Quarterly Report — Form 10-Q
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-Q Paxson Communications, Inc. Form 10-Q 21 142K
13: EX-10.100 Asset Purchase Agreement 40 175K
14: EX-10.101 Asset Purchase Agreement 41 177K
15: EX-10.102 Asset Purchase Agreement 45 190K
16: EX-10.103 Construction Agreement 9 37K
17: EX-10.104 Loan Agreement 29 120K
18: EX-10.105 Asset Purchase Agreement 44 184K
19: EX-10.106 Asset Purchase Agreement 42 176K
20: EX-10.107 Agreement and Plan of Merger 34 110K
21: EX-10.107.01 First Amendment to Agreement and Plan of Merger 3 17K
22: EX-10.108 Asset Purchase Agreement 41 174K
23: EX-10.109 Option Agreement 9 35K
24: EX-10.110 Subordinated Note 13 50K
25: EX-10.111 Asset Purchase Agreement 40 142K
26: EX-10.112 Asset Purchase Agreement 40 169K
27: EX-10.113 Time Brokerage Agreement 28 96K
28: EX-10.114 Purchase Agreement 17 63K
29: EX-10.115 Asset Purchase Agreement 32 138K
30: EX-10.116 Asset Purchase Agreement 32 148K
31: EX-10.117 Asset Purchase Agreement 32 144K
32: EX-10.118 Asset Purchase Agreement 33 147K
33: EX-10.119 Time Brokerage Agreement 16 70K
34: EX-10.120 Loan Agreement 28 109K
35: EX-10.121 Second Amendment to Asset Purchase Agreement 6 22K
36: EX-10.122 Asset Purchase Agreement 41 180K
37: EX-10.123 Asset Purchase Agreement 94 303K
38: EX-10.124 Loan Agreement 52 170K
39: EX-10.125 Time Brokerage Agreement 28 98K
40: EX-10.126 Option Agreement 18 64K
2: EX-10.89 Amended as Restated Promissory Note 6 25K
3: EX-10.90 First Anemdment to Loan Agreement 2 15K
4: EX-10.91 Asset Purchase Agreement 15 73K
5: EX-10.92 Asset Purchase Agreement 41 174K
6: EX-10.93 The Brokerage Agreement 29 97K
7: EX-10.94 Asset Purchase Agreement 38 173K
8: EX-10.95 First Amendment 2 15K
9: EX-10.96 Promissory Note 4 21K
10: EX-10.97 Stock Purchase Agreement 42 199K
11: EX-10.98 Asset Purchase Agreement 42 178K
12: EX-10.99 Asset Purchase Agreement 42 177K
41: EX-27 Financial Data Schedule (For SEC Use Only) 1 12K
EX-10.110 — Subordinated Note
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EXHIBIT 10.110
Schedule 2.4
SUBORDINATED NOTE
Buyer has the option to pay a portion of the Purchase Price by
assigning all or a portion of Buyer's right, title and interest in and to the
Subordinated Note (attached) and any equity securities (or right to receive the
same) of the issuer of the Subordinated Note issued to the holder thereof upon
the exercise of the conversion right with respect to all or part of the
principal amount of the Subordinated Note contained in the Subordinated Note,
as adjusted under the terms of the Security Holders Agreement, together with a
ratable interest in any other claims or other amounts payable to the hold er of
the Subordinated Note under the terms thereof (collectively, the "Assigned
Rights"). In that event, the Purchase Price shall be credited to the extent of
the unpaid face amount of the Subordinated Note or portion thereof assigned,
plus accrued and unpaid interest thereon. In the event of any such assignment
to Seller of the Subordinated Note or any securities issued upon the conversion
thereof or both, Seller agrees to accept the Assigned Rights subject to all of
the terms and conditions contained in the Subordinated Note, the Security
Holders Agreement and any other documents and agreements governing the rights
and liabilities of the holder of the Assigned Rights. Without limiting any of
the foregoing, the assignment shall be made, accepted and effective for the
foregoing purposes without representations or warranties of any kind and
without regard to:
(a) the validity, enforceability or collectibility of the
Subordinated Note or any of the other Assigned Rights. or the
financial condition, prospects, assets or liabilities of the
issuer thereof;
(b) the validity or enforceability of any purported sale,
assignment or transfer of any assets or property to such
issuer, or of any agreement or instrument relating to such
transfer;
(c) any default under or acceleration of any obligation of such
issuer of the Subordinated Note (including any such obligation
that may be subject to a guarantee issued by Seller or its
affiliate) arising as a result of such assignment of the
Assigned Rights.
CONVERTIBLE SUBORDINATED NOTE
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE TO THE BORROWER'S SENIOR
SECURED NOTES AS MORE FULLY SET FORTH IN ANNEX A HERETO. COPIES OF THE SENIOR
SECURED NOTES AND THE DOCUMENTS PURSUANT TO WHICH THEY WERE ISSUED ARE
AVAILABLE FROM THE BORROWER (AS DEFINED BELOW).
NEITHER THIS NOTE NOR THE SECURITIES IT IS CONVERTIBLE INTO HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED OR SOLD UNLESS SO
REGISTERED OR UNLESS AN EXEMPTION IS AVAILABLE.
THIS NOTE AND THE SECURITIES IT IS CONVERTIBLE INTO ARE SUBJECT TO AN AGREEMENT
DATED JUNE 7, 1996, ENTERED INTO IN ORDER, INTER ALIA, TO RESTRICT THE
TRANSFERABILITY OF THIS NOTE AND SUCH SECURITIES. SAID AGREEMENT IS
AUTOMATICALLY BINDING UPON ANY PERSON WHO ACQUIRES THIS NOTE AND/OR THE
SECURITIES. ANY TRANSFER OR ACQUISITION IN VIOLATION OF SUCH AGREEMENT IS NULL
AND VOID. A COPY OF THE AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
OFFICE OF THE BORROWER.
THIS NOTE IS CONVERTIBLE INTO SHARES OF BORROWER'S COMMON STOCK IN SUCH AMOUNT
AND ON TERMS AND CONDITIONS SET FORTH HEREIN AND IN THE SECURITYHOLDERS
AGREEMENT (AS DEFINED BELOW).
$3,000,000.00 June 7, 1996
FOR VALUE RECEIVED, the undersigned, MACDONALD COMMUNICATIONS
CORPORATION, a New York corporation ("BORROWER"), hereby promises to pay to
PAXSON COMMUNICATIONS CORPORATION or registered assigns ("LENDER") on June
30, 2002 ("MATURITY DATE"), in lawful money of the United States, the
principal sum of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00).
Borrower also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at a rate per annum equal to
the Prime Rate (as defined below). Interest on this Convertible Subordinated
Note ("NOTE") shall be payable in arrears commencing on December 31, 1996 and
continuing on the last day of each March, June, September and December in each
calendar year thereafter, on the Maturity Date, upon any payment or conversion
of this Note (to the extent accrued on the amount being paid or converted) and
at maturity (including final maturity) of this Note. Interest shall be
computed on the basis of a 365-day year.
This Note shall mature on June 30, 2002, and on such date, the entire
unpaid principal balance of this Note, together with all accrued and unpaid
interest thereon, shall be due and payable in cash. If any payment is due on a
day that is not a business day, such payment shall be due on the next
succeeding business day.
Payments on this Note shall be made to Lender by crediting, before
1:00 p.m., New York time, by federal funds bank wire transfer, the account
designated in writing from time to time by Lender, in accordance with the
instructions set forth in such writing.
This Note is not prepayable. Borrower shall, upon written request,
provide any holder or prospective transferee of this Note with a written
statement setting forth a statement of the amount which will be due and payable
on this Note at maturity.
Subject to the restrictions on transfer set forth herein and in the
Securityholders Agreement: (i) each Convertible Note shall be issued in
registered form, and Borrower shall maintain a register for the Convertible
Notes in which it shall provide for the registration and transfer of the
Convertible Notes; (ii) upon surrender for registration or transfer of any
Convertible Note, Borrower, at its expense, shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Convertible
Notes; (iii) Convertible Notes may be exchanged at the option of any holder
thereof for Convertible Notes of a like aggregate principal amount in the same
name but in different denominations; whenever any Convertible Notes are so
surrendered for exchange, Borrower, at its expense, shall execute and deliver
the Convertible Notes which the holder making the exchange is entitled to
receive; (iv) all Convertible Notes issued upon any registration of transfer or
exchange thereof shall be the valid obligations of Borrower evidencing the same
debt, and entitled to the same benefits, as Convertible Notes surrendered upon
such registration of transfer or exchange; and (v) every Convertible Note
presented or surrendered for registration of transfer or exchange shall (if so
required by Borrower) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to Borrower duly executed by the
holder thereof or its attorney duly authorized in writing.
Upon receipt of evidence reasonably satisfactory to Borrower of the
loss, theft, destruction or mutilation of a Convertible Note and upon delivery
of an indemnity agreement reasonably satisfactory to Borrower from any holder
of such Convertible Note or, in the case of any such mutilation, upon the
surrender of such Convertible Note for cancellation to Borrower, at its
principal office, Borrower at its expense will execute and deliver, in lieu
thereof, a new Convertible Note of like tenor, dated so that there will be no
loss of interest. Any Convertible Note in lieu of which any such new
Convertible Note has been so executed and delivered by Borrower shall not
thereupon be deemed an outstanding Convertible Note for any purpose.
Upon the occurrence of any Event of Default (as defined below)
described in clause (ii), clause (iii) or clause (iv) of the definition of
"Event of Default," each of (a) the unpaid principal amount of and accrued
interest on this Note and (b) all other obligations and amounts due under or in
connection with this Note as set forth herein shall automatically
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become immediately due and payable, without presentment, demand, protest
or other requirements of any kind, all of which are hereby expressly waived by
Borrower, and (ii) upon the occurrence and during the continuation of any other
Event of Default, the holder hereof may, by written notice to Borrower, declare
all or any portion of the amounts described in clauses (a) and (b) above to be,
and the same shall forthwith become, immediately due and payable.
All overdue payments on this Note (including, to the extent permitted
by law, overdue interest) shall bear interest from the due date of such
payments at a rate per annum equal to the Prime Rate plus 2%.
No amendment, modification or waiver of any provision of this Note, or
consent to any departure by Borrower herefrom, shall in any event be effective
without the written concurrence of the holder hereof.
No provision of this Note shall alter or impair the obligation of
Borrower, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times and in the currency
herein prescribed.
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the preparation, execution, delivery, transfer,
collection and enforcement of this Note. Borrower and endorsers of this Note
hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand hereunder.
Any notice hereunder shall be in writing and shall be delivered by
recognized courier, telecopy or certified mail, return receipt requested, and
shall be conclusively deemed to have been received by a party hereto and to be
effective on the day on which delivered or telecopied to such party at its
address set forth below (or at such other address as such party shall specify
to the other parties hereto in writing), or, if sent by certified mail, on the
third business day after the day on which mailed, addressed to such party at
such address:
If to Borrower:
MacDonald Communications Corporation
230 Park Avenue
New York, NY 10010
Fax: (212) 697-1971
Attention: Jay MacDonald
If to Lender:
Paxson Communications Corporation
3
601 Clearwater Park Road
West Palm Beach, Florida 33401
Fax: (561) 655-7395
Attention: Lowell W. Paxson
Anthony L. Morrison
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
No failure or delay on the part of the holder hereof in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Note are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
The holder hereof shall not be under any obligation to marshal any
assets in favor of Borrower or any other party or against or in payment of any
or all of the obligations hereunder. To the extent that Borrower makes a
payment or payments to the holder hereof, or the holder hereof exercises its
rights of setoff, and such payment or payments or the proceeds of such setoff
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law,
common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all rights
and remedies therefor or related thereto, shall be revived and continued in
full force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
In case any provision in or obligation under this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This Note shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the holder hereof. Neither Borrower's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Borrower without the prior written consent of the holder hereof.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR
RELATING TO THIS NOTE OR ANY OBLIGATION HEREUNDER MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COUNTY OF NEW YORK, STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS NOTE BORROWER ACCEPTS FOR
ITSELF
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AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS NOTE OR SUCH OBLIGATION. Borrower
hereby agrees that service of all process in any such court may be made by
registered or certified mail, return receipt requested, to Borrower at its
address provided above, such service being hereby acknowledged by Borrower to
be sufficient for personal jurisdiction in any action against Borrower in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the holder hereof to bring
proceedings against Borrower in the courts of any other jurisdiction.
EACH OF THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREOF
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each such party
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Note, and that each will continue to rely on this waiver in their related
future dealings. Each such party hereto further warrants and represents that
it has reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN MADE HEREUNDER. In the event of
litigation, this Note may be filed as a written consent to a trial by the
court.
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE AND JUNIOR IN
RIGHT OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN ANNEX A HERETO) TO
THE EXTENT PROVIDED IN SAID ANNEX A.
DEFINED TERMS
The following terms shall have the following meanings:
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
5
"COMMON SHARE" means one share of Common Stock of Borrower, par value
$0.01 per share.
"CONVERTIBLE NOTES" means this Note and each other of Borrower's
Convertible Subordinated Notes substantially in the form hereof, in an
aggregate principal amount not to exceed $6,000,000.00.
"EVENT OF DEFAULT" means any of the following:
(i) failure to pay any installment of principal of this Note when
due, whether at stated maturity, by acceleration or otherwise; or failure to
pay any interest on this Note or any fee or any other amount due under this
Note within five days after the date due; or
(ii) The Borrower shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, be adjudicated insolvent, petition or
apply to any tribunal for the appointment of a receiver, custodian, or any
trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect, or the Borrower shall take any corporate action to
authorize any of the foregoing actions; or there shall have been filed any such
petition or application, or any such proceeding shall have been commenced
against it, that remains undismissed for a period of 60 days or more; or any
order for relief shall be entered in any such proceeding; or the Borrower by
any act or omission shall indicate its consent to, approval of or acquiescence
in any such petition, application or proceeding or the appointment of a
custodian, receiver or any trustee for it or any substantial part of any of its
properties, or shall suffer any custodianship, receivership or trusteeship to
continue undischarged for a period of 60 days or more; or
(iii) The Borrower shall generally not pay its debts as such debts
become due;
(iv) The Borrower shall have concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them or made or suffered a transfer of any of
its property that may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law (it being understood that the foregoing does not include any
obligation incurred by the Borrower with respect to its acquisition of the Lang
Assets (as defined in the Loan Agreement)); or shall have suffered or
permitted, while insolvent, any creditor to obtain a lien upon any of its
property through legal proceedings or distraint that is not vacated within 60
days from the date thereof; or
(v) a Loan Agreement Event of Default shall occur and be
continuing or the Loans (as defined in the Loan Agreement) thereunder shall
have become due and payable prior to their stated maturity date; or
(vi) a Securityholders Agreement Event of Default shall occur
and be continuing.
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"LOAN AGREEMENT" means that certain Loan Agreement dated as of the
date hereof by and between Borrower and Fleet Bank, N.A., as such Agreement may
be amended, restated, supplemented or otherwise modified from time to time.
"LOAN AGREEMENT EVENT OF DEFAULT" means an Event of Default as
defined in the Loan Agreement.
"PRIME RATE" means the rate that The Bank of New York publicly
announces from time to time as its prime lending rate, as in effect from time
to time. The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer.
"SECURITYHOLDERS AGREEMENT EVENT OF DEFAULT" means a breach of a
representation, warranty, covenant or any other agreement of Borrower contained
in the Securityholders Agreement.
"SECURITYHOLDERS AGREEMENT" means that certain Securityholders'
Agreement dated as of the date hereof by and among Borrower, each holder of
Common Shares and each holder of a Convertible Note, as such Agreement may be
amended, restated, supplemented or otherwise modified from time to time.
"STATED AMOUNT" means, as of the date of conversion of this Note,
the unpaid principal amount of this Note.
CONVERSION PROVISIONS
1. At any time and from time to time, including, without
limitation, before, upon or after the maturity hereof, the holder hereof shall
be entitled to convert this Note in whole, but not in part, into fully paid and
nonassessable shares of Common Stock of Borrower, par value $0.01 per share
("CONVERSION COMMON SHARES") at the rate of one Common Share per $375 of
Stated Amount, subject to adjustment as set forth herein and in the
Securityholders Agreement, on the terms and conditions hereinafter set forth.
2. To exercise such conversion option, the holder hereof shall
give written notice, (the "CONVERSION NOTICE") postage prepaid, by certified
or registered mail, return receipt requested, or by hand delivery, to Borrower
at its principal executive office, of the election of such holder to convert
all of this Note into Common Shares, which notice shall set forth the name or
names in which the certificate or certificates representing the Common Shares
to be issued upon conversion are to be issued. Conversion shall be deemed to
have been effected on the date (the "CONVERSION DATE") of receipt by Borrower
of the Conversion Notice. As promptly as practicable thereafter, Borrower
shall issue to the holder, or the holder's designee as specified in the
Conversion Notice, a certificate or certificates for the number of full Common
Shares to which such holder is entitled and, upon such holder's receipt
thereof, the principal amount of the Note converted shall be deemed repaid and
the
7
outstanding principal amount hereunder reduced by the amount of such
repayment. The holder, or the person or persons designated by the holder,
shall be deemed to have become a holder of record of the Conversion Common
Shares at the beginning of business on the applicable Conversion Date unless
the transfer books of Borrower are closed on such date, in which event the
holder, or the holder's designee, shall be deemed to have become a holder of
record of the Conversion Common Shares on the next succeeding date on which the
transfer books of Borrower are open.
3. No fractional Common Shares shall be issued upon conversion of
this Note. In lieu of issuing fractional Common Shares upon conversion of this
Note, Borrower shall pay a cash adjustment in respect of such fractional Common
Shares equal to the fair market value thereof, as determined in good faith by
the Board of Directors of Borrower.
4. The number of Common Shares into which this Note shall be
convertible shall be subject to adjustment from time to time as follows:
(a) In case Borrower shall at any time after the date hereof:
(i) declare a dividend or make a distribution on Common
Shares, or on any warrant or other security
convertible into or exercisable or exchangeable for
Common Shares, of Common Shares or any warrant or
other security convertible into or exercisable or
exchangeable for Common Shares;
(ii) subdivide the outstanding Common Shares, or any
warrant or other security convertible into or
exercisable or exchangeable for Common Shares, into a
greater number of Common Shares or any warrant or
other security convertible into or exercisable or
exchangeable for Common Shares; or
(iii) combine the outstanding Common Shares, or any warrant
or other security convertible into or exercisable or
exchangeable for Common Shares, into a smaller number
of Common Shares or any warrant or other security
convertible into or exercisable or exchangeable for
Common Shares,
then, in each case, the number of Conversion Common Shares to be received upon
conversion of this Note shall be adjusted so that conversion of this Note after
such time shall entitle the holder hereof to receive the aggregate number of
Common Shares such holder would have received had such holder converted this
Note under paragraph 1 of this Section immediately prior to such dividend,
distribution, subdivision or combination.
(b) In case Borrower shall at any time recapitalize or reclassify
its capital stock, or in case of any consolidation or merger of Borrower with
or into any other person (other than a consolidation or merger in which the
Borrower is the continuing entity and which
8
does not result in any change in the capital stock of Borrower) or in
case of the sale or other disposition of all or substantially all the assets of
Borrower as an entirety to any other person, then in each such case this Note
shall, after such recapitalization, reclassification, consolidation, merger,
sale or other disposition, be convertible into the kind and number of shares of
capital stock or other securities or assets of the corporation or of the entity
resulting from such consolidation or surviving such merger or to which such
assets shall have been sold or otherwise disposed of, to which the holder
thereof would have been entitled if such holder had converted this Note
immediately prior to such recapitalization, reclassification, consolidation,
merger, sale or other disposition.
(c) (i) In case Borrower shall authorize the distribution to holders of
Common Shares of evidences of its indebtedness, assets or other property (other
than (a) cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or (b) dividends payable in Common Shares,
warrants, or other securities convertible into or exercisable or exchangeable
for Common Shares), the number of Common Shares issuable per $375 of Stated
Amount shall be adjusted as of the record date of such distribution to an
amount determined by multiplying such number of Common Shares by a fraction the
numerator of which is the Current Market Price Per Common Share (determined as
set forth in Section 4(c)(ii) below by the Board of Directors of Borrower) and
the denominator of which is the Current Market Price Per Common Share less the
fair market value (determined, subject to Section 4(c)(ii) below, by the Board
of Directors of Borrower) of the portion of the assets, other property or
evidences of indebtedness so distributed which is allocable to one Common
Share; provided that, in lieu of making such adjustment, Borrower may, at its
option (x) in the case of a cash distribution, set aside in a segregated,
interest-bearing account for distribution to the holder of this Note (together
with all interest earned thereon) upon conversion of this Note, cash in the
aggregate amount that would have been distributable to the holder of this Note
if this Note had been converted immediately prior to such distribution or (y)
in the case of any other distribution, make provisions, satisfactory to the
holders of not less than 40% of the principal amount of Convertible Notes
outstanding on the record date of the distribution, for the distribution to the
holder hereof, upon conversion hereof, of the evidences of indebtedness, assets
or other property that would have been distributed to the holder hereof if this
Note had been converted immediately prior to the record date for such
distribution, together with all interest that would have been paid or accrued
thereon from the date of distribution to the date of conversion had such
evidences of indebtedness, assets or other property been liquidated on the date
of distribution.
(ii) For the purpose of any computation under Section 4(c)(i)
above:
(x) at any time prior to Borrower's initial public
offering, the Current Market Price Per Common Share shall be the fair
market value of such share determined by the Board of Directors of
Borrower, subject to clause (z) of this paragraph, and at any time
after Borrower's initial public offering, the Current Market Price Per
Common Share on any date shall be deemed to be the average (weighted
by daily trading volume) of the daily closing prices per Common Share
(for
9
each applicable class thereof) for the 30 consecutive trading days as
reported on the Composite Transactions tape commencing 45 trading days
before such date, or, if the Common Shares are not reported on the
Composite Transactions tape, on the principal national securities
exchange on which the Common Shares are listed for or admitted to
trading, or if the Common Shares are not listed for or admitted to
trading on any national securities exchange, the average of the
highest furnished by the National Association of Securities Dealers,
Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such date the Common Shares are
not quoted by any such organization, the Current Market Price Per
Common Share shall be the fair market value of such shares on such
date as determined by the Board of Directors of Borrower, subject to
clause (z) of this paragraph;
(y) the number of Common Shares outstanding at any time
shall not include shares owned or held by or for the account of
Borrower; and
(z) if the holders of not less than 40 percent of the
principal amount of Convertible Notes shall object to any
determination by the Board of Directors of Borrower of fair market
value or Current Market Price Per Common Share, the Board of Directors
of Borrower shall retain an independent appraiser reasonably
satisfactory to such holders to determine such fair market value or
the Current Market Price Per Common Share, as applicable.
5. In the event that Borrower prepares to take any action
described in Section 4 hereof, Borrower shall cause to be given to the
registered holder of this Note at his address appearing on the Note register,
at least 30 days prior to the applicable record date (or effective date, if no
record date is fixed), by certified mail, postage prepaid, a written notice
stating the date as of which the holders of record of Common Shares affected by
such actions are to be determined. Whenever the number of Common Shares
issuable upon the conversion of this Note is adjusted as provided in Section 4
hereof, Borrower shall promptly furnish the holder hereof a certificate
prepared by an officer of Borrower setting forth the number of Common Shares so
issuable upon conversion of this Note, together with a brief statement of the
facts accounting for such adjustment and a detailed explanation of the basis
for the computation. Failure to give any notice or certification required by
this Section 5 or any defect therein shall not affect the legality or validity
of any action that results in an adjustment pursuant to Section 4, or the right
of any holder to the benefits of such adjustment.
6. This Note shall be registered in the name of the record holder
hereof from time to time. Borrower may deem and treat the registered holder of
this Note as the absolute owner hereof for the purpose of any conversion
hereof, any distribution to the holder hereof, and for all other purposes, and
Borrower shall not be affected by any notice to the contrary.
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7. Borrower shall pay any transfer taxes attributable to the
initial issuance of this Note and of Common Shares issuable upon the conversion
of this Note (but not any income taxes or other taxes measured by or assessed
upon income of any holder thereof).
8. (a) Borrower shall at all times reserve and keep
available out of its authorized and unissued Common Shares, free from
preemptive rights, solely for the purpose of effecting the conversion of this
Note, the full number of Common Shares deliverable from time to time upon the
conversion of this Note.
(b) All Common Shares issued upon conversion of this Note
shall, when issued, be validly issued, fully paid and nonassessable and free
from preemptive rights.
9. Except as set forth in the Securityholders Agreement, nothing
contained in this Note shall be construed as conferring upon the holder hereof
any rights as, or responsibilities of, a shareholder of Borrower, including
without limitation the right to vote or receive dividends or to consent or to
receive notice as shareholders in respect of any meeting of shareholders for
the election of directors of Borrower or any other matter.
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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed as of the date first above written.
MACDONALD COMMUNICATIONS CORPORATION
By: J.C. MacDonald
--------------------
Name: Jay C. MacDonald
--------------------
Title: President
--------------------
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Dates Referenced Herein and Documents Incorporated by Reference
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