of the
foregoing, each Paxson Stockholder shall vote all of the Voting Stock that it
has the power to vote in favor of any Company Sale which is in the form of a
merger, consolidation or other reorganization, sale of substantially all assets
or complete liquidation, dissolution, winding up or other transaction that
requires the approval of the Company's stockholders and shall tender all shares
of Common Stock held by it in connection with a Company Sale in the form of a
transaction involving a tender or exchange offer, on the same terms and
conditions offered to holders of Common Stock generally.
ARTICLE IV
Transfer Restrictions
Section 4.1 Investor Restrictions.
(a) Company Right of First Refusal. (i) If the Investor at any time
intends to Transfer any Subject Securities (other than pursuant to (A) a merger,
consolidation or reorganization to which the Company is a party or a tender
offer approved by the Board of Directors of the Company or (B) after February 1,
2002, any transaction or series of related transactions that require the
exercise of Warrant B and the purchase of the Call Shares and after giving
effect to such transaction or transactions neither Paxson nor any of his
Affiliates and family members continue to qualify as the FCC Single Majority
Stockholder (each, an "Investor Transfer")) to any Person other than an
Affiliate of the Investor or the Company (an "Investor Third Party"), the
Investor shall give written notice 90 days prior to the effectiveness of such
Transfer (an "Investor Offer Notice") to the Company and the Paxson
Stockholders, stating the Investor's intention to make such a Transfer, the name
of the proposed Investor Third Party transferee, the Subject Securities proposed
to be transferred (the "Investor Offered Securities"), the aggregate
consideration to be paid for the Investor Offered Securities
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Stockholder Agreement
and the implied price per share or Underlying Share (which shall include the
exercise price in the case of the Warrants and the Call Price in the case of the
Call Agreement) (the "Investor Offer Price") and in reasonable detail all other
material terms and conditions upon which such Transfer is proposed. If the
Investor indicates that the Investor Offer Price is the then current market
price or the consideration is not cash, then the Investor Offer Price shall be
the closing price for shares of the Company on the American Stock Exchange on
the day immediately preceding the date of the Investor Offer Notice.
(ii) The Investor shall require as a condition to any Investor
Transfer of any Warrants or of rights to acquire shares under the Call Agreement
that the Investor Third Party transferee exercise in full the transferred
portion of the Warrants or the entire right to acquire shares under the Call
Agreement within 30 days after the later of (A) the consummation of such
Investor Transfer and (B), unless waived in writing by the Company, the date on
which such Warrant or the Call Agreement first becomes exercisable in accordance
with its terms.
(iii) Upon receipt of the Investor Offer Notice, the Company shall
have an option to purchase all of the Investor Offered Securities at the
Investor Offer Price, which option may be exercised by written notice to the
Investor given within 30 days of the Company's receipt of the Investor Offer
Notice.
(iv) If the Company exercises its option to purchase the Investor
Offered Securities, the closing of such purchase shall take place within 60 days
of the date the Company gives notice of such exercise.
(v) If the Company determines not to exercise its option to purchase
the Investor Offered Securities, then the Investor shall be free, for a period
of 60 days from the earlier of (A) the expiration of the offer to the Company
and (B) the receipt of written notice from the Company stating that the Company
does not intend to exercise its option, to sell the Investor Offered Securities
to the Investor Third Party transferee at a price equal to or greater than the
Investor Offer Price and on substantially the same terms as set forth in the
Investor Offer Notice.
(vi) This subsection 4.1(a) shall not apply in the case of an
Unrestricted Transfer (as defined in the Investment
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Stockholder Agreement
Agreement) pursuant to Section 9.4 of the Investment Agreement, a Company Sale
pursuant to Section 9.5 of the Investment Agreement, a transfer pursuant to
subsection 4.1(c)(ii) of this Agreement or a transfer pursuant to open market
sales.
(b) Transfer of Operating Rights and Investor Rights. The Investor
may not transfer the Operating Rights and may not transfer the Investor Rights
except in conjunction with a transfer of Subject Securities and except as
provided in this subsection 4.1(b).
(i) If after giving effect to any Transfer of Subject Securities,
the Investor and its Affiliates own the Minimum Investment, the Operating
Rights and the Investor Rights shall continue unaffected by such Transfer.
(ii) If after giving effect to any Transfer of Subject Securities,
neither the Investor and its Affiliates nor the transferee of such Subject
Securities would own the Minimum Investment, then the Operating Rights and
the Investor Rights shall terminate upon the effectiveness of such
Transfer.
(iii) If after giving effect to any Transfer of Subject Securities,
the Investor and its Affiliates would not hold the Minimum Investment and
the transferee of such Subject Securities would own the Minimum Investment,
then the transfer of Investor Rights shall be subject to the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed and shall be subject to subsection 4.1(c) below. Upon the
effectiveness of such Transfer, (A) the Operating Rights shall terminate,
(B) if the Company has not consented to the Transfer, on the 30th day after
the effectiveness of such Transfer, the Investor Rights shall terminate and
(C) if the Company has consented to the Transfer, the Investor Rights shall
be transferred and continue unaffected by such Transfer.
This subsection 4.1(b) shall not apply to a transfer of the Investor Rights in
(A) an Unrestricted Transfer pursuant to Section 9.4 of the Investment Agreement
or (B) a transfer pursuant to the last sentence of subsection 4.1(c)(ii) of this
Agreement.
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Stockholder Agreement
(c) Company Purchase Obligation. (i) After February 1, 2002, if the
Company does not consent to a proposed Transfer of the Investor Rights within 45
days following the Company's receipt of the applicable Investor Offer Notice,
then the Company shall be obligated to offer to purchase or designate a
purchaser for the Investor Offered Securities (together with any Additional
Offered Securities(as defined below)) at the Investor Offer Price set forth in
the Investor Offer Notice. The Investor may set forth in the Investor Offer
Notice any additional Subject Securities (the "Additional Offered Securities")
that the Investor determines in its sole discretion must be included as part of
the securities that the Company or its designee is required to offer to purchase
if the Company does not consent to a proposed Transfer of the Investor Rights.
Upon receipt of notice of the Company's refusal to consent to the proposed
transferee of the Investor Rights or the end of such 45-day period, if such
consent is not granted by the Company, the Investor may elect, by written notice
to the Company within five business days thereafter, to withdraw the Investor
Offer Notice, in which case the Company and any designee shall have no right or
obligation to purchase the Investor Offered Securities or any Additional Offered
Securities. If the Investor does not give written notice to the Company of the
Investor's election to withdraw an Investor Offer Notice then the Company or its
designee, as the case may be, shall be obligated to purchase the Investor
Offered Securities (and any Additional Offered Securities) at a price or prices
per share or Underlying Share (net of any applicable exercise price) equal to
the Investor Offer Price, and on the same terms and conditions set forth in the
Investor Offer Notice.
(ii) If the Company or its designee is obligated to purchase the
Investor Offered Securities (and any Additional Offered Securities) pursuant to
the preceding subsection 4.1(c)(i), the closing of such purchase shall take
place prior to ten days after the earlier of (x) the 30th day after the date the
Company gives notice of its determination not to consent to a Transfer or (y)
the end of the 45-day period referred to in subsection 4.1(c)(i), if no consent
to transfer is given by the Company. If the Company fails to purchase the
Investor Offered Securities (and any Additional Offered Securities) within such
period, then the Investor shall be free to sell such Investor Offered Securities
without regard to any restrictions on transfer thereof set forth herein
(including without limitation any rights of first refusal or tag-along rights).
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Stockholder Agreement
(d) Paxson Tag-along Right. If the Company consents to the transfer of
the Investor Rights in connection with a Transfer, the Paxson Stockholders and
the Paxson Estate Planning Affiliates may elect to participate in such Transfer
by giving written notice of its election to the Investor within 45 days of the
Company's receipt of the applicable Investor Offer Notice (each Person electing
to participate, a "Paxson Participant"). Each Paxson Participant shall be
entitled to sell in the proposed Transfer, at a price per share of Common Stock
equal to the Investor Offer Price and on the same terms and conditions as the
Investor, up to a number of shares of Common Stock equal to the product of (I)
the number of Paxson Shares set forth on Schedule 5.2(c) then owned by such
Paxson Participant multiplied by (II) the quotient of (A) the number of shares
of Common Stock included in the Investor Offered Securities plus the number of
Underlying Shares represented by the Investor Offered Securities divided by (B)
the total number of shares of Common Stock then owned by the Investor and its
Affiliates (which shall include all Underlying Shares and Call Shares). Each
Paxson Participant shall be obligated to pay its pro rata portion of the
transaction costs associated with any Transfer. If the aggregate number of
securities proposed to be sold by the Investor and the Paxson Participants is
greater than the number that the proposed transferee agrees to purchase, then
the number of securities proposed to be sold by the Investor and each of the
Paxson Participants shall be decreased pro rata. This subsection 4.1(d) shall
not apply in the case of an Unrestricted Transfer (except if such Unrestricted
Transfer is triggered only because of the exercise of the Investor's right to
redemption after the third anniversary of the date hereof pursuant to subsection
9.1(a)(ii) of the Investment Agreement) pursuant to Section 9.4 of the
Investment Agreement, a Company Sale pursuant to Section 9.5 of the Investment
Agreement, a transfer pursuant to subsection 4.1(c)(ii) of this Agreement or a
transfer pursuant to open market sales.
Section 4.2 Paxson Stockholder Restrictions.
(a) Transfer Restrictions. Until the earlier of (i) such time as the
Investor is permitted under the Communications Act and the FCC rules and
regulations promulgated thereunder to own all of the Conversion Shares, the
Underlying Shares and the Call Shares or (ii) the sixth anniversary of the date
hereof, Paxson and the Paxson Non- Estate Planning Affiliates shall not,
directly or indirectly, Transfer any Voting Stock to any Person unless after
taking
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Stockholder Agreement
into account such Transfer, Paxson or an Affiliate or family member of Paxson
continues to be the FCC Single Majority Stockholder of the Company. In order to
permit Transfers by Paxson and the Paxson Non-Estate Planning Affiliates
pursuant to the initial sentence of this subsection (a) the Investor agrees to
grant to Paxson a revocable proxy (in a form reasonably satisfactory to the
Investor) to vote a sufficient number of Underlying Shares owned by the Investor
to assist Paxson or an Affiliate or family member of Paxson remain the FCC
Single Majority Stockholder; provided that (i) the Investor makes no
representation or warranty as to the effectiveness of such arrangement in
satisfying the requirements for Paxson to remain the FCC Single Majority
Shareholder and (ii) in connection with such proxy, the Investor shall have no
obligations to acquire shares of Voting Stock, convert Preferred Stock or
exercise Warrants. Notwithstanding anything contained in this Section 4.2 to the
contrary, the Paxson Stockholders may not transfer any of the Call Shares,
except to the extent permitted in the Call Agreement.
(b) Investor Right of First Refusal. (i) If any Paxson Stockholder at
any time intends to Transfer any Common Stock (other than pursuant to a merger,
consolidation or reorganization to which the Company is a party or a tender
offer approved by the Board of Directors of the Company)(each, a "Paxson
Transfer") to any Person other than to another Paxson Stockholder (a "Paxson
Third Party"), the transferring Paxson Stockholders (each, a "Paxson
Transferor")shall give written notice 90 days prior to the effectiveness of such
Transfer (a "Paxson Offer Notice") to the Investor, stating such Paxson
Transferor's intention to make such a Transfer, the name of the proposed Paxson
Third Party transferee, the Common Stock proposed to be transferred (the "Paxson
Offered Securities"), the aggregate consideration to be paid for the Paxson
Offered Securities and the price per share of Common Stock (the "Paxson Offer
Price") and in reasonable detail all other material terms and conditions upon
which such Transfer is proposed. If the Paxson Transferor indicates that the
Paxson Offer Price is the then current market price or the consideration is not
cash, then the Paxson Offer Price shall be the closing price for shares of the
Company on the American Stock Exchange on the day immediately preceding the date
of the Paxson Offer Notice. Notwithstanding the preceding provisions of this
subsection 4.1 (b), the Investor shall have no right to purchase pursuant to
subsection 4.1(b) (i) the Call Shares, (ii) shares held by Paxson Estate
Planning Affiliates and (iii) up to the first 2,000,000 shares of Class
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Stockholder Agreement
A Common Stock transferred by the Paxson Stockholders in the aggregate. This
subsection 4.2(b) shall not apply with respect to open market sales.
(ii) Upon receipt of the Paxson Offer Notice, the Investor shall
have an option to purchase all of the Paxson Offered Securities at the Paxson
Offer Price, which option may be exercised by written notice to the Paxson
Transferors given within 30 days of the Investor's receipt of the Paxson Offer
Notice.
(iii) If the Investor exercises its option to purchase the Paxson
Offered Securities, the closing of such purchase shall take place within 60 days
of the date the Investor gives notice of such exercise.
(iv) If the Investor determines not to exercise its option to
purchase the Paxson Offered Securities, then the Paxson Transferors shall be
free, for a period of 60 days from the earlier of (A) the expiration of the
offer to the Investor and (B) the receipt of written notice from the Investor
stating that the Investor does not intend to exercise its option, to sell the
Paxson Offered Securities to the Paxson Third Party transferee at a price equal
to or greater than the Paxson Offer Price and on substantially the same terms as
set forth in the Paxson Offer Notice.
(c) Investor Tag-Along Right. If any Paxson Transfer that is
otherwise permitted hereunder and under the Call Agreement would result in a
Change of Control of the Company, the Investor and its Affiliates may elect to
participate in such Paxson Transfer by giving written notice of its election to
the Paxson Transferor within 45 days of the Investor's receipt of the applicable
Paxson Offer Notice (each Person electing to participate, an "Investor
Participant"). Each Investor Participant shall be entitled to sell in the
proposed Paxson Transfer, at a price or prices per share or Underlying Share
equal to the Paxson Offer Price as the case may be, and on the same terms and
conditions as the Paxson Transferor, up to a number of Subject Securities (other
than the Call Right) owned by the Investor Participant equal to the product of
(I) the aggregate number of shares of Common Stock then owned by the Investor
Participant and its Affiliates (which shall include all Underlying Shares and
Call Shares) multiplied by (II) the quotient of (A) the Paxson Offered
Securities divided by (B) the total number of Paxson Shares set forth on
Schedule 5.3(c) then owned by the Paxson Stockholders and the Paxson Estate
Planning Affiliates. The
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Stockholder Agreement
purchase price for any Subject Securities that the Investor Participant elects
to sell shall be (x) in the case of Common Stock, the Paxson Offer Price per
share, (y) in the case of Warrants, the Paxson Offer Price per share of
Underlying Stock, net of the applicable exercise price for such Warrants,
assuming the Exercise Date (as defined in Warrant B) is the date of the Paxson
Offer Notice and (z) in the case of Preferred Stock, the Paxson Offer Price per
Conversion Share. Each Investor Participant shall be obligated to pay its pro
rata portion of the transaction costs associated with any Transfer. If the
aggregate number of securities proposed to be sold by the Paxson Stockholders
and the Investor Participants is greater than the number of securities that the
proposed transferee agrees to purchase, then the number of securities proposed
to be sold by the Paxson Transferors and each of the Investor Participants shall
be decreased pro rata.
Section 4.3 Certain Transfer. Notwithstanding anything herein to the
contrary, after February 1, 2002 the transfer restrictions, including the tag
along rights, right of first refusal and consent to transfer of Investor Rights,
in this Article IV shall not apply to any Transfer of the Subject Securities in
connection with any transaction or series of related or substantially concurrent
transactions that require the exercise of Warrant B in full and the purchase of
the Call Shares, provided that after giving effect to such transaction or
transactions (taking into account any delays in consummation of such exercise),
Paxson and Affiliates or family members of Paxson no longer qualify as the FCC
Single Majority Stockholder. The Investor shall give the Company and the Paxson
Stockholders five days prior written notice of any such Transfer of Subject
Securities in connection with any transaction or series of related transactions.
Section 4.4 Legends. (a) Subject to the provisions of this Section
4.4, if the Investor or any of its Affiliates decides to dispose of any of the
Subject Securities, each such party understands and agrees that it may do so
only pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act. The
Investor agrees to the imprinting, so long as appropriate, of substantially the
following legends on certificates representing any of the securities referenced
in the preceding sentence:
NEITHER THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES ISSUABLE UPON
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Stockholder Agreement
EXERCISE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND THE OTHER
TERMS OF A STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER 15, 1999, AMONG
PAXSON COMMUNICATIONS CORPORATION, NATIONAL BROADCASTING COMPANY, INC.,
SECOND CRYSTAL DIAMOND, LIMITED PARTNERSHIP AND PAXSON ENTERPRISES, INC.
The legend set forth above shall be removed if and when (i) the securities
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or (ii) the Investor delivers to
the Company an opinion of counsel reasonably acceptable to the Company to the
effect that such legends are no longer necessary.
(b) The Paxson Stockholders agree to the imprinting of substantially
the following legends on certificates representing any of the Paxson Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND OTHER TERMS OF A STOCKHOLDER AGREEMENT, DATED AS OF
SEPTEMBER 15, 1999, AMONG PAXSON COMMUNICATIONS CORPORATION, NATIONAL
BROADCASTING COMPANY, INC., SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, AND
PAXSON ENTERPRISES, INC.
Section 4.5 Price Calculations. Calculations of price per share or
Underlying Share shall be based on total consideration paid per share including
any exercise price or the Call Price required in connection with the exercise of
any Warrant or the Call Right. The Call Price for purposes of such calculations
shall be the Call Price determined under the Call Agreement assuming the date of
the Call Notice (as defined in the Call Agreement) is the date of the applicable
notice for which such calculation is being made. The exercise price for Warrant
B for purposes of such calculation shall be the exercise price determined under
Warrant B assuming the
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Stockholder Agreement
Exercise Date (as defined in Warrant B) is the date of the applicable notice for
which such calculation is being made.
ARTICLE V
Representations and Warranties
Section 5.1 Representations of the Company. The Company represents and
warrants to the Investor and the Paxson Stockholders as follows:
(a) Corporate Existence; Compliance with Law. The Company (i) is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (ii) is duly qualified to
conduct business and is in good standing in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified, individually or
in the aggregate, would not have a Material Adverse Effect; (iii) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now,
heretofore and proposed to be conducted; (iv) is in compliance with its
charter and by-laws; and (v) is in compliance with all applicable
provisions of law (including, without limitation, the Communications Act),
except where the failure to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(b) Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by the Company of this Agreement and
its obligations hereunder: (i) are within the Company's corporate power;
(ii) have been duly authorized by all necessary or proper corporate and
shareholder action; (iii) do not contravene any provision of the Company's
charter or bylaws; (iv) do not violate any law or regulation, or any order
or decree of any court or Governmental Entity applicable to it; (v) do not
conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any material indenture, mortgage, deed of trust, or any
Material Agreement (as defined in the Investment Agreement) to which the
Company is a party or by which
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Stockholder Agreement
the Company or any of its property is bound; (vi) do not result in the
creation or imposition of any material Lien upon any of the property of the
Company; and (vii) do not require the consent or approval of any
Governmental Entity or any other Person, except the filing of all notices,
reports and other documents required by, and the expiration of all waiting
periods under, the HSR Act and the rules and regulations promulgated by the
FCC. This Agreement is duly executed and delivered by the Company and this
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditor's rights generally and subject to the
availability of equitable remedies.
Section 5.2 Representations of the Investor. The Investor represents
and warrants to the Company and the Paxson Stockholders as follows:
(a) Corporate Existence; Compliance with Law. The Investor (i) is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (ii) is duly qualified to
conduct business and is in good standing in each other jurisdiction where
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified,
individually or in the aggregate would not have a Material Adverse Effect;
(iii) has the requisite corporate power and authority and the legal right
to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business
as now, heretofore and proposed to be conducted; (iv) is in compliance with
its charter and by-laws; and (v) is in compliance with all applicable
provisions of law (including, without limitation, the Communications Act),
except where the failure to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(b) Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by the Investor of this Agreement and
its obligations hereunder: (i) are within its corporate power; (ii) have
been duly authorized by all necessary or proper corporate and shareholder
action; (iii) do not contravene any
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Stockholder Agreement
provision of its charter or bylaws; (iv) do not violate any law or
regulation, or any order or decree of any court or Governmental Entity
applicable to it; (v) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any material indenture,
mortgage, deed of trust, lease, agreement or other instrument to which the
Investor is a party or by which the Investor or any of its property is
bound; (vi) do not result in the creation or imposition of any material
Lien upon any of the property of the Investor; and (vii) do not require the
consent or approval of any Governmental Entity or any other Person, except
the filing of all notices, reports and other documents required by, and the
expiration of all waiting periods under, the HSR Act and the rules and
regulations promulgated by the FCC. This Agreement is duly executed and
delivered by the Investor and this Agreement shall constitute a legal,
valid and binding obligation of the Investor enforceable against it in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
limiting creditor's rights generally and subject to the availability of
equitable remedies.
Section 5.3 Representations of the Paxson Stockholders. Each of the
Paxson Stockholders represents and warrants to the Investor and the Company as
follows:
(a) Corporate Existence; Compliance with Law. Each Paxson Stockholder
(i) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
formation; (ii) is duly qualified to conduct business and is in good
standing in each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified, individually or in the aggregate, would not
have a Material Adverse Effect; (iii) has the requisite corporate or
partnership power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now,
heretofore and proposed to be conducted; (iv) is in compliance with its
charter, by-laws and other organizational documents; and (v) is in
compliance with all applicable provisions of law (including, without
limitation, the Communications
28
<PAGE> 29
Stockholder Agreement
Act), except where the failure to comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(b) Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each of the Paxson Stockholders of
this Agreement, and their obligations hereunder: (i) are within such
Person's corporate or partnership power; (ii) have been duly authorized by
all necessary or proper corporate, partnership and shareholder action;
(iii) do not contravene any provision of such Person's charter, bylaws or
other organizational documents; (iv) do not violate any law or regulation,
or any order or decree of any court or Governmental Entity applicable to
it; (v) do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
performance required by, any material indenture, mortgage, deed of trust,
lease, agreement or other instrument to which such Person is a party or by
which such Person or any of its property is bound; (vi) do not result in
the creation or imposition of any material Lien upon any of the property of
such Person; and (vii) do not require the consent or approval of any
Governmental Entity or any other Person, except the filing of all notices,
reports and other documents required by, and the expiration of all waiting
periods under, the HSR Act and the rules and regulations promulgated by the
FCC. This Agreement is duly executed and delivered by each of the Paxson
Stockholders and this Agreement constitutes a legal, valid and binding
obligation of each of the Paxson Stockholders enforceable against it in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
limiting creditor's rights generally and subject to the availability of
equitable remedies.
(c) Capitalization; Ownership. Schedule 5.3(c) sets forth, for each
Paxson Stockholder and the Paxson Estate Planning Affiliates, all of the
shares of Common Stock, Options and other equity securities of the Company
that each Beneficially Owns as of the date hereof (the "Paxson Shares").
(d) Voting Power. The Paxson Stockholders have, and at the
Stockholders Meeting will have, the power to vote a sufficient number of
shares of capital stock of
29
<PAGE> 30
Stockholder Agreement
the Company to approve each of the Stockholder Proposals without the vote
of any other Company stockholder.
ARTICLE VI
Miscellaneous
Section 6.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Fax: 212-664-2648
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John W. Carr
Fax: (212) 455-2502
(b) If to the Company, to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Executive Officer
Fax: 561-655-9424
with copy to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Fax: 561-655-4754
30
<PAGE> 31
Stockholder Agreement
(c) If to the Paxson Stockholders, to:
Lowell W. Paxson
601 Clearwater Park Road
West Palm Beach, Florida 33401
Fax: 561-655-9424
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 6.2 Entire Agreement; Amendment. This Agreement, the
Investment Agreement and the other Ancillary Documents and the documents
described herein and therein or attached or delivered pursuant hereto or thereto
set forth the entire agreement between the parties hereto with respect to the
transactions contemplated by this Agreement. Any provision of this Agreement may
be amended or modified in whole or in part at any time by an agreement in
writing between the parties hereto executed in the same manner as this
Agreement. No failure on the part of any party to exercise, and no delay in
exercising, any right shall operate as a waiver thereof nor shall any single or
partial exercise by any party of any right preclude any other or future exercise
thereof or the exercise of any other right.
Section 6.3 Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
Section 6.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original, but
all of which together shall constitute one and the same document.
Section 6.5 Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed and construed in accordance with the laws of the
State of New York applicable to contracts executed and performed within such
state, and each party hereby submits to the jurisdiction of any state or U.S.
federal court sitting within the County of New York, New York. The parties
hereto waive all right to trial by jury in any action, suit or proceeding
brought to enforce or defend any rights or remedies under this Agreement.
31
<PAGE> 32
Stockholder Agreement
Section 6.6 Successors and Assigns; Third Party Beneficiaries. The
Company may not assign any of its rights or delegate any of its duties under
this Agreement without the prior written consent of the Investor. Subject to
applicable law and the following sentence, the Investor may assign its rights
under this Agreement in whole or in part only in accordance with this Agreement
or to any Affiliate of the Investor, but no such assignment shall relieve the
Investor of its obligations hereunder. Except as set forth in subsection 4.2(a),
the Paxson Stockholders may not assign any of their rights or delegate any of
their duties under this Agreement without the prior written consent of the
Investor. The Investor may not assign any of its rights under this Agreement
unless such assignee expressly assumes all of the obligations of the Investor
associated with the rights proposed to be assigned. Any purported assignment in
violation of this Agreement shall be void. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any Person other than
the parties hereto and their respective successors, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their respective successors, and for the benefit of no other Person.
Section 6.7 Arbitration. Any controversy, dispute or claim arising out
of, in connection with or in relation to the interpretation, performance or
breach of this Agreement, shall be determined, at the request of any party, by
arbitration in a city mutually agreeable to the parties to such controversy,
dispute or claim before and in accordance with the then-existing Rules for
Commercial Arbitration of the American Arbitration Association, and any judgment
or award rendered by the arbitrator will be final, binding and unappealable and
judgment may be entered by any state or Federal court having jurisdiction
thereof. The pre-trial discovery procedures of the Federal Rules of Civil
Procedure shall apply to any arbitration under this Section 6.7. Any controversy
concerning whether a dispute is an arbitrable dispute or as to the
interpretation or enforceability of this Section 6.7 shall be determined by the
arbitrator. The arbitrator shall be a retired or former United States District
Judge or other person acceptable to each of the parties, provided such
individual has substantial professional experience with regard to corporate or
partnership legal matters. The parties intend that this agreement to arbitrate
be valid, enforceable and irrevocable.
32
<PAGE> 33
Stockholder Agreement
Section 6.8 Remedies. (a) No right, power or remedy conferred upon
any party in this Agreement shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power or remedy
whether conferred in this Agreement or now or hereafter available at law or in
equity or by statute or otherwise. No course of dealing between the Investor,
the Company and the Paxson Stockholders and no delay in exercising any right,
power or remedy conferred in this Agreement or now or hereafter existing at law
or in equity or by statute or otherwise shall operate as a waiver or otherwise
prejudice any such right, power or remedy. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in
addition to any other remedy to which they are entitled at law or in equity.
(b) In addition to and not in limitation of, the remedies set forth in
subsection 6.8(a), if any Paxson Stockholder breaches the provisions of Section
3.3 (other than any failure to vote for resolutions under clauses (i) and (iv)
of the definition of "Stockholder Proposals") and as a result of such failure,
the resolutions under clauses (ii) and (iii) do not receive the requisite
shareholder vote for approval and such breach remains uncured for 120 days after
written notice thereof from the Investor delivered not later than 30 days after
the Stockholders Meeting, then the Investor (or any transferee) shall have the
irrevocable right to acquire all of the Call Shares for a purchase price of $10
per share, exercisable immediately by the Investor (or any transferee).
Section 6.9 Headings, Captions and Table of Contents. The section
headings, captions and table of contents contained in this Agreement are for
reference purposes only, are not part of this Agreement and shall not affect the
meaning or interpretation of this Agreement.
Section 6.10 Termination. Articles II, III and IV of this Agreement
shall terminate if neither (i) the Investor (together with its Affiliates) owns
at least the Minimum Investment nor (ii) a transferee of the Investor, to whom
the Investor Rights were transferred in accordance with the Stockholder
Agreement, owns at least the Minimum Investment. This Agreement shall terminate
in its entirety upon the earlier of (i) the Investor acquiring shares of Capital
Stock
33
<PAGE> 34
Stockholder Agreement
that provide it with the unfettered right to vote a sufficient number of Voting
Shares to elect a majority of the members of the Board of Directors or (ii) the
tenth anniversary of the date hereof.
Section 6.11 Additional Paxson Stockholders. Each Affiliate (including
family members) of Paxson who acquires shares of Common Stock from a Paxson
Stockholder after the date hereof shall become a Paxson Stockholder for all
purposes of this Agreement and shall execute and deliver to the Company an
Assumption Agreement in the form of Exhibit A hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto or by their respective duly authorized representatives, all as of the
date first above written.
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------
Name:
Title:
NATIONAL BROADCASTING COMPANY,
INC.
By:
-------------------------------
Name:
Title:
----------------------------------
Lowell W. Paxson
SECOND CRYSTAL DIAMOND LIMITED
PARTNERSHIP
By: Paxson Enterprises, Inc.,
its general partner
By:
-------------------------------
Name:
Title:
34
<PAGE> 35
Stockholder Agreement
PAXSON ENTERPRISES, INC.
By:
-------------------------------
Name:
35
<PAGE> 36
Stockholder Agreement
Exhibit A
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of ______, ______, made by ______, (the
"Additional Stockholder"), in connection with the Stockholder Agreement dated
as of September 15, 1999, among Paxson Communications Corporation, National
Broadcasting Company, Inc., Lowell W. Paxson, Second Crystal Diamond Limited
Partnership and Paxson Enterprises, Inc. (the "Stockholder Agreement"). All
capitalized terms not defined herein shall have the meaning ascribed to them in
the Stockholder Agreement.
W I T N E S S E T H :
WHEREAS, the Paxson Stockholders have entered into the Stockholder
Agreement, which requires the Additional Stockholder to become a party to the
Stockholder Agreement in connection with the transfer of shares of Paxson Stock
to the Additional Stockholder; and the Additional Stockholder has agreed to
execute and deliver this Assumption Agreement in order to become a party to the
Stockholder Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Assumption. By executing and delivering this Assumption Agreement,
the Additional Stockholder, as provided in Section 6.11 of the Stockholder
Agreement, hereby becomes a party to the Stockholder Agreement with the same
force and effect as if originally named therein as a Paxson Stockholder and,
without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Paxson Stockholder thereunder. The information
set forth in Annex 1 hereto is hereby added to the information set forth in
Schedule 5.3(c) to the Stockholder Agreement. The Additional Stockholder hereby
represents and warrants that each of the representations and warranties
contained in Section 5.3 of the Stockholder Agreement is true and correct on and
as the date hereof (after giving effect to this Assumption Agreement) as if made
on and as of such date.
<PAGE> 37
Stockholder Agreement
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL STOCKHOLDER]
By:
-------------------------------------
Name:
Title:
2
<PAGE> 38
STOCKHOLDER AGREEMENT
dated as of September 15, 1999
among
PAXSON COMMUNICATIONS CORPORATION,
NATIONAL BROADCASTING COMPANY, INC.,
MR. LOWELL W. PAXSON,
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
and
PAXSON ENTERPRISES, INC.
<PAGE> 39
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
CERTAIN DEFINITIONS ............................................. 1
Section 1.1 Definitions ......................................... 1
ARTICLE II
Certain Investor Rights .................................... 9
Section 2.1 Board of Directors ............................. 9
Section 2.2 Reimbursement of Expenses; Attendance
at Board Meetings; Indemnification ............. 10
ARTICLE III
Certain Agreements ......................................... 10
Section 3.1 Financial Statements and Other Reports ......... 10
Section 3.2 Certain Other Matters .......................... 14
Section 3.3 Agreement to Vote Stock ........................ 15
Section 3.4 Company Sale ................................... 15
ARTICLE IV
Transfer Restrictions ...................................... 16
Section 4.1 Investor Restrictions .......................... 16
Section 4.2 Paxson Stockholder Restrictions ................ 19
Section 4.3 Certain Transfer ............................... 22
Section 4.4 Legends ........................................ 22
ARTICLE V
Representations and Warranties ............................. 23
Section 5.1 Representations of the Company ................. 23
Section 5.2 Representations of the Investor ................ 24
Section 5.3 Representations of the Paxson Stockholders ..... 26
ARTICLE VI
Miscellaneous .............................................. 27
Section 6.1 Notices ........................................ 27
Section 6.2 Entire Agreement; Amendment .................... 28
Section 6.3 Severability ................................... 28
Section 6.4 Counterparts ................................... 28
</TABLE>
i
<PAGE> 40
<TABLE>
<CAPTION>
Page
<S> <C>
Section 6.5 Governing Law; Jurisdiction; Waiver of Jury
Trial ......................................... 29
Section 6.6 Successors and Assigns; Third Party
Beneficiaries ................................. 29
Section 6.7 Arbitration ................................... 29
Section 6.8 Remedies ...................................... 30
Section 6.9 Headings, Captions and Table of Contents ...... 30
Section 6.10 Termination ................................... 30
Section 6.11 Additional Paxson Stockholders ................ 30
</TABLE>
EXHIBIT
Exhibit A - Assumption Agreement
SCHEDULE
Schedule 5.3(c)
ii
