1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
PAXSON COMMUNICATIONS CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
PAXSON COMMUNICATIONS CORPORATION
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
2
(PAXSON COMMUNICATIONS CORPORATION LOGO)
April 2, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Paxson Communications Corporation (the "Company"), which will be held at The
Waldorf Astoria, 301 Park Avenue, New York, New York 10022, on May 1, 2001, at
11:00 a.m., local time.
Please note that attendance at the Annual Meeting will be limited to
stockholders as of the record date (or their authorized representatives) and to
our invited guests. If your shares are registered in your name and you plan to
attend the Annual Meeting, please mark the appropriate box on the enclosed proxy
card and you will be pre-registered for the meeting (if your shares are held of
record by a broker, bank or other nominee and you plan to attend the meeting,
you must also pre-register by returning the registration card forwarded to you
by your bank or broker). Stockholders who are not pre-registered will only be
admitted to the Annual Meeting upon verification of stock ownership.
The notice of the meeting and proxy statement on the following pages
contain information concerning the business to be considered at the meeting.
Please give these proxy materials your careful attention. It is important that
your shares be represented and voted at the Annual Meeting regardless of the
size of your holdings. Accordingly, whether or not you plan to attend the Annual
Meeting, please complete, sign, and return the accompanying proxy card in the
enclosed envelope in order to make sure your shares will be represented at the
Annual Meeting. Stockholders who attend the Annual Meeting will have the
opportunity to vote in person.
Sincerely,
/s/ Lowell W. Paxson
LOWELL W. PAXSON
Chairman of the Board
3
PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401-6233
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 1, 2001
The Annual Meeting of Stockholders of Paxson Communications Corporation
will be held at The Waldorf Astoria, 301 Park Avenue, New York, New York 10022,
on May 1, 2001, at 11:00 a.m., local time, for the following purposes:
1. To elect three Class I directors to serve for a term of three years, and
until their successors have been duly elected and qualified;
2. To approve an increase in the total number of shares of Class A Common
Stock subject to awards under our 1998 Stock Incentive Plan from
7,200,000 shares to 9,803,292 shares;
3. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent certified public accountants for 2001; and
4. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 26, 2001,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
Stockholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE MEETING.
By Order of the Board of Directors
/s/ ANTHONY L. MORRISON
Anthony L. Morrison, Secretary
West Palm Beach, Florida
April 2, 2001
4
PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401-6233
PROXY STATEMENT
This proxy statement is first being sent to stockholders on or about April
2, 2001, in connection with the solicitation of proxies by the Board of
Directors of Paxson Communications Corporation (the "Company"), to be voted at
the Annual Meeting of Stockholders to be held on May 1, 2001, and at any
adjournment thereof (the "Meeting"). The Board of Directors has fixed the close
of business on March 26, 2001, as the record date of the determination of
stockholders entitled to notice of and to vote at the Meeting. At the close of
business on the record date, we had outstanding (i) 56,041,786 shares of $0.001
par value Class A Common Stock ("Class A Common Stock"), entitled to one vote
per share, (ii) 8,311,639 shares of $0.001 par value Class B Common Stock
("Class B Common Stock," and with the Class A Common Stock, collectively,
the"Common Stock"), entitled to ten votes per share, and (iii) 9,595 shares of
9 3/4% Series A Convertible Preferred Stock ("Series A Convertible Preferred
Stock"), entitled to 625 votes per share.
VOTING
Shares represented by duly executed proxies in the accompanying form
received by us prior to the Meeting will be voted at the Meeting in accordance
with the directions given. If a proxy card is signed and returned without
specifying a vote or an abstention on any proposal, it will be voted according
to the recommendation of the Board of Directors on that proposal. The Board of
Directors recommends a vote FOR the election of the Class I directors, the
approval of an increase in the total number of shares of Common Stock subject to
awards under our 1998 Stock Incentive Plan, and the appointment of
PricewaterhouseCoopers LLP as our independent certified public accountants for
2001. The Board of Directors knows of no business to be transacted at the
Meeting other than the proposals set forth in this Proxy Statement. If other
matters are properly presented for action, it is the intention of the persons
named as proxies to vote on such matters according to their best judgment.
If you hold your shares through an intermediary you must provide
instructions on voting as requested by your bank or broker. If you sign and
return a proxy, you may revoke it at any time before it is voted by taking one
of the following three actions: (i) giving written notice of the revocation to
the Secretary of the Company; (ii) executing and delivering a proxy with a later
date; or (iii) voting in person at the Meeting. Attendance at the Meeting will
not in itself constitute revocation of a proxy.
The presence in person or by proxy of the holders of shares of stock having
a majority of the votes which could be cast by all outstanding shares of stock
entitled to vote at the Meeting constitutes a quorum for the transaction of
business at the Meeting. The election of directors will require the affirmative
vote of a plurality of the votes cast at the Meeting, if a quorum is present.
The affirmative vote of at least a majority of the votes cast in person or by
properly executed proxy is required to approve each of the proposals to be
considered at the Meeting. Votes cast by proxy or in person at the Meeting will
be tabulated by one or more inspectors of election appointed at the Meeting, who
will also determine whether a quorum is present for the transaction of business.
Abstentions and broker non-votes will be counted as shares present at the
Meeting for purposes of determining whether a quorum is present. Because only a
plurality is required for the election of directors, abstentions or broker
non-votes will have no effect on the election of directors. As to other matters
to be considered at the Meeting, abstentions will be treated as votes AGAINST,
and broker non-votes will not be counted as shares voting for the purpose of
determining whether a proposal has been approved. Lowell W. Paxson, our Chairman
and the beneficial owner of a majority of the voting power of our outstanding
stock, has advised us that he intends to vote all shares which he is entitled to
vote in favor of the proposals being submitted at the Meeting, therefore
approval of the proposals by our stockholders is assured.
5
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to our equity securities
beneficially owned on March 5, 2001, by (i) each director, (ii) each executive
officer named in the Summary Compensation Table, (iii) all of our directors and
executive officers as a group, and (iv) any person who we know to be the
beneficial owner of more than five percent of any class of our voting
securities. Beneficial ownership means sole or shared voting power or investment
power with respect to a security. We have been informed that all shares shown
are held of record with sole voting and investment power, except as otherwise
indicated.
AMOUNT AND
NATURE OF AGGREGATE
BENEFICIAL VOTING
CLASS OF STOCK NAME OF BENEFICIAL OWNER(1) OWNERSHIP % OF CLASS POWER(%)
-------------- ---------------------------------- ---------- ---------- ------------
Class A Common Stock National Broadcasting Company,
Company, Inc.(2).................. 63,928,159 53.3% 30.6%
Lowell W. Paxson(3)............... 21,339,976 37.9 14.7
Mario J. Gabelli(4)............... 4,361,250 7.8 3.0
Landmark Communications,
Inc.(5)........................... 4,007,297 7.2 2.8
William E. Simon, Jr.(7).......... 987,102 1.7 **
Jeffrey Sagansky(6)............... 1,160,000 2.0 **
Dean M. Goodman(6)................ 487,661 ** **
Anthony L. Morrison(6)............ 374,950 ** **
Seth A. Grossman(6)............... 162,175 ** **
Bruce L. Burnham(6)............... 55,850 ** **
James L. Greenwald(6)............. 39,500 ** **
John E. Oxendine(6)............... 10,000 ** **
R. Brandon Burgess................ 0 ** **
Keith G. Turner................... 0 ** **
R. Edward Wilson.................. 0 ** **
All directors and executive
officers as a group(8)............ 24,663,689 41.4% 16.7%
Class B Common Stock Lowell W. Paxson.................. 8,311,639 100% 57.3%
All directors and executive
officers as a group............... 8,311,639 100% 57.3%
---------------
** Less than 1%
(1) Unless otherwise specified in the footnotes to this table, the address of
each person in this table is c/o Paxson Communications Corporation, 601
Clearwater Park Road, West Palm Beach, Florida 33401-6233.
(2) Consists of 31,896,032 shares of Class A Common Stock issuable upon
conversion of shares of 8% Series B Convertible Exchangeable Preferred Stock
held by NBC Palm Beach Investment I, Inc., and 32,032,127 shares of Class A
Common Stock issuable upon exercise of outstanding warrants held by NBC Palm
Beach Investment II, Inc. The holders' rights to acquire shares of Class A
Common Stock upon conversion and exercise, respectively, of such securities,
while currently exercisable, are subject to material conditions precedent,
including approval of the Federal Communications Commission. According to
information contained in a Schedule 13D filed with the Securities and
Exchange Commission (the "Commission"), dated September 15, 1999, each of
such holders is a subsidiary of National Broadcasting Company, Inc. ("NBC"),
whose address is 30 Rockefeller Plaza, New York, New York 10112, and NBC and
its parent entity, General Electric Company, Inc., each disclaims beneficial
ownership of such securities.
(3) Includes 333,333 shares which may be acquired within 60 days through the
exercise of stock options; does not include 8,311,639 shares of Class B
Common Stock, each share of which is convertible into one share of Class A
Common Stock. Mr. Paxson is the beneficial owner of all reported shares,
other than 333,433 shares of Class A Common Stock, through his control of
Second Crystal Diamond, Limited Partnership and Paxson Enterprises, Inc.
(4) According to information contained in an amendment to Schedule 13D filed
with the Commission, dated December 29, 2000, various investment funds and
other entities controlled by or affiliated with Mario J. Gabelli and Marc J.
Gabelli, each of whose
2
6
address is c/o Gabelli Asset Management, Inc., One Corporate Center, Rye,
New York 10580, acquired such shares for investment for one or more accounts
over which it has shared or sole investment and voting power or for its own
account.
(5) According to information contained in an amendment to Schedule 13D filed
with the Commission, dated January 25, 2001, Landmark Communications, Inc.,
whose address is 150 W. Brambleton Avenue, Norfolk, Virginia 23510, acquired
such shares pursuant to an Asset Acquisition Agreement dated as of June 13,
1997 in connection with its sale to the Company of the assets related to The
Travel Channel, and holds such shares for investment purposes.
(6) Includes shares which may be acquired within 60 days through the exercise of
stock options granted under the Company's Stock Incentive Plans as follows:
Jeffrey Sagansky - 660,000; Dean M. Goodman - 487,661; Anthony L. Morrison -
344,400; Seth A. Grossman - 134,000; Bruce L. Burnham - 43,750; James L.
Greenwald - 39,500; John E. Oxendine - 10,000; also includes 500,000 shares
which may be acquired by Mr. Sagansky within 60 days through the exercise of
additional stock options.
(7) Consists of shares which may be acquired upon the exercise of warrants and
conversion of Series A Convertible Preferred Stock held by an affiliate of
Mr. Simon.
(8) Includes 1,719,311 shares which may be acquired within 60 days through the
exercise of stock options granted under the Company's Stock Incentive Plans,
833,333 shares which may be acquired within 60 days through the exercise of
additional stock options granted to Mr. Paxson and Mr. Sagansky, and 987,102
shares which may be acquired upon the exercise of warrants and conversion of
Series A Convertible Preferred Stock held by an affiliate of Mr. Simon.
POTENTIAL CHANGE IN CONTROL
On September 15, 1999, NBC, through subsidiaries, purchased $415 million
aggregate liquidation preference of shares of our 8% Series B Convertible
Exchangeable Preferred Stock, which are convertible into 31,896,032 shares of
Class A Common Stock, and acquired warrants to purchase an additional 32,032,127
shares of Class A Common Stock. Concurrently, NBC entered into an agreement with
Mr. Paxson, our Chairman and controlling stockholder, and certain of his
affiliates, pursuant to which NBC was granted the right to purchase all (but not
less than all) 8,311,639 shares of our outstanding Class B Common Stock
beneficially owned by Mr. Paxson, which shares are entitled to ten votes per
share on all matters submitted to a vote of our stockholders.
Pursuant to these agreements and the related agreements entered into in
connection with the transaction, NBC has the right to acquire voting and
operational control of the Company, subject to various conditions including
approval of the Federal Communications Commission ("FCC"). Exercise of these
rights by NBC would result in a change in control of the Company.
PROPOSAL 1 -- ELECTION OF CLASS I DIRECTORS
The Board of Directors is divided into three classes. A class of directors
is elected each year to serve for a three year term and until their successors
are elected and qualified. Any director appointed by the Board of Directors to
fill a vacancy on the Board serves the balance of the unexpired term of the
class of directors in which the vacancy occurred. The current term of the
Company's Class I directors will expire at the Meeting. The terms of the Class
II directors (Messrs. Burnham, Greenwald and Oxendine) expire upon the election
and qualification of directors at the Annual Meeting of Stockholders to be held
in 2002, and the terms of the Class III directors (Messrs. Burgess, Turner and
Wilson) expire upon the election and qualification of directors at the Annual
Meeting of Stockholders to be held in 2003.
The Board of Directors has nominated Lowell W. Paxson, Jeffrey Sagansky and
William E. Simon, Jr., each of whom currently serves as a Class I director of
the Company, for election as Class I directors. The Class I directors elected at
the Meeting will serve for a term of three years expiring upon the election and
qualification of their successors at the Company's Annual Meeting of
Stockholders to be held in 2004 or until their earlier resignation or removal.
Each of the nominees has indicated his willingness to serve, if elected.
Should any nominee become unable or unwilling to accept nomination or election
for any reason, the persons named as proxies may cast votes for a substitute
nominee designated by the Board of Directors, which has no reason to believe the
nominees named will be unable or unwilling to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
NOMINEES LISTED BELOW.
3
7
Biographical and other information concerning the directors of the Company
and the nominees for election at the Meeting is set forth below.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS (TERM TO EXPIRE AT THE ANNUAL MEETING
IN 2004)
DIRECTOR
NOMINEE AGE POSITION, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND DIRECTORSHIPS SINCE
------- --- --------------------------------------------------------------------- --------
Lowell W. Paxson....... 65 Chairman of the Board since 1991 and Chief Executive Officer of the 1991
Company from 1991 to 1998. President, Home Shopping Network, Inc.
from 1985 to 1990.
William E. Simon, 49 Vice Chairman of the Board since 1998. Executive Director, William E. 1998
Jr................... Simon & Sons, LLC, a private investment firm and merchant bank, from
1988 to present. Director and Chairman, GeoLogistics Corporation.
Jeffrey Sagansky....... 49 President and Chief Executive Officer of the Company since 1998. 1998
Co-President, Sony Pictures Entertainment, a producer of film and
video programming, from 1996 to 1997.
CLASS II DIRECTORS CONTINUING IN OFFICE (TERM TO EXPIRE AT THE ANNUAL MEETING IN 2002)
Bruce L. Burnham....... 67 President of The Burnham Group since 1993, a firm providing 1996
consulting and marketing services to the retail industry. Director,
Forcenergy, Inc., and J. B. Rudolph, Inc.
James L. Greenwald..... 74 Chairman and Chief Executive Officer from 1975 to 1994 of Katz 1996
Communications, Inc., a broadcast advertising representative sales
firm; Chairman Emeritus since 1994. Director, Granite Broadcasting
Company and Source Media, Inc.
John E. Oxendine....... 58 President and Chief Executive Officer since 1998 of Blackstar, Inc.; 2000
Chairman and Chief Executive Officer since 1999 of Broadcast Capital,
Inc.; Chairman from 1994 to 1998 of Blackstar LLC; Chairman and Chief
Executive Officer 1987 to 1998 of Blackstar Communications, Inc. All
of such entities are owners and operators of, or investors in,
broadcast television stations.
CLASS III DIRECTORS CONTINUING IN OFFICE (TERM TO EXPIRE AT THE ANNUAL MEETING IN 2003)
R. Brandon Burgess..... 33 Vice President and Chief Financial Officer, Business Development and 1999
New Media, of NBC since 2000; Vice President and CFO, Television
Network, of NBC from 1999 to 2000; Director of Business Development
and International Business of NBC from 1998 to 1999; Manager of
Corporate Strategy and Mergers and Acquisitions of Pepsico, Inc. a
beverage company, from 1995 to 1998.
Keith G. Turner........ 47 President, Television Network Sales of NBC since 1998; Vice 1999
President, Sports Sales and Television Network Sales of NBC from 1990
to 1998.
R. Edward Wilson(1).... 44 President, NBC Enterprises and Syndication since September 2000; 2001
President and Chief Operating Officer of CBS Enterprises and EYEMARK
from 1996 to September 2000.
---------------
(1) Harold N. Brook resigned as a member of the Board of Directors on December
12, 2000. On February 26, 2001, the Board of Directors elected R. Edward
Wilson as a Class III director to fill the vacancy on the Board left by Mr.
Brook's resignation.
4
8
OTHER EXECUTIVE OFFICERS
Dean M. Goodman, 53, has been the President of our PAX TV network
television operations since 1998. Mr. Goodman was president of our inTV and
Network-Affiliated Television divisions from 1995 to 1997. From 1993 to 1995,
Mr. Goodman was general manager of our Miami, Florida radio station group.
Anthony L. Morrison, 39, has served as our Executive Vice President,
Secretary and Chief Legal Officer since 1995. Prior to that time he was an
attorney in private practice with the O'Melveny & Meyers law firm, concentrating
his practice on commercial financings.
Seth A. Grossman, 36, was named our Executive Vice President and Chief
Strategic Officer in August 2000. Mr. Grossman also served as our Senior Vice
President and Chief Financial Officer from December 1999 until August 2000. From
1997 to December 1999, he was our Senior Vice President, Corporate Development
and from 1995 to 1997, he was our Director of Finance.
Thomas E. Severson, Jr., 37, was named our Senior Vice President and Chief
Financial Officer in August 2000. From 1995 until August 2000, Mr. Severson was
employed by Sinclair Broadcast Group, Inc., in various finance and accounting
positions, most recently serving as Vice President and Chief Accounting Officer.
Ronald L. Rubin, 35, was named our Vice President, Chief Accounting Officer
and Corporate Controller in January 2001. From 1996 until January 2001, Mr.
Rubin was employed by AutoNation, Inc., in various finance and accounting
positions, most recently serving as Vice President and Corporate Controller.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 2000, the Board of Directors held four meetings. Other than Keith G.
Turner, each incumbent director attended at least 75% of the total number of
Board meetings and meetings of committees of which he is a member. In addition,
the Board of Directors took action 14 times during 2000 by unanimous written
consent in lieu of a meeting, as permitted by applicable state law.
The Compensation Committee consists of James L. Greenwald and Bruce L.
Burnham. Mr. Greenwald is the chairman of the Compensation Committee. The
Compensation Committee recommends to the Board both base salary levels and
bonuses for the Chief Executive Officer and the other officers of the Company.
See "Board Compensation Committee Report on Executive Compensation." The
Compensation Committee also reviews and makes recommendations with respect to
our existing and proposed compensation plans, and serves as the committee
responsible for administering our Stock Incentive Plans. During 2000, the
Compensation Committee met informally in conjunction with each of the meetings
of the Board of Directors, and held two separate Committee meetings.
The Audit Committee consists of Bruce L. Burnham, James L. Greenwald and
John E. Oxendine. Mr. Burnham is the chairman of the Audit Committee. Each of
the members of the Audit Committee is an independent director as defined under
the rules of the American Stock Exchange and the Audit Committee operates under
a written charter adopted by the Board of Directors, which is attached as
Appendix A to this proxy statement. The duties of the Audit Committee are to
recommend to the Board of Directors the selection of independent certified
public accountants, to meet with our independent certified public accountants to
review the scope and results of the audit, and to consider various accounting
and auditing matters related to our system of internal controls, financial
management practices and other matters. During 2000, the Audit Committee met six
times.
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or employees of NBC receive
an annual retainer of $24,000 and are paid fees of $1,500 for each board meeting
attended, $1,000 for each committee meeting attended and $500 for each meeting
chaired. All directors receive reimbursement of reasonable out-of-pocket
expenses incurred in connection with meetings of the Board of Directors. In
connection with his commence-
5
9
ment of service as a director, Mr. Oxendine received options to purchase 50,000
shares of Class A Common Stock at an exercise price of $7.25 per share, vesting
ratably over a five year period commencing in March 2000. In April 1999, Mr.
Burnham and Mr. Greenwald each received a 50,000 share option grant at the same
exercise price, vesting ratably over five years. No other directors receive
separate compensation from us for services rendered as a director, including
directors who are employed by us.
CERTAIN TRANSACTIONS INVOLVING DIRECTORS AND OFFICERS
NBC Transactions. On September 15, 1999, the Company, NBC and Mr. Paxson,
our Chairman and controlling stockholder, entered into a series of agreements
which created a significant strategic and financial relationship between the two
companies and under which, subject to various conditions including FCC approval,
NBC has the ability to acquire voting and operational control of the Company.
The Company has also entered into an agreement with NBC pursuant to which NBC
serves as the Company's exclusive sales representative to sell the Company's PAX
TV Network advertising time for agreed compensation. During 2000, the Company
continued the process of entering into joint sales agreements with NBC's owned
and operated television stations serving markets also served by a Company
television station. Directors Burgess, Turner and Wilson, employees of NBC,
serve as Class III Directors of the Company. Apart from their service as
employees of NBC, we are not aware of any interest of Messrs. Burgess, Turner
and Wilson in our transactions with NBC.
DP Media. On November 21, 1999, we agreed to purchase the television
station assets (eight stations and a contractual right to acquire a television
station, WBPX, and two full power satellite stations serving the Boston,
Massachusetts market) of DP Media, Inc. and certain related corporations
(collectively, "DP Media") which were then beneficially owned by family members
of Mr. Paxson. In conjunction with the acquisition agreement, we advanced
approximately $106 million to DP Media pursuant to a secured loan agreement,
which was used to repay DP Media's outstanding indebtedness to third party
lenders. On March 3, 2000, we agreed with DP Media to convert the asset sale
transaction into a purchase by us of all of the capital stock of DP Media. In
June 2000, we completed the acquisition of DP Media for aggregate consideration
of $113.5 million, including the $106 million previously advanced. DP Media's
assets include a 32% equity interest in a limited liability company controlled
by the former stockholders of DP Media, which owns television station WWDP in
Norwell, Massachusetts. We have the right to require a sale of WWDP, which is
not a PAX TV network affiliate, if the station is not sold within a specified
period, and the right to receive 45% of the net proceeds from the sale of the
station.
The Christian Network, Inc. We have entered into several agreements with
The Christian Network, Inc. and certain of its for-profit subsidiaries
(individually and collectively referred to herein as "CNI"). The Christian
Network, Inc. is a section 501(c)(3) not-for-profit corporation to which Mr.
Paxson has been a substantial contributor and of which he was a member of the
Board of Stewards through 1993.
On September 10, 1999, we entered into a Master Agreement with CNI for
overnight programming and use of a portion of our digital capacity in exchange
for CNI's providing public interest programming. The Master Agreement has a term
of 50 years and is automatically renewable for successive ten year periods
unless CNI ceases to exist, commences action to liquidate, ceases family values
programming or the FCC revokes the licenses of a majority of our stations.
Pursuant to the Master Agreement, we broadcast CNI overnight programming on each
of our stations seven days a week from 1:00 a.m. to 6:00 a.m. If and when our
stations begin digital programming in multiple channels, we are obligated to
make a digital channel available for CNI's use. CNI will have the right to use
the digital channel for 24 hour CNI digital programming.
We entered into an agreement with CNI in May 1994 (the "CNI Agreement")
under which we agreed that, if the tax exempt status of CNI were jeopardized by
virtue of its relationship with us, we would take certain actions to ensure that
CNI's tax exempt status would no longer be so jeopardized. These steps could
include rescission of one or more transactions or additional payments by us. We
believe that our agreements with CNI have been on terms as favorable to CNI as
it would obtain in arm's length transactions, and we intend any future
agreements with CNI to be as favorable to CNI as CNI would obtain in arm's
length transactions. Accordingly, if our activities with CNI are consistent with
the terms governing our relationship,
6
10
we should not be required to take any actions under the CNI Agreement. We cannot
be sure, however, that we will not be required to take any actions under the CNI
Agreement which might have a material cost to us.
We have contracted with CNI to lease CNI's television production and
distribution facility, the Worship Channel Studio. We utilize this facility
primarily as our network operations center and originate our PAX TV network
signal from this location. During the year ended December 31, 2000, we incurred
rental charges in connection with this agreement of $199,000.
Aircraft Lease. During 1997, we entered into a three year lease with a
company owned by Mr. Paxson for a Boeing 727 aircraft. The lease provided for
monthly payments of $63,600. We incurred rental costs under the lease of
approximately $759,000 during 2000. The lease expired in December 2000 without
being renewed. At the lease expiration, the Company had leasehold improvements
of approximately $222,577 (net of accumulated depreciation).
Simon Interests. In May 1998, Mr. Simon was appointed Vice Chairman of the
Board of Directors of the Company. In connection with this appointment, in June
1998 we issued to an affiliate of Mr. Simon fully vested warrants to purchase
155,500 shares of Class A Common Stock at an exercise price of $16 per share. In
June 1998, the affiliate of Mr. Simon purchased $10 million aggregate
liquidation preference of our Series A Convertible Preferred Stock and warrants
to purchase 32,000 shares of Class A Common Stock at an exercise price of $16
per share. In March, 2000, we reduced the exercise price of the 187,500 warrants
held by Mr. Simon's affiliate from $16 per share to $12.60 per share.
Officer Loans. During December 1996, we approved a program to extend loans
to members of our senior management to finance their purchase of shares of Class
A Common Stock in the open market. The loans are full recourse promissory notes
bearing interest at 5.75% per annum and are collateralized by a pledge of the
shares of Class A Common Stock purchased with the loan proceeds. During the year
ended December 31, 2000, we did not receive any payments of principal or
interest in respect of the loans outstanding under this program. At March 31,
2001, the outstanding balance of principal and accrued interest on such loans to
our Named Executive Officers was as follows: Mr. Goodman, $614,355; Mr.
Morrison, $322,661; and Mr. Grossman, $147,600.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and officers and persons who own more than ten percent of our Common Stock
("Reporting Persons") to file initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company
with the Securities and Exchange Commission and to furnish us with copies of all
Section 16(a) reports they file. Based on our review of the copies of such
reports received by us and written representations from certain Reporting
Persons, the Company believes that during 2000, Mr. Paxson failed to timely file
a Form 4 reflecting his sale of 550,000 shares of Class A Common Stock in
November 2000, which sale was subsequently reported on Mr. Paxson's Form 5 filed
on February 20, 2001; Mr. Severson filed a late Form 3 in February 2001
reflecting his appointment as a reporting person in December 2000 (subsequently
amended in March 2001 to reflect the date of his appointment as a reporting
person in August 2000); and Mr. Oxendine filed a late Form 3 in March 2001
reflecting his appointment as a reporting person in May 2000 (subsequently
amended in March 2001 to reflect the date of his appointment as a reporting
person in March 2000).
7
11
EXECUTIVE COMPENSATION
The following table presents information concerning the compensation
received or accrued for services rendered during the fiscal years ended December
31, 2000, 1999 and 1998 for our Chief Executive Officer and our four most highly
compensated executive officers other than the Chief Executive Officer who were
serving as of December 31, 2000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION NUMBER OF
-------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS COMPENSATION(2)(3)
------------------ ---- ---------- ---------- ------------ ------------ ------------------
Jeffrey Sagansky............ 2000 $610,000 $ -- $ -- -- $61,000
Chief Executive Officer, 1999 600,000 -- 140,070(4) 2,000,000 61,000
President 1998 379,615 -- 200,000(4) 1,200,000 --
Lowell W. Paxson............ 2000 610,000 -- -- -- --
Chairman of the Board 1999 493,798 -- -- 1,000,000 --
1998 465,850 75,000 -- -- --
Dean M. Goodman............. 2000 412,997 -- 1,023,273(5) -- 42,300
President -- PAX TV 1999 315,000 -- 924,937(5) -- 13,600
1998 315,000 100,000 -- 600,000 32,500
Anthony L. Morrison......... 2000 275,000 -- -- -- 28,500
Executive Vice President, 1999 223,438 -- 432,781(5) 99,000 20,688
Chief Legal Officer 1998 196,875 75,000 -- 200,000 20,688
Seth A. Grossman............ 2000 219,750 75,000 -- -- 1,000
Executive Vice President, 1999 177,292 -- -- 22,000 1,000
Chief Strategic Officer 1998 165,000 -- -- 100,000 1,000
---------------
(1) Includes amounts Named Executive Officers elected to defer pursuant to the
Company's Profit Sharing Plan.
(2) Includes contributions to supplemental retirement plans as follows: during
2000, Mr. Sagansky -- $60,000; Mr. Goodman -- $41,300; Mr.
Morrison -- $27,500; during 1999, Mr. Sagansky -- $60,000; Mr.
Goodman -- $12,600; Mr. Morrison -- $19,688; during 1998, Mr.
Goodman -- $31,500; Mr. Morrison -- $19,688.
(3) Includes $1,000 Company contributions to the Profit Sharing Plan during
1998, 1999 and 2000.
(4) Consists of relocation allowance in 1998 and related tax reimbursement in
1999.
(5) Represents the difference between the price paid by the Named Executive
Officer upon the exercise of stock options and the fair market value of the
underlying Common Stock at the time of exercise.
OPTION GRANTS IN LAST FISCAL YEAR
None of the Named Executive Officers was granted any options to purchase
shares of Class A Common Stock of the Company during the year ended December 31,
2000.
8
12
2000 AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to stock options
exercised by the Named Executive Officers during the fiscal year ended December
31, 2000 and stock options held as of December 31, 2000 by each Named Executive
Officer.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT DECEMBER 31, MONEY OPTIONS AT
SHARES 2000 DECEMBER 31, 2000(1)
ACQUIRED VALUE ------------------------------ ------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE(2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE(3)
---- --------------- --------- -------------- ------------- ----------- ----------------
Jeffrey Sagansky............... -- $ -- 1,160,000 2,040,000 $8,484,500 $6,440,850
Lowell W. Paxson............... -- -- 333,333 666,667 645,833 --
Dean M. Goodman................ 100,000 1,023,273 337,661 390,000 1,956,828 1,943,025
Anthony L. Morrison............ -- -- 284,600 209,400 2,004,313 1,058,163
Seth A. Grossman............... -- -- 109,600 53,200 670,014 249,375
---------------
(1) Based on the closing sale price of the Class A Common Stock of $11.9375 on
December 29, 2000.
(2) Excludes securities underlying options which vested January 1, 2001 as
follows: Mr. Goodman, 150,000 shares; Mr. Morrison, 79,800 shares; Mr.
Grossman, 24,400 shares.
(3) Certain options held by Mr. Sagansky and Mr. Paxson which are not currently
exercisable have variable exercise prices to be determined at future dates,
as described below under "Employment Agreements," and are therefore not
treated as "in the money" for purposes of the amounts shown in this column.
STOCK INCENTIVE PLANS
We established our Stock Incentive Plan, 1996 Stock Incentive Plan and 1998
Stock Incentive Plan (collectively, the "Stock Incentive Plans") to provide
incentives to officers, employees and others who perform services for us through
awards of options and shares of restricted stock. Awards are granted under the
Stock Incentive Plans at the discretion of our Compensation Committee and may be
in the form of either incentive or nonqualified stock options or awards of
restricted stock. Options granted under the Stock Incentive Plans generally vest
over a five year period and expire ten years after the date of grant. At
December 31, 2000, 276,861 shares of Class A Common Stock were available for
additional awards under the Stock Incentive Plans.
The exercise price per share of Class A Common Stock, vesting schedule and
expiration date of each stock option granted under the Stock Incentive Plans is
determined by the Compensation Committee at the date the option is granted and
as provided in the terms of the Plans. The Compensation Committee may, in its
sole discretion, accelerate the time at which any stock option may be exercised.
Holders of more than ten percent (10%) of the combined voting power of our
capital stock may be granted stock options, provided that if any of such options
are intended to be incentive stock options, the exercise price must be at least
110% of the fair market value of Class A Common Stock as of the date of the
grant and the term of the option may not exceed five years. Options granted
under the Stock Incentive Plans may be exercised by the participant to whom
granted or by his or her legal representative. If a participant's employment is
terminated for cause, each option which has not been exercised shall terminate.
The Compensation Committee also has the discretion to award restricted
stock, consisting of shares of Class A Common Stock which vest over a period
determined by the Committee and are subject to forfeiture in whole or in part if
the recipient's employment is terminated prior to the end of the restricted
period. Prior to vesting, the participant may transfer the restricted stock to a
trust for the benefit of the participant or an immediate family member, but may
not otherwise sell, assign, transfer, give or otherwise dispose of, mortgage,
pledge or encumber such restricted stock. The Compensation Committee may, in its
discretion, provide that a participant shall be vested in whole or with respect
to any portion of the participant's award not previously vested if the
participant's employment with us is terminated because of death, disability or
retirement. To date, we have not awarded any restricted stock under the Stock
Incentive Plans.
9
13
EXECUTIVE BONUS PLAN
Under our Executive Bonus Plan, members of our senior management approved
by the Compensation Committee may earn cash bonus compensation on an annual
basis in such amounts as are determined by the Committee, based upon the
achievement of operating and financial objectives and individual performance
criteria. The bonus calculation criteria are established on an annual basis by
the Committee, and generally consist of a set of operating and financial
performance objectives which we must meet for any participant to be entitled to
receive a bonus, and individualized performance criteria and bonus levels for
each participant (generally expressed as a percentage of the participant's base
salary). Bonuses awarded with respect to a fiscal year are to be paid during the
following year.
PROFIT SHARING PLAN
We have a profit sharing plan under Section 401(k) of the Internal Revenue
Code under which our employees must complete six months of service in order to
be eligible to defer salary and, if available, receive matching contributions
under the Section 401(k) portion of the plan. Participants may elect to
contribute a specified percentage of their compensation to the plan on a pre-tax
basis. We may, at our discretion, make matching contributions based on a
percentage of deferred salary contributions at a rate to be determined by
certain of our officers, which matching contributions may be paid in Company
stock. In addition, we may make supplemental profit sharing contributions in
such amounts as certain of our officers may determine. Participants earn a
vested right to their profit sharing contribution in increasing amounts over a
period of five years. After five years of service, a participant's right to his
or her profit sharing contribution is fully vested. Thereafter the participant
may receive a distribution of the entire value of his or her account at age 55,
62 or 65 or upon termination of employment, death or disability.
EMPLOYMENT AGREEMENTS
Mr. Paxson is employed as our Chairman, in which capacity he serves as our
senior executive officer, pursuant to an employment agreement for a three year
term commencing October 16, 1999, and renewing thereafter for successive one
year periods so long as Mr. Paxson remains our "Single Majority Shareholder" as
such term is defined under the rules of the FCC. Mr. Paxson's current base
salary under the agreement is $660,000, increasing 10% per year. Mr. Paxson may
receive an annual bonus of up to twice his base salary if we attain revenue
targets established by our Compensation Committee. In connection with the
employment agreement, we granted Mr. Paxson nonqualified options to purchase
1,000,000 shares of Class A Common Stock, which vest in equal installments over
a three year period. The exercise price for options to purchase 333,333 shares
which vested on October 16, 2000, is $10 per share. The exercise price for
options to purchase 333,333 shares which will vest on October 16, 2001, will be
$12.03 per share. The exercise price for the remaining 333,334 options vesting
on October 16, 2002, will be the lower of $18 per share or the fair market value
of the common stock on the prior anniversary date. Mr. Paxson is eligible to
participate in all employee benefit plans and arrangements that are generally
available to other senior executives. The Board of Directors may terminate Mr.
Paxson's employment agreement before expiration for good cause, as defined in
the agreement, and Mr. Paxson may terminate the agreement for good reason, as
defined in the agreement. If Mr. Paxson dies, becomes permanently disabled,
terminates his employment for good reason or is terminated other than for good
cause during the term of the agreement, we will pay Mr. Paxson or his estate, as
the case may be, his then existing salary for the remaining term of the
agreement, in the case of disability, termination for good reason or termination
other than for good cause, or 18 months, in the case of death.
Mr. Sagansky is employed as our President and Chief Executive Officer
pursuant to an employment agreement entered into in September 1999 for a four
year term expiring September 15, 2003. Mr. Sagansky's current base salary under
the agreement is $660,000, increasing 10% per year. Mr. Sagansky may receive an
annual bonus of up to twice his base salary if we attain revenue targets
established by our Compensation Committee, which shall be the same revenue
targets established for purposes of Mr. Paxson's bonus compensation. In
connection with the employment agreement, we granted Mr. Sagansky nonqualified
options to purchase 2,000,000 shares of Class A Common Stock, vesting in four
equal annual installments commencing September 15, 2000, and expiring in ten
years. The vesting of these options will be accelerated if,
10
14
at any time after Mr. Paxson ceases to be our FCC Single Majority Shareholder,
Mr. Sagansky's employment is terminated other than by reason of his death or
disability and other than for good cause (as defined in the agreement). The
exercise price for options to purchase 500,000 shares which vested on September
15, 2000, is $10 per share. The exercise price for options to purchase 500,000
shares which will vest on September 15, 2001, will be $11.68 per share. The
exercise price for options vesting on subsequent anniversaries will be the lower
of a range between $18 and $21 per share or the fair market value of the common
stock on the prior anniversary date. Mr. Sagansky is eligible to participate in
all employee benefit plans and arrangements that are generally available to
other senior executives. The Board of Directors may terminate Mr. Sagansky's
employment agreement before expiration for good cause, as defined in the
agreement, and Mr. Sagansky may terminate the agreement for good reason, as
defined in the agreement. If Mr. Sagansky dies, becomes permanently disabled,
terminates his employment for good reason or is terminated other than for good
cause during the term of the agreement, we will pay Mr. Sagansky or his estate,
as the case may be, his then existing salary for the remaining term of the
agreement, in the case of disability, termination for good reason or termination
other than for good cause, or 18 months, in the case of death.
Mr. Goodman is employed as President of PAX TV under a five year employment
agreement commencing January 1, 1998. Mr. Goodman is entitled to receive annual
base salary increases of at least 10% each January 1 and is eligible to receive
an annual bonus. Mr. Goodman is eligible to participate in all employee benefit
plans and arrangements that are generally available to other senior executives
and to receive such other cash and non-cash bonus awards and compensation
(including awards under the Stock Incentive Plans) as we may determine. We may
terminate Mr. Goodman's employment for good cause, as defined in the agreement.
If Mr. Goodman's employment is terminated by reason of his disability or other
than for good cause, or if Mr. Goodman terminates his employment for good
reason, as defined in the agreement, the Company will continue to pay Mr.
Goodman his base salary for the lesser of two years or the balance of the
employment term in the case of disability; and for the balance of the employment
term in all other cases. If Mr. Goodman dies, the Company will pay Mr. Goodman's
estate his then existing salary for a period of one year.
Mr. Morrison is employed as our Executive Vice President and Chief Legal
Officer under a five year employment agreement commencing January 1, 1998. Mr.
Morrison is entitled to annual base salary increases of at least 10% each
January 1 and is eligible to receive an annual bonus. Mr. Morrison is eligible
to participate in all employee benefit plans and arrangements that are generally
available to other senior executives and to receive such other cash and non-cash
bonus awards and compensation (including awards under the Stock Incentive Plans)
as we may determine. We may terminate Mr. Morrison's employment for good cause,
as defined in the agreement. If Mr. Morrison's employment is terminated by
reason of his disability or other than for good cause, or if Mr. Morrison
terminates his employment for good reason, as defined in the agreement, we will
continue to pay Mr. Morrison his base salary for the lesser of two years or the
balance of the employment term in the case of disability; and for the balance of
the employment term in all other cases. If Mr. Morrison dies, we will pay his
estate his then existing salary for a period of one year.
Mr. Grossman is employed as our Executive Vice President and Chief
Strategic Officer under a four year employment agreement commencing June 30,
2000. Mr. Grossman is entitled to annual base salary increases of at least 10%
each January 1 and is eligible to receive an annual bonus. Mr. Grossman is
eligible to participate in all employee benefit plans and arrangements that are
generally available to other senior executives and to receive such other cash
and non-cash bonus awards and compensation (including awards under the Stock
Incentive Plans) as we may determine. We may terminate Mr. Grossman's employment
for cause, as defined in the agreement. If Mr. Grossman's employment is
terminated by reason of his death or disability or other than for good cause, we
will continue to pay Mr. Grossman his base salary for the lesser of two years or
the balance of the employment term.
The terms of each of the employment agreements described above, other than
that of Mr. Grossman, were approved by the Compensation Committee.
11
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was composed of Mr. Burnham and Mr. Greenwald
during 2000. No executive officer of the Company served on the compensation
committee of another entity or on any other committee of the board of directors
of another entity performing similar functions during 2000.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Compensation
Committee Report on Executive Compensation and the Performance Graph shall not
be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee of the Board of
Directors, which is currently comprised of Mr. Burnham and Mr. Greenwald, each
of whom is a non-employee director of the Company.
The Compensation Committee of the Board of Directors reviews and recommends
the salaries and other compensation of the executive officers of the Company,
including its Chairman and its Chief Executive Officer and other Named Executive
Officers, and is responsible for administering the Company's Executive Bonus
Plan and Stock Incentive Plans, and for reviewing proposed executive
compensation and other compensation plans and making recommendations to the
Board of Directors.
In making its recommendations as to executive compensation, the Committee
seeks to recommend a level of base compensation which is competitive with the
compensation offered to executives performing similar functions by others in the
Company's line of business, and to link a significant portion of an executive's
total potential cash compensation to the achievement of overall Company
operating and financial goals and individual performance criteria. In
administering the Executive Bonus Plan, the Committee establishes, on an annual
basis, overall Company operating and financial goals and individual performance
criteria which offer Company executives the opportunity to earn significant
bonus compensation. In formulating its recommendations as to awards under the
stock incentive plans, the Committee seeks to provide a means for Company
executives to realize substantial additional compensation based upon
appreciation in the public trading price of the Company's common stock, thereby
aligning the executives' interests with those of the Company's stockholders.
The Company's operating and financial performance for the 2000 fiscal year,
when compared with the operating and financial goals established by the
Committee under the Executive Bonus Plan for the 2000 fiscal year, resulted in
the participants in the Executive Bonus Plan being entitled to receive bonus
compensation of 25% of their individually established target bonus amounts. The
target bonus amounts for the Company's executive officers for the level of
operating and financial performance achieved by the Company ranged between 10%
and 50% of annual base compensation. Bonus compensation earned with respect to
the 2000 fiscal year will be paid in 2001.
Except for a grant of options to purchase 150,000 shares of Class A Common
Stock vesting over a four year period which was made to Thomas E. Severson, Jr.,
in connection with his commencement of service as the Company's Senior Vice
President and Chief Financial Officer in August 2000, the Committee did not
grant additional options or other stock-based compensation awards to the
Company's executive officers during the year ended December 31, 2000.
Submitted by the Compensation Committee
James L. Greenwald, Chairman
Bruce L. Burnham
12
16
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on our
Class A Common Stock from December 31, 1995 through December 31, 2000 with the
cumulative total return of the American Stock Exchange Market Value Index and an
industry peer group index compiled by us that consists of several companies (the
"Peer Group").(1) The comparison assumes $100 was invested at the per share
closing price of our Class A Common Stock on December 31, 1995. Similar
calculations were made with respect to the American Stock Exchange Market Value
Index and the Peer Group for the relevant periods assuming that all dividends
were reinvested.
AMERICAN STOCK EXCHANGE
PAXSON COMM CORP -CL A INDEX PEER GROUP INDEX
---------------------- ----------------------- ----------------
12/31/95 100.00 100.00 100.00
12/31/96 50.82 101.55 136.97
12/31/97 49.18 127.26 217.54
12/31/98 60.25 136.58 217.25
12/31/99 78.28 179.36 365.26
12/31/00 78.28 168.46 285.63
(1) The following companies comprise the Peer Group: Granite Broadcasting Corp,
Hearst-Argyle Television Inc., LIN Television Corp. (included through
December 31, 1997 only, as the company was acquired during 1998), Sinclair
Broadcast Group, Inc., Univision Communications, Inc. and Young
Broadcasting, Inc. Calculations for the Peer Group were weighted on the
basis of their respective market capitalizations.
13
17
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Audit
Committee Report shall not be incorporated by reference into any such filings.
AUDIT COMMITTEE REPORT
This report is submitted by the Audit Committee of the Board of Directors,
which is currently comprised of three independent directors and operates under a
written charter adopted by the Board of Directors, which is attached as Appendix
A to this Proxy Statement. The members of the committee are Bruce L. Burnham,
James L. Greenwald and John E. Oxendine. Mr. Burnham is the chairman of the
Audit Committee. The Audit Committee recommends to the Board of Directors the
selection of Company's independent auditors, subject to stockholder
ratification.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
In this context, the Audit Committee has met and discussed the fiscal 2000
audited financial statements with management and the independent auditors.
Management represented to the Audit Committee that the Company's consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The Audit Committee discussed with the independent auditors matters required to
be discussed by Statement on Auditing Standards No. 61, entitled Communications
with Audit Committees.
The Company's independent auditors also provided to the Audit Committee the
written disclosures and the letter required by Independence Standards Board
Standard No. 1, entitled Independence Discussions with Audit Committees, and the
Audit Committee discussed with the independent auditors that firm's
independence.
Based on the Audit Committee's discussion with management and the
independent auditors and the Audit Committee's review of the representation of
management and the report of the independent auditors to the Audit Committee,
the Audit Committee recommends that the Board of Directors include the audited
financial statements for fiscal 2000 in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000 filed with the Securities and Exchange
Commission.
Submitted by the Audit Committee
Bruce L. Burnham, Chairman
James L. Greenwald
John E. Oxendine
14
18
PROPOSAL 2 -- AMENDMENT OF THE 1998 STOCK INCENTIVE PLAN
The Board of Directors adopted the Paxson Communications Corporation 1998
Stock Incentive Plan (the "1998 Plan") in June 1998. Pursuant to the 1998 Plan,
a maximum of 7,200,000 shares of Class A Common Stock were made available to
provide stock-based incentive compensation by granting stock options and
restricted stock awards (collectively referred to herein as "awards") to
eligible persons performing services for us. The adoption of the 1998 Plan was
approved by the stockholders at our Annual Meeting of Stockholders in April
1999.
The purpose of the 1998 Plan is to promote our interests and those of our
stockholders by providing persons performing services for us with additional
incentives to increase their efforts on our behalf and to remain in our employ
or service through the award of stock options and shares of restricted stock,
and to increase recipients' proprietary interest in the Company and thereby
align their interests with those of our stockholders. Of the 7,200,000 shares of
Class A Common Stock originally made available for awards under the 1998 Plan,
181,425 shares currently remain available for additional awards.
In the fall of 2000, the Board of Directors determined that insufficient
shares remained available for future awards under the 1998 Plan for us to be
able to continue to provide meaningful stock-based incentive compensation to
those persons in a position to contribute to our success. Therefore, in December
2000, the Board of Directors approved an increase in the total number of shares
of Class A Common Stock available for awards under the 1998 Plan from 7,200,000
shares to 9,803,292 shares, and directed that the amendment of the 1998 Plan be
submitted to our stockholders for approval at the next annual meeting.
A SUMMARY OF THE PRINCIPAL FEATURES OF THE 1998 PLAN IS PROVIDED BELOW, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE 1998 STOCK
INCENTIVE PLAN, AS PROPOSED TO BE AMENDED, WHICH IS INCLUDED AS EXHIBIT A TO
THIS PROXY STATEMENT.
GENERAL
Awards granted under the 1998 Plan may consist of options ("Options") to
purchase a specified number of shares of Class A Common Stock at a stated price
per share, which may include options which qualify as "incentive stock options"
("ISOs") pursuant to the Internal Revenue Code of 1986, as amended (the "Code"),
shares of Class A Common Stock which are subject to restrictions and a risk of
forfeiture to the Company ("Restricted Stock"), or combination of the foregoing.
The Board of Directors has the right to alter, amend or terminate the 1998 Plan
without the approval of the stockholders and may condition any amendment of the
1998 Plan on the approval of the stockholders.
SHARES AVAILABLE FOR ISSUANCE
When the 1998 Plan was adopted by the Board of Directors in June 1998,
7,200,000 shares of Class A Common Stock were available for awards under the
1998 Plan, representing approximately 12% of the then outstanding shares of
Class A Common Stock (after giving effect to the issuance of such additional
shares).
If Proposal 2 is approved, an additional 2,603,292 shares of Class A Common
Stock will be available for awards of stock options and restricted stock under
the 1998 Plan, thus making an aggregate total of 9,803,292 shares of Class A
Common Stock available for awards under the 1998 Plan, representing
approximately 14.9% of the currently outstanding shares of Class A Common Stock
(after giving effect to the issuance of such shares).
Authority to grant awards under the 1998 Plan will continue until the 1998
Plan is terminated by the Board of Directors, subject to the continued
availability of shares for the granting of awards under the 1998 Plan. The
shares of Class A Common Stock subject to Options which expire unexercised or
are terminated or which are included in awards of Restricted Stock which are
forfeited to the Company shall again become available for the granting of awards
under the 1998 Plan. In the event of stock splits or other changes in the number
or kind of outstanding shares of Class A Common Stock, an appropriate adjustment
will be made with respect to existing and future awards. The proceeds we receive
from the sale of stock under the 1998 Plan will
15
19
be added to our general funds. The closing sale price per share of the Class A
Common Stock on March 26, 2001, was $10.00.
ELIGIBILITY; ADMINISTRATION
All persons who perform services for us, whether as a director, officer,
employee, consultant or other independent contractor, all persons who have in
the past performed such services, and all persons performing services relating
to the Company in their capacity as an employee or independent contractor of a
corporation or other entity providing such services to us are eligible to
receive awards under the 1998 Plan, provided that only our employees are
eligible to receive ISOs. As of March 1, 2001, we had approximately 765
employees eligible to receive awards under the 1998 Plan. The 1998 Plan is
administered by the Compensation Committee of the Board of Directors. The
Committee has the power to interpret the provisions of the 1998 Plan, to select
the eligible persons who are to receive awards under the 1998 Plan, to determine
the type of award, the amount thereof and all other terms of each award and to
make all other decisions with respect to the 1998 Plan and any awards granted
thereunder.
STOCK OPTION AWARDS
Granting of Options. The Compensation Committee is authorized to grant
Options to eligible persons ("Optionees"), which may be either ISOs or
non-qualified stock options ("NSOs"). All ISOs are intended to comply with the
provisions of the Code applicable to ISOs. The term of an ISO cannot exceed ten
years, and the exercise price of any ISO must be equal to or greater than the
Fair Market Value of the shares of Class A Common Stock on the date of the
grant. Any ISOs granted to a holder of 10% or more of the combined voting power
of our capital stock must have an exercise price equal to or greater than 110%
of the fair market value of the Class A Common Stock on the date of grant and
may not have a term exceeding five years from the grant date. For purposes of
the 1998 Plan, "Fair Market Value" generally means the closing sale price of the
Class A Common Stock on the preceding trading day on the principal national
securities exchange on which the Class A Common Stock is traded. We have not
granted any ISOs under the 1998 Plan. The exercise price of NSOs shall be
determined by the Committee on the date the NSO is granted, and may be less than
Fair Market Value.
Exercisability. Options shall become exercisable in whole or in part by
the Optionee during the period that the Compensation Committee determines at the
date of grant. The Committee may, in its sole discretion, accelerate the time at
which any Option becomes exercisable.
Termination. Each Option shall expire on the date or dates that the
Compensation Committee determines at the date of grant. Upon termination of an
Optionee's employment with us (including by reason of the Optionee's death),
each unexercised Option (whether or not then exercisable) shall terminate and be
forfeited, except that any Options which are then exercisable shall remain
exercisable for the period (if any) after termination of the Optionee's
employment that the Committee may have determined at the time the Option was
granted, which period may extend beyond the stated term of the Option. The
Committee may alter the foregoing and permit Options to remain exercisable for
longer periods, except that in the case of ISOs, the period after termination of
employment during which the ISO shall continue to be exercisable shall not
exceed the maximum such period permitted under the Code. If an Optionee's
employment or service relationship with us is terminated for cause (as defined
in the 1998 Plan), all of that person's Options shall immediately terminate.
Payment of Exercise Price. The person exercising an Option must pay for
the shares of Class A Common Stock being purchased in full at the time of
purchase. Payment may be made in cash, by the transfer to us of shares of Class
A Common Stock owned by the Optionee valued at their Fair Market Value on the
date of transfer, any combination of those payment methods, or in any other
manner that may be authorized by the Compensation Committee.
16
20
TAX CONSEQUENCES
The following discussion addresses certain federal tax consequences in
connection with the 1998 Plan. State tax treatment is subject to individual
state laws and is not reviewed in this discussion.
Incentive Stock Options. An ISO results in no taxable income to the
Optionee or deduction to the Company at the time it is granted or exercised. If
the Optionee retains the stock received as a result of the exercise of an ISO
for at least two years from the date of the grant and one year from the date of
exercise, then any gain on the sale of such stock will be treated as long-term
capital gain. If the shares are disposed of during this period, the Option will
be treated as an NSO. If the Optionee exercises the Option more than three
months after the Optionee has left employment with us (12 months in the case of
disability), the Option will be treated as an NSO. We receive a tax deduction
only in the event the Option is treated as an NSO, equal to the amount of income
recognized by the Optionee.
Non-Qualified Stock Options. An NSO results in no taxable income to the
Optionee or deduction to the Company at the time it is granted. Upon exercising
such an Option, the Optionee will recognize taxable compensation equal to the
excess of the then Fair Market Value of the shares over the Option price.
Subject to the applicable provisions of the Code, we will be allowed a tax
deduction in the year of exercise in an amount equal to the income recognized by
the Optionee.
Restricted Stock Awards. No income will be recognized by the recipient of
Restricted Stock so long as such award is subject to a substantial risk of
forfeiture. Generally, at the time the substantial risk of forfeiture terminates
with respect to a Restricted Stock award, the then Fair Market Value of the
stock will constitute ordinary income to the recipient. Subject to the
applicable provisions of the Code, we will be allowed a tax deduction in an
amount equal to the income recognized by the recipient.
ACCOUNTING TREATMENT
We account for the issuance of stock options using the intrinsic value
method, which requires us to accrue compensation cost to the extent that the
market price of the Common Stock on the grant date exceeds the exercise price.
In addition, we make pro forma disclosures of net income and earnings per share
as if the fair value method had been applied.
Options. Under the 1998 Plan, the issuance of Options will result in
compensation expense to the extent the exercise price of the Option is less than
the Fair Market Value of the Class A Common Stock on the grant date.
Substantially all Options which we have granted under the 1998 Plan have had an
exercise price of $7.25 per share, which has generally been less than the Fair
Market Value of the Class A Common Stock on the option grant date.
Restricted Stock. Restricted Stock awarded to employees results in
compensation expense equal to the Fair Market Value of the Class A Common Stock
on the date that the substantial risk of forfeiture of such award lapses.
Accounting for Income Taxes. The compensation cost related to Options and
Restricted Stock awards recorded for financial statement purposes may differ
from the deduction for income tax purposes. The income tax effect of the
difference, if any, generally would be adjusted through additional paid-in
capital.
APPROVAL BY STOCKHOLDERS
The amendment of the 1998 Plan to increase the number of shares of Class A
Common Stock available for issuance thereunder from 7,200,000 to 9,803,292 was
adopted by the Board of Directors in December, 2000, and we are submitting it
for stockholder approval so that future awards under the 1998 Plan relating to
the additional shares will qualify as "performance-based compensation" under
Section 162(m) of the Code, which generally limits to one million dollars the
annual corporate federal income tax deduction for compensation paid to the chief
executive officer or any of the four other highest paid officers of a
publicly-held corporation. We intend that all awards granted under the 1998 Plan
will qualify for the performance-based compensation exclusion from this
deduction limitation. In order for the awards to qualify as performance-
17
21
based compensation, among other requirements, the material terms of the 1998
Plan must be approved by our stockholders. Approval of the amendment of the 1998
Plan requires the affirmative vote of a majority of the outstanding shares
represented at the Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN
THE TOTAL NUMBER OF SHARES OF CLASS A COMMON STOCK SUBJECT TO AWARDS UNDER OUR
1998 STOCK INCENTIVE PLAN FROM 7,200,000 SHARES TO 9,803,292 SHARES.
PROPOSAL 3 -- RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP to audit
our consolidated financial statements for the year ended December 31, 2001.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting to answer questions from stockholders, and will have an
opportunity to make a statement if they wish to do so.
AUDIT FEES
The aggregate fees billed to us by PricewaterhouseCoopers LLP for its
services in connection with the audit of our annual consolidated financial
statements for the fiscal year ended December 31, 2000, and its review of the
quarterly financial statements included in our reports on Form 10-Q filed during
the 2000 fiscal year were $364,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
For our fiscal year ended December 31, 2000, PricewaterhouseCoopers LLP was
not engaged to and did not provide any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
ALL OTHER FEES
The aggregate fees billed by PricewaterhouseCoopers LLP for services
rendered to us during the year ended December 31, 2000, other than those
described above, were $368,805. These fees relate primarily to tax consultation
and special projects.
COMPATIBILITY OF FEES
The Audit Committee of the Board of Directors has considered the provision
of non-audit services by PricewaterhouseCoopers LLP and the fees paid to them
for such services, and believes that the provision of such services and the fees
charged are compatible with PricewaterhouseCoopers LLP's maintenance of their
independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR 2001.
OTHER INFORMATION
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals of stockholders intended for presentation at the 2002 annual
meeting must be received by us on or before December 1, 2001, in order to be
included in our proxy statement and form of proxy for that meeting.
EXPENSES OF SOLICITATION
We will bear the expense of preparing, printing, and mailing proxy
materials to our stockholders. In addition to solicitations by mail, our
employees may solicit proxies on behalf of the Board of Directors in
18
22
person or by telephone. We will also reimburse brokerage houses and other
nominees for their expenses in forwarding proxy material to beneficial owners of
our stock.
OTHER MATTERS
The financial statements, financial information and management discussion
and analysis of financial condition and results of operations set forth in our
2000 Annual Report are incorporated by reference. We will provide to any
stockholder upon written request a copy of our Annual Report on Form 10-K,
including the financial statements and the schedules thereto, for our fiscal
year ended December 31, 2000, as filed with the Securities and Exchange
Commission pursuant to Rule 13a-1 under the Securities Exchange Act of 1934. We
will not charge for copies of our annual report, but will assess a reasonable
charge for copies of the exhibits, if requested.
By Order of the Board of Directors
/s/ ANTHONY L. MORRISON
Anthony L. Morrison, Secretary
West Palm Beach, Florida
April 2, 2001
19
23
APPENDIX A
PAXSON COMMUNICATIONS CORPORATION
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee of the Board of Directors of
Paxson Communications Corporation (the "Corporation") is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
the Securities and Exchange Commission or the public; the Corporation's systems
of internal controls regarding finance, accounting, legal compliance and ethics
that management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Corporation's
financial reporting process and system of internal controls.
- Review and appraise the audit efforts of the Corporation's outside
auditors.
- Provide an open avenue of communication among the outside auditors,
financial and senior management, and the Board of Directors.
- Oversee that management has established and maintained processes to
assure compliance by the Company with all applicable laws and regulations
and Company policy.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall have at least three members and shall be
comprised solely of "independent directors," as defined in accordance with the
rules of the principal national securities exchange on which the Corporation's
common stock shall be listed for trading (which at the date of adoption of this
charter is the American Stock Exchange). Each member shall be free of any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. No
person shall be deemed independent if he or she is an employee of the
Corporation. The members of the Audit Committee shall be generally knowledgeable
in financial and auditing matters and shall be able to read and understand
financial statements. At least one member of the Audit Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background which
results in such individual's financial sophistication, including having been a
chief executive officer, chief financial offer or other senior officer with
financial oversight responsibilities. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until the next annual
meeting or until their successors shall be duly elected and qualified. Unless a
Chair is elected by the full Board, the members of the Committee may designate a
Chair by majority vote of the full Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its responsibility to foster open
communication, the Committee should meet at least annually with management and
the outside auditors in separate executive sessions to discuss any matters that
the Committee or any of these groups believe should be discussed privately. In
addition, the Committee or at least
A-1
24
its Chair should meet with the outside auditors and management quarterly to
review the Corporation's financial statements. The Chairman of the Committee
shall report to the Board of Directors following the meetings of the Audit
Committee.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
- Create an agenda for the ensuing year.
- Review and reassess this Charter at least annually.
- Review the Corporation's annual financial statements and any reports or
other financial information submitted to the Securities and Exchange
Commission or the public, including any certification, report, opinion,
or review rendered by the outside auditors.
- Review with financial management and the outside auditors the
Corporation's Quarterly Reports on Form 10-Q prior to filing or prior to
the release of earnings. The Chair of the Committee may represent the
entire Committee for purposes of this review.
- Conduct or authorize investigations into any matters within the Audit
Committee's scope of responsibilities. The Audit Committee shall be
empowered to retain independent counsel, accountants, or others to assist
it in the conduct of any investigation.
- Consider such other matters in relation to the financial affairs of the
Company and its accounts and in relation to the external audit of the
Company as the Audit Committee may, in its discretion, determine to be
advisable.
Outside Auditors
- Recommend to the Board of Directors the selection of the outside
auditors, considering independence and effectiveness and approve the fees
and other compensation to be paid to the outside auditors. On an annual
basis, the Committee should review and discuss with the outside auditors
all significant relationships the outside auditors have with the
Corporation to determine the outside auditors' independence. The Audit
Committee shall be responsible for ensuring its receipt from the outside
auditors of a formal written statement delineating all relationships
between the auditors and the Corporation, and the Audit Committee shall
be responsible for actively engaging in a dialogue with the auditors with
respect to any disclosed relationships or services that may affect the
objectivity and independence of the auditors and for taking, or
recommending that the full board take, appropriate action to oversee the
independence of the outside auditors.
- Advise the outside auditors of their ultimate accountability to the board
of directors and the Audit Committee, as representatives of the
stockholders. The Audit Committee, subject to action of the Board of
Directors, shall have ultimate authority to select, evaluate, and where
appropriate, replace the outside auditors (or to nominate the outside
auditors to be proposed for stockholder approval in any proxy statement).
- Review the performance of the outside auditors and approve any proposed
discharge of the outside auditors when circumstances warrant.
- Periodically consult with the outside auditors out of the presence of
management about internal controls and the completeness and accuracy of
the Corporation's financial statements.
Financial Reporting Process
- In consultation with the outside auditors, review the integrity of the
Corporation's financial reporting processes, both internal and external.
- Consider the outside auditors' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
A-2
25
APPENDIX B
PAXSON COMMUNICATIONS CORPORATION
1998 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this 1998 Stock Incentive Plan (the "Plan") is
to further the interests of Paxson Communications Corporation, a Delaware
corporation, its Subsidiaries and its shareholders by providing incentives in
the form of grants of stock options and restricted stock to key employees and
other persons who contribute materially to the success and profitability of the
Company. Also, the Plan will assist the Company in attracting and retaining key
persons.
2. DEFINITIONS. The following definitions will apply to the Plan:
A. "AWARD" means, individually or collectively, a grant under the Plan
of a Nonqualified Stock Option, an Incentive Stock Option, a Stock
Appreciation Right, or Restricted Stock.
B. "BOARD" means the board of directors of Paxson Communications
Corporation.
C. "CAUSE" means, except as otherwise may be provided under any
agreement under which any award or grant is made under this Plan, (i)
Recipient's arrest for the commission of (A) a felony, (B) two (2) offenses
for operating a motor vehicle while impaired by or under the influence of
alcohol or illegal drugs, (C) any criminal act with respect to Recipient's
employment (including any criminal act involving a violation of the
Communications Act of 1934, as amended, or regulations promulgated by the
Federal Communications Commission), or (D) any act that materially
threatens to result in suspension, revocation, or adverse modification of
any FCC license of any broadcast station owned by any affiliate of the
Company or would subject any such broadcast station to fine or forfeiture;
(ii) Recipient's taking of any action or inaction which would cause the
Company to be in default under any material contract, lease or other
agreement; (iii) Recipient's dependence on alcohol or illegal drugs; (iv)
Recipient's failure or refusal to perform according to or follow the lawful
policies and directives of the Chairman of the Board or the Chief Executive
Officer or such other officer or employee to which Recipient reports; (v)
Recipient's misappropriation, conversion or embezzlement of the assets of
the Company or any affiliate of the Company; and (vi) a material breach of
any Employment Agreement between Recipient and the Company.
D. "CODE" means the Internal Revenue Code of 1986, as amended.
E. "COMMITTEE" means the Compensation Committee appointed by the
Board. If the Board does not appoint a Compensation Committee or in the
case of any Award to members of the Committee, "Committee" means the Board.
F. "COMMON STOCK" means the Class A Common Stock, par value $.001 per
share of Paxson Communications Corporation, or such other class of shares
or securities as to which the Plan may be applicable pursuant to Section 9
of the Plan.
G. "COMPANY" means Paxson Communications Corporation and its
Subsidiaries.
H. "DATE OF GRANT" means the date on which the Option or Restricted
Stock, whichever is applicable, is granted.
I. "DISABILITY" means "disability" as defined in the Company's long
term disability plan or policy.
J. "ELIGIBLE PERSON" means any person who performs or has in the past
performed services for the Company, whether as a director, officer,
Employee, consultant or other independent contractor, and any person who
performs services relating to the Company as an employee or independent
contractor of a corporation or other entity that provides services to the
Company.
K. "EMPLOYEE" means any person employed on an hourly or salaried basis
by the Company.
L. "FAIR MARKET VALUE" means, with respect to the Common Stock, (i) if
the Common Stock is listed for trading on a national securities exchange,
the closing sale price, regular way, of the Common
B-1
26
Stock on the principal national securities exchange on which the Common
Stock is listed for trading on the trading day next preceding the date as
of which Fair Market Value is being determined, or if no sale is reported
on such date, the average of the closing bid and asked prices of the Common
Stock on such exchange on such date, (ii) if the Common Stock is not listed
for trading on any national securities exchange but is listed or quoted on
the NASDAQ Stock Market, the closing sale price of the Common Stock on the
trading day next preceding the date as of which Fair Market Value is being
determined as reported in NASDAQ, or if no sale is reported on such date,
the average of the closing bid and asked prices of the Common Stock on such
day as reported in NASDAQ, and (iii) if the Common Stock is not publicly
traded on the date as of which Fair Market Value is being determined, Fair
Market Value shall be as determined by the Board, using such factors as the
Board considers relevant, such as the price at which recent sales have been
made, the book value of the Common Stock, and the Company's current and
projected earnings.
M. "INCENTIVE STOCK OPTION" means a stock option, granted pursuant to
this Plan or any other Company plan, that satisfies the requirements of
Section 422 of the Code and that entitles the Recipient to purchase stock
of the Company.
N. "NONQUALIFIED STOCK OPTION" means a stock option, granted pursuant
to the Plan, that is not an Incentive Stock Option and that entitles the
Recipient to purchase stock of the Company.
O. "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.
P. "OPTION AGREEMENT" means a written agreement, between the Company
and a Recipient, that sets out the terms and restrictions of an Option
Award.
Q. "OPTION SHAREHOLDER" means an Employee who has acquired Shares upon
exercise of an Option.
R. "OPTION SHARES" means Shares that a Recipient receives upon
exercise of an Option.
S. "PERIOD OF RESTRICTION" means the period beginning on the Date of
Grant of a Restricted Stock Award and ending on the date on which all
restrictions applicable to the Shares subject to such Award expire.
T. "PLAN" means this Paxson Communications Corporation 1998 Stock
Incentive Plan, as amended from time to time.
U. "RECIPIENT" means an individual who receives an Award.
V. "RESTRICTED STOCK" means an Award granted pursuant to Section 7 of
the Plan consisting of Shares subject to such terms and restrictions as
shall be established by the Committee.
W. "RESTRICTED STOCK AGREEMENT" means a written agreement between the
Company and a Recipient setting forth the terms and restrictions of an
Award of Restricted Stock.
X. "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 9 of the Plan.
Y. "SUBSIDIARY" means any corporation 50 percent or more of the voting
securities of which are owned directly or indirectly by the Company at any
time during the existence of the Plan.
3. ADMINISTRATION. The Committee will administer the Plan. The Committee
has the exclusive power to select the Recipients of Awards pursuant to the Plan,
to establish the terms of the Awards granted to each Recipient, and to make all
other determinations necessary or advisable under the Plan. The Committee has
the sole discretion to determine whether the performance of an Eligible Person
warrants an Award under the Plan, and to determine the size and type of the
Award. The Committee has full and exclusive power to construe and interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, and to take all actions necessary or advisable for the Plan's
administration. The Committee, in the exercise of its powers, may correct any
defect or supply any omission, or reconcile any inconsistency in the Plan, or in
any Agreement, in the manner and to the extent it deems necessary or expedient
to make the Plan fully effective. In exercising this power, the Committee may
retain counsel at the expense of the Company. The Committee
B-2
27
also has the power to determine the duration and purposes of leaves of absence
which may be granted to a Recipient without constituting a termination of the
Recipient's employment for purposes of the Plan. Any of the Committee's
determinations will be final and binding on all persons. A member of the
Committee will not be liable for performing any act or making any determination
in good faith.
4. SHARES SUBJECT TO PLAN. Subject to the provisions of Section 9 of the
Plan, the maximum aggregate number of Shares that may be subject to Awards under
the Plan is 9,803,292. If an unexercised Award expires or becomes unexercisable,
the unpurchased Shares subject to such Award will be available for other Awards
under the Plan.
5. ELIGIBILITY. Any Eligible Person that the Committee in its sole
discretion designates is eligible to receive an Award under the Plan. Only an
Employee may receive an Incentive Stock Option. The Committee's grant of an
Award to a Recipient in any year does not entitle the Recipient to an Award in
any other year. Furthermore, the Committee may grant different Awards to
different Recipients. The Committee may consider such factors as it deems
pertinent in selecting Recipients and in determining the types and sizes of
their Awards. Recipients may include persons who previously received stock,
stock options, stock appreciation rights, or other benefits under the Plan or
another plan of the Company or a Subsidiary, whether or not the previously
granted benefits have been fully exercised or vested. An Award will not enlarge
or otherwise affect a Recipient's right, if any, to continue to serve the
Company and its Subsidiaries in any capacity, and will not restrict the right of
the Company or a Subsidiary to terminate at any time the Recipient's employment.
6. OPTIONS. The Committee may grant Options to purchase Common Stock to
Recipients in such amounts as the Committee determines in its sole discretion;
provided that, subject to the provisions of Section 9 of the Plan, (i) during
any 12-month period, the Committee may not grant to any Recipient Options to
purchase more than a total of 2,000,000 Shares, (ii) the Committee may not grant
Options such that during any 12-month period the aggregate number of Shares with
respect to which Options first become exercisable ("vest") during such period,
in accordance with the vesting schedules established by the Committee as of the
Date of Grant, exceeds 5% of the Company's total issued and outstanding shares
of common stock, determined in accordance with the rules of the American Stock
Exchange, and (iii) the Committee may not grant Options such that during any
five year period the aggregate number of Shares with respect to which Options
vest during such period, in accordance with the vesting schedules established by
the Committee as of the Date of Grant, exceeds 10% of the Company's total issued
and outstanding shares of common stock, determined in accordance with the rules
of the American Stock Exchange. An Option may be in the form of an Incentive
Stock Option or a Nonqualified Stock Option. The Committee may grant an Option
alone or in addition to another Award. Each Option will satisfy the following
requirements:
A. WRITTEN AGREEMENT. Each Option granted to a Recipient will be
evidenced by an Option Agreement. The terms of the Option Agreement need
not be identical for different Recipients. The Option Agreement will
contain such provisions as the Committee deems appropriate and will include
a description of the substance of each of the requirements in this Section
6.
B. NUMBER OF SHARES. Each Option Agreement will specify the number of
Shares that the Recipient may purchase upon exercise of the Option.
C. EXERCISE PRICE.
I. INCENTIVE STOCK OPTION. Except as provided in subsection 6.l.
of the Plan, the exercise price of each Share subject to an Incentive
Stock Option will equal the exercise price designated by the Committee,
but will not be less than the Fair Market Value on the Date of Grant.
II. NONQUALIFIED STOCK OPTION. The exercise price of each Share
subject to a Nonqualified Stock Option will equal the exercise price
designated by the Committee.
B-3
28
D. DURATION OF OPTION.
I. INCENTIVE STOCK OPTION. Except as otherwise provided in this
Section 6, an Incentive Stock Option will expire on the earlier of the
tenth anniversary of the Date of Grant or the date set by the Committee
on the Date of Grant.
II. NONQUALIFIED STOCK OPTION. Except as otherwise provided in
this Section 6, a Nonqualified Stock Option will expire on the tenth
anniversary of its Date of Grant or, at such earlier or later date set
by the Committee on the Date of Grant.
E. VESTING OF OPTION. Each Option Agreement will specify the vesting
schedule applicable to the Option. The Committee, in its sole discretion,
may accelerate the vesting of any Option at any time. An unexercised Option
that is not fully vested will become fully vested if the Recipient of the
Option dies or terminates employment with the Company because of
Disability.
F. DEATH.
I. INCENTIVE STOCK OPTION. If a Recipient dies, an Incentive Stock
Option granted to the Recipient will expire on the one-year anniversary
of the Recipient's death, or if earlier, the date specified in
subsection 6.d. of the Plan, unless the Committee sets an earlier
expiration date on the Date of Grant.
II. NONQUALIFIED STOCK OPTION. If a Recipient dies, a Nonqualified
Stock Option granted to the Recipient will expire on the one-year
anniversary of the Recipient's death, or if earlier, the date specified
in subsection 6.d. of the Plan, unless the Committee sets an earlier or
later expiration date on the Date of Grant, or a later expiration date
subsequent to the Date of Grant but prior to the one-year anniversary of
the Recipient's death.
G. DISABILITY.
I. INCENTIVE STOCK OPTION. If the Recipient terminates employment
with the Company because of his Disability, an Incentive Stock Option
granted to the Recipient will expire on the one-year anniversary of the
Recipient's last day of employment, or, if earlier, the date specified
in subsection 6.d. of the Plan.
II. NONQUALIFIED STOCK OPTION. If the Recipient terminates
employment with the Company because of his Disability, a Nonqualified
Stock Option granted to the Recipient will expire on the one-year
anniversary of the Recipient's last day of employment, or, if earlier,
the date specified in subsection 6.d. of the Plan, unless the Committee
sets an earlier or later expiration date on the Date of Grant or a later
expiration date subsequent to the Date of Grant but prior to the
one-year anniversary of the Recipient's last day of employment.
H. RETIREMENT OR INVOLUNTARY TERMINATION.
I. INCENTIVE STOCK OPTION. If the Recipient terminates employment
with the Company as a result of his retirement in accordance with the
Company's normal retirement policies, or if the Company terminates the
Recipient's employment other than for Cause, an Incentive Stock Option
granted to the Recipient will expire 90 days following the last day of
the Recipient's employment, or, if earlier, the date specified in
subsection 6.d. of the Plan, unless the Committee sets an earlier
expiration date on the Date of Grant.
II. NONQUALIFIED STOCK OPTION. If the Recipient terminates
employment with the Company as a result of his retirement in accordance
with the Company's normal retirement policies, or if the Company
terminates the Recipient's employment other than for Cause, a
Nonqualified Stock Option granted to the Recipient will expire 180 days
following the last day of the Recipient's employment, or, if earlier,
the date specified in subsection 6.d. of the Plan, unless the Committee
sets an earlier or later expiration date on the Date of Grant or a later
expiration date subsequent to the Date of Grant but prior to 180 days
following the Recipient's last day of employment.
B-4
29
I. TERMINATION OF SERVICE. If the Recipient's employment with the
Company terminates for any reason other than the reasons described in
Sections 6.f., 6.g., 6.h., or 6.j. of the Plan, an Option granted to the
Recipient will expire 30 days following the last day of the Recipient's
employment with the Company, or, if earlier, the date specified in
subsection 6.d. of the Plan, unless the Committee sets an earlier or later
expiration date on the Date of Grant or a later expiration date subsequent
to the Date of Grant but prior to the 30th day following the Recipient's
last day of employment. The Committee may not delay the expiration of an
Incentive Stock Option more than 90 days after termination of the
Recipient's employment. During any delay of the expiration date, the Option
will be exercisable only to the extent it is exercisable on the date the
Recipient's employment terminates, subject to any adjustment under Section
9 of the Plan.
J. CAUSE. Notwithstanding any provisions set forth in the Plan, if
the Company terminates the Recipient's employment for Cause, any
unexercised portion(s) of the Recipient's Option(s) will expire immediately
upon the earlier of the occurrence of the event that constitutes Cause or
the last day the Recipient is employed by the Company.
K. CONDITIONS REQUIRED FOR EXERCISE. An Option is exercisable only to
the extent it is vested according to the terms of the Option Agreement.
Furthermore, an Option is exercisable only if the issuance of Shares upon
exercise would comply with applicable securities laws. Each Agreement will
specify any additional conditions required for the exercise of the Option.
L. TEN PERCENT SHAREHOLDERS. An Incentive Stock Option granted to an
individual who, on the Date of Grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of
either the Company or any parent or Subsidiary, will have an exercise price
of 110 percent of Fair Market Value on the Date of Grant and will be
exercisable only during the five-year period immediately following the Date
of Grant. For purposes of calculating stock ownership of any person, the
attribution rules of Code Section 424(d) will apply, and any stock that
such person may purchase under outstanding options will not be considered.
M. MAXIMUM OPTION GRANTS. The aggregate Fair Market Value, determined
on the Date of Grant, of Shares with respect to which any Incentive Stock
Options under the Plan and all other plans of the Company or its
Subsidiaries become exercisable by any individual for the first time in any
calendar year will not exceed $100,000.
N. METHOD OF EXERCISE. An Option will be deemed exercised when the
person entitled to exercise the Option (i) delivers written notice to the
President of the Company (or his delegate, in his absence) of the decision
to exercise, (ii) concurrently tenders to the Company full payment for the
Shares to be purchased pursuant to the exercise, and (iii) complies with
such other reasonable requirements as the Committee establishes pursuant to
Section 9 of the Plan. Payment for Shares with respect to which an Option
is exercised may be made (i) in cash, (ii) by certified check, (iii) in the
form of Common Stock having a Fair Market Value equal to the exercise
price, or (iv) by delivery of a notice instructing the Company to deliver
the Shares to a broker subject to the broker's delivery of cash to the
Company equal to the exercise price. No person will have the rights of a
shareholder with respect to Shares subject to an Option granted under the
Plan until a certificate or certificates for the Shares have been delivered
to him. A partial exercise of an Option will not affect the holder's right
to exercise the remainder of the Option from time to time in accordance
with the Plan.
O. LOAN FROM COMPANY TO EXERCISE OPTION. The Committee may, in its
discretion and subject to the requirements of applicable law, recommend to
the Company that it lend the Recipient the funds needed by the Recipient to
exercise an Option. The Recipient will apply to the Company for the loan,
completing the forms and providing the information required by the Company.
The loan will be secured by such collateral as the Company may require,
subject to its underwriting requirements and the requirements of applicable
law. The Recipient will execute a promissory note and any other documents
deemed necessary by the Company.
B-5
30
P. DESIGNATION OF BENEFICIARY. Each Recipient may file with the
Company a written designation of a beneficiary to receive the Recipient's
Options in the event of the Recipient's death prior to full exercise of
such Options. If the Recipient does not designate a beneficiary, or if the
designated beneficiary does not survive the Recipient, the Recipient's
estate will be his beneficiary. Recipients may, by written notice to the
Company, change a beneficiary designation.
Q. TRANSFERABILITY OF OPTION.
I. NONQUALIFIED STOCK OPTION. To the extent permitted by tax,
securities or other applicable laws to which the Company, the Plan,
Recipients or Eligible Persons are subject, and unless provided
otherwise by the Committee on the Date of Grant, a Recipient who
receives a Nonqualified Stock Option may transfer such Option to (i) the
Recipient's spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, (ii) a trust for the
benefit of the Recipient's spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, or (iii)
a partnership whose partners consist solely of two or more of the
Recipient, the Recipient's spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law.
II. INCENTIVE STOCK OPTION. An Incentive Stock Option granted
under the Plan is not transferable except by will or the laws of descent
and distribution. During the lifetime of the Recipient, all rights of
the Incentive Stock Option are exercisable only by the Recipient.
7. RESTRICTED STOCK. The Committee may grant Awards of Restricted Stock to
Recipients in such amounts as the Committee determines in its sole discretion.
The Committee may grant Awards of Restricted Stock alone or in addition to
another Award. Each Restricted Stock Award granted to a Recipient will satisfy
the following requirements:
A. WRITTEN AGREEMENT. Each Restricted Stock Award granted to a
Recipient will be evidenced by a Restricted Stock Agreement. The terms of
the Restricted Stock Agreement need not be identical for each Recipient.
The Restricted Stock Agreement will specify the Period(s) of Restriction.
In addition, the Restricted Stock Agreement will include a description of
the substance of each of the requirements in this Section 7 and will
contain such provisions as the Committee deems appropriate.
B. NUMBER OF SHARES. Each Restricted Stock Agreement will specify the
number of Shares of Restricted Stock granted to the Recipient.
C. TRANSFERABILITY. Shares of Restricted Stock may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction, or upon earlier
satisfaction of any other conditions, as specified in the Restricted Stock
Agreement.
D. OTHER RESTRICTIONS. The Committee will impose on Shares of
Restricted Stock any other restrictions that the Committee deems advisable,
including, without limitation, vesting restrictions, restrictions based
upon the achievement of specific Company-wide, Subsidiary, or individual
performance goals, and/or restrictions under applicable federal or state
securities laws, and may place legends on the certificates representing
Restricted Stock to give appropriate notice of such restrictions. The
Committee may also require that Recipients make cash payments at the time
of grant or upon expiration of the Period of Restriction in an amount not
less than the par value of the Shares of Restricted Stock.
E. CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to subsection 7.d. of the Plan, each certificate
representing Restricted Stock will bear the following legend:
The sale or other transfer of the Shares represented by this
certificate, whether voluntary, involuntary, or by operation of law,
is subject to certain restrictions on transfer as set forth in the
Paxson Communications Corporation 1998 Stock Incentive Plan, as
amended, and in a Restricted Stock Agreement dated . A copy of the
Plan and the Restricted Stock Agreement may be obtained from the
Chief Financial Officer of Paxson Communications Corporation.
B-6
31
F. REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Section 7, Restricted Stock will become freely transferable by the
Recipient after the Period of Restriction expires. The Recipient will be
entitled to removal of the legend required by subsection 7.e. of the Plan
following the expiration of the Period of Restriction.
G. VOTING RIGHTS. During the Period of Restriction, Recipients
holding Restricted Stock may exercise full voting rights with respect to
such Shares.
H. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Recipients holding Restricted Stock will be entitled to
receive all dividends and other distributions payable to the holders of the
Common Stock generally. If any such dividends or distributions are paid in
Shares, such Shares will be subject to the same restrictions on
transferability and risks of forfeiture as the Shares of Restricted Stock
with respect to which they were paid.
I. DEATH. The restrictions on a Recipient's Restricted Stock will
terminate on the date of the Recipient's death.
J. DISABILITY. If a Recipient terminates employment with the Company
because of his total and permanent Disability, the restrictions on the
Recipient's Restricted Stock will expire on the Recipient's last day of
employment.
K. TERMINATION OF SERVICE. If a Recipient ceases employment for any
reason other than death or Disability, the Recipient will forfeit
immediately to the Company all nonvested Restricted Stock held by the
Recipient. The Committee may, in its sole discretion and upon such terms
and conditions as it deems proper, provide for termination of the
restrictions on Restricted Stock following termination of employment.
L. DESIGNATION OF BENEFICIARY. Each Recipient may file with the
Company a written designation of a beneficiary to receive the Recipient's
Restricted Stock in the event of the Recipient's death prior to removal of
all restrictions thereon. If the Recipient does not designate a
beneficiary, or if the designated beneficiary does not survive the
Recipient, the Recipient's estate will be his beneficiary. Recipients may,
by written notice to the Company, change a beneficiary designation.
8. TAXES; COMPLIANCE WITH LAW; APPROVAL OF REGULATORY BODIES; LEGENDS. The
Company will have the right to withhold from payments otherwise due and owing to
the Recipient or his beneficiary or to require the Recipient or his beneficiary
to remit to the Company in cash upon demand an amount sufficient to satisfy any
federal (including FICA and FUTA amounts), state or local withholding tax
requirements at the time the Recipient or his beneficiary recognizes income for
federal, state or local tax purposes with respect to any Award under the Plan.
The Committee may grant Awards and the Company may deliver Shares under the
Plan only in compliance with all applicable federal and state laws and
regulations and the rules of all stock exchanges on which the Company's stock is
listed at any time. An Option is exercisable only if either (i) a registration
statement pertaining to the Shares to be issued upon exercise of the Option has
been filed with and declared effective by the Securities and Exchange Commission
and remains effective on the date of exercise, or (i) an exemption from the
registration requirements of applicable securities laws is available. The Plan
does not require the Company, however, to file such a registration statement or
to assure the availability of such exemptions. Any certificate issued to
evidence Shares issued under the Plan may bear such legends and statements, and
will be subject to such transfer restrictions, as the Committee deems advisable
to assure compliance with federal and state laws and regulations and with the
requirements of this Section 8. No Option may be exercised, and Shares may not
be issued under the Plan, until the Company has obtained the consent or approval
of every regulatory body, federal or state, having jurisdiction over such
matters as the Committee deems advisable.
Each person who acquires the right to exercise an Option or to ownership of
Shares by transfer, bequest or inheritance may be required by the Committee to
furnish reasonable evidence of ownership of the Option as
B-7
32
a condition to his exercise of the Option or receipt of Shares. In addition, the
Committee may require such consents and releases of taxing authorities as the
Committee deems advisable.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 ("1934 Act"), transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the 1934 Act, as such Rule
may be amended from time to time, or its successor under the 1934 Act. To the
extent any provision of the Plan or action by the Committee or the Company fails
to so comply, it will be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
9. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock occurs, the Committee will equitably adjust the
number and class of Shares for which Awards are authorized to be granted under
the Plan, the number and class of Shares then subject to Awards previously
granted to Employees under the Plan, and the price per Share payable upon
exercise of each Award outstanding under the Plan. To the extent deemed
equitable and appropriate by the Board, subject to any required action by
shareholders, any Award will pertain to the securities and other property to
which a holder of the number of Shares of stock covered by the Award would have
been entitled to receive in connection with any merger, consolidation,
reorganization, liquidation or dissolution.
10. LIABILITY OF THE COMPANY. Neither the Company nor any parent or
Subsidiary of the Company that is in existence or hereafter comes into existence
will be liable to any person for any tax consequences incurred by a Recipient or
other person with respect to an Award.
11. AMENDMENT AND TERMINATION OF PLAN. The Board may alter, amend, or
terminate the Plan from time to time without approval of the shareholders of the
Company. The Board may, however, condition any amendment on the approval of the
shareholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other laws applicable to the Company, the Plan,
Recipients or Eligible Persons. Any amendment, whether with or without the
approval of shareholders of the Company, that alters the terms or provisions of
an Award granted before the amendment (unless the alteration is expressly
permitted under the Plan) will be effective only with the consent of the
Recipient of the Award or the holder currently entitled to exercise the Award.
12. EXPENSES OF PLAN. The Company will bear the expenses of administering
the Plan.
13. DURATION OF PLAN. Awards may be granted under the Plan only during the
ten years immediately following the original effective date of the Plan.
14. NOTICES. All notices to the Company will be in writing and will be
delivered to Anthony L. Morrison, Esq., Vice President, Secretary and General
Counsel, Paxson Communications Corporation, 601 Clearwater Park Road, West Palm
Beach, Florida 33401. All notices to a Recipient will be delivered personally or
mailed to the Recipient at his address appearing in the Company's personnel
records. The address of any person may be changed at any time by written notice
given in accordance with this Section 14.
15. APPLICABLE LAW. The validity, interpretation, and enforcement of the
Plan are governed in all respects by the laws of Delaware and the United States
of America.
16. EFFECTIVE DATE. The effective date of the Plan will be the earlier of
(i) the date on which the Board adopts the Plan or (ii) the date on which the
Shareholders approve the Plan.
B-8
33
[FOLD AND DETACH HERE]
PROXY PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401-6233
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony L. Morrison and William L. Watson, or
either of them, as Proxies, each with the power to appoint his or her
substitute, and hereby authorizes them or their substitutes to represent and to
vote, as designated below, all the shares of stock of Paxson Communications
Corporation held of record by the undersigned on March 26, 2001, at the annual
meeting of stockholders to be held on May 1, 2001, or any adjournment thereof.
1. ELECTION OF CLASS I DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY (except as
marked to the contrary below)
To vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW)
Lowell W. Paxson, William E. Simon, Jr., Jeffrey Sagansky
2. PROPOSAL TO APPROVE AN INCREASE IN THE TOTAL NUMBER OF SHARES OF CLASS A
COMMON STOCK SUBJECT TO AWARDS UNDER THE COMPANY'S 1998 STOCK INCENTIVE PLAN
FROM 7,200,000 SHARES TO 9,803,292 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued and to be signed on other side)
34
[FOLD AND DETACH HERE]
(Continued from other side)
4. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL CLASS I DIRECTORS AND FOR PROPOSALS 2 AND 3.
Dated , 2001
------------------
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
PLEASE SIGN EXACTLY AS NAME APPEARS
BELOW. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. When
signing as attorney, as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.