EXHIBIT 10.4
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT is made
and entered into as of this 7th day of November, 2005, by and
between PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation
(the “ Company ”), and DEAN M. GOODMAN (“
Employee ”).
W I T N E S S
E T H :
WHEREAS, the Employee is currently
employed as the President and Chief Operating Officer of the
Company and the Company desires to enter into an agreement that
amends and supersedes Employee’s current employment agreement
and embodies the terms of such continued employment (this “
Agreement ”) and Employee desires to enter into this
Agreement and to accept such continued employment, subject to the
terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of
the promises and mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which are mutually acknowledged, the Company and Employee hereby
agree as follows:
Section 1. Definitions
.
(a) “ Accrued
Obligations ” shall mean (i) all accrued but unpaid
Base Salary through the date of termination of Employee’s
employment; (ii) any unpaid or unreimbursed expenses incurred
in accordance with Company policy, including amounts due under
Section 6 hereof to the extent incurred prior to termination
of employment; (iii) any benefits provided under the
Company’s employee benefit plans upon a termination of
employment, in accordance with the terms therein, including rights
to equity in the Company pursuant to any plan or grant, and
settlement of RSUs and exercise of Options in accordance with the
terms of this Agreement; (iv) any unpaid Annual Bonus in
respect to any completed fiscal year that has ended on or prior to
the date of termination of Employee’s employment; and
(v) rights to indemnification by virtue of Employee’s
position as an officer or director of the Company or its
subsidiaries and the benefits under any directors’ and
officers’ liability insurance policy maintained by the
Company, in accordance with its terms thereof.
(b) “ Affiliate
” shall mean, as to any Person, any other Person that
controls, is controlled by, or is under common control with, such
Person.
(c) “ Annual Bonus
” shall mean the bonus provided for in Section 4(b)
below.
(d) “ Auditor
” shall mean a nationally recognized United States public
accounting firm, jointly selected by the Company and Employee,
which has not, during the two years preceding the date of its
selection, acted in any way on behalf of the Company or its
Affiliates. If Employee and the Company cannot agree on the firm to
serve as the Auditor, then Employee and the Company shall each
select one accounting firm and those two firms shall jointly select
the accounting firm to serve as the Auditor.
(e) “ Base Salary
” shall mean the salary provided for in Section 4(a) or any
increased salary granted to Employee pursuant to Section 4(a)
below.
(f) “ Board
” shall mean the Board of Directors of the Company.
(g) “ Cause
” shall mean (i) act or acts of willful misconduct by
Employee in connection with Employee’s employment duties,
which result in material and demonstrable injury to the Company;
(ii) embezzlement or other financial fraud committed by
Employee; or (iii) Employee’s conviction of, admission
to, or entry of pleas of no contest to, any felony.
(h) “ Change in
Control ” shall mean (i) a sale by NBC Palm Beach
Investment II, Inc. (the “ Call Option Holder ”)
of that portion of the preferred stock of the Company owned by the
Call Option Holder that, if converted into shares of common stock
of the Company, would equal a majority of the voting stock of the
Company, and the conversion of such preferred stock into voting
securities then entitled to vote; (ii) a change in ownership
or control of the Company effected through a transaction or series
of transactions whereby any “person” or related
“group” of “persons” (as such terms are
used in Sections 13(d) and 14(d)(2) of the Exchange Act), other
than an Affiliate of the Company, directly or indirectly acquires
“beneficial ownership” (within the meaning of
Rule 13d-3 under the Exchange Act) of voting securities then
entitled to vote of the Company possessing more than fifty percent
(50%) of the total combined voting power of the Company’s
securities outstanding immediately after such acquisition;
(iii) the sale or conveyance of all or substantially all of
the assets of the Company; (iv) during any consecutive
two-year period, individuals who at the beginning of such period
constituted the Board (together with any new directors whose
election by the Board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of
the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board then in office; or (v) any
other transaction or event resulting in Lowell Paxson no longer
being the single voting majority shareholder of the Company.
(i) “ Code ”
shall mean the Internal Revenue Code of 1986, as amended.
(j) “ Commencement
Date ” shall mean November 7, 2005.
(k) “ Common Stock
” shall mean the Class A common stock of the Company,
par value $0.001 per share.
(l) “ Company
” except as otherwise expressly set forth herein, shall have
the meaning set forth in the preamble hereto.
(m) “ Competitive
Activities ” shall mean any business activities, other
than radio broadcasting activities, which are in direct competition
with the Company’s main line of business, terrestrial
television broadcasting in the United States of America.
(n) “ Confidential
Information ” shall have the meaning set forth in Section
9(a) below.
(o) “ Disability
” shall mean any physical or mental disability or infirmity
that results in Employee being “Disabled” within the
meaning of Section 409A(a)(2)(C)(i) of the Code. Any question
as to the existence, extent or potentiality of Employee’s
Disability upon which Employee and the Company cannot agree shall
be determined by a qualified, independent physician mutually agreed
upon by the Company and Employee. If Employee and the Company
cannot agree on such physician, then Employee and the Company shall
each select one physician and those physicians shall jointly select
the physician to make such determination. The determination of any
such physician shall be final and conclusive for all purposes of
this Agreement.
(p) “ Employee
” shall have the meaning set forth in the preamble
hereto.
(q) “ Exchange Act
” shall mean the Securities Exchange Act of 1934, as
amended.
(r) “ Fair Market
Value ” shall mean the average closing price per share of
Common Stock on the American Stock Exchange during the ten
(10) trading day period immediately preceding the Commencement
Date (for purposes of determining the exercise price of the FMV
Options).
(s) “ FMV Options
” shall have the meaning set forth in Section 4(e) below.
(t) “ Good Reason
” shall mean, without Employee’s consent, (i) any
material diminution in Employee’s duties, responsibilities,
reporting relationship or authorities, including, without
limitation, any failure by the Company to nominate Employee for
election to serve on the Board; (ii) any reduction in Base
Salary or target Annual Bonus opportunity; (iii) the
relocation of Employee’s principal place of employment to a
location more than thirty (30) miles from the location set
forth in Section 3(c) below; or (iv) any breach by the Company
of any material provision of this Agreement which the Company fails
to fully cure within fifteen (15) days from receipt of written
notice setting forth the specifics of such breach. Notwithstanding
the foregoing, Employee and the Company agree that the following
events shall not constitute Good Reason: (i) the failure of
Employee to be elected to the Board after having been nominated by
the Company to serve on the Board, and (ii) any modification
to Employee’s duties, responsibilities, reporting
relationship or authorities that results in Employee having reduced
or no responsibility for the Legal, Finance and/or Programming
operations of the Company and its subsidiaries.
(u) “ New Call
Option ” shall mean the new option to purchase a
controlling interest in the Company granted to the Call Option
Holder pursuant to that certain Call Agreement, dated as of
November 7, 2005, by and among Mr. Lowell W. Paxson,
Second Crystal Diamond Limited Partnership, and Paxson Enterprises,
Inc. and the Call Option Holder.
(v) “ Options
” shall have the meaning set forth in Section 4(e) below.
(w) “ Parachute Excise
Tax ” shall mean any tax imposed under Section 4999
of the Code or any similar tax that may hereafter be imposed.
(x) “ Payment
” shall mean any payment or benefit made or provided to
Employee under this Agreement or under any other plan, program or
agreement of the Company or its Affiliates.
(y) “ Person
” shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust (charitable or non-charitable), unincorporated
organization or other form of business entity.
(z) “ Restricted
Area ” means any Nielsen Designated Market Area within
the United States of America or any other jurisdiction in which the
Company or its subsidiaries engage (or has committed plans to
engage) in the television broadcasting business during the Term of
Employment, or, following termination of Employee’s
employment, was engaged in such business (or had committed plans to
engage) at the time of such termination of employment.
(aa) “ Restricted
Period ” shall mean the period commencing on the
Commencement Date and ending on the second anniversary of
Employee’s termination of employment hereunder for any
reason.
(bb) “ RSUs
” shall have the meaning set forth in Section 4(d) below.
(cc) “ Severance
Amount ” shall mean (i) in the event of
Employee’s termination of employment with the Company by
reason of his death or Disability, the amount of his annual Base
Salary as in effect at the time of such termination, and
(ii) in the event of Employee’s termination of
employment by the Company without Cause or by Employee with Good
Reason, or upon expiration of the Term of Employment following the
Company’s failure to make the bona fide renewal offer
described in Section 7(g), an amount equal to four (4.0) times
his annual Base Salary as in effect at the time of such
termination.
(dd) “ Severance
Term ” shall mean the two (2) year period following
the date of Employee’s termination of employment
hereunder.
(ee) “ Stockholder
Agreement ” shall mean the Amended and Restated
Stockholder Agreement Dated as of November 7, 2005 among the
Company, NBC Universal, Inc., Mr. Lowell W. Paxson, Second
Crystal Diamond Limited Partnership and Paxson Enterprises,
Inc.
(ff) “ Target
EBITDA ” shall mean such Earnings before Interest, Taxes,
Depreciation and Amortization, as developed by the management of
the Company in connection with the annual budget process and
reviewed and approved by the Compensation Committee of the Board
annually prior to the commencement of the second fiscal quarter of
the fiscal year to which the Target EBITDA relates. For fiscal year
2005, Target EBITDA shall be determined in the manner set forth in
the resolutions of the Compensation Committee of the Board dated
June 10, 2005.
(gg) “ Term of
Employment ” shall mean the period specified in
Section 2 below.
Section 2. Acceptance and
Term of Employment .
The Company agrees to continue to
employ Employee and Employee agrees to continue to serve the
Company on the terms and conditions set forth herein. The Term of
Employment shall commence on the Commencement Date and shall
continue, subject to Section 7 hereof, through the third (3rd)
anniversary of the Commencement Date. The Agreement shall be
automatically renewed for one-year terms upon expiration of the
Term of Employment, unless either the Company or Employee provides
the other party with written notice of non-renewal not later than
four (4) months prior to the expiration of the Term of
Employment or expiration of the current one-year renewal
period.
Section 3. Position, Duties
and Responsibilities; Place of Performance .
(a) During the Term of
Employment, Employee shall be employed and serve as the President
and Chief Operating Officer of the Company and shall have such
duties typically associated with such title, including, without
limitation, supervising operations and management of the Company
and its subsidiaries. Employee shall continue to serve on the Board
as of the Commencement Date, and shall be nominated by the Company
to serve as a member of the Board after his current term on the
Board expires and as necessary thereafter to allow Employee to
serve on the Board during the Term of Employment, in each case,
without additional compensation. Employee also agrees to serve as
an officer and/or director of the Company or any subsidiary of the
Company, in each case without additional compensation. Employee
shall report directly to the Chief Executive Officer. Employee
agrees to comply with any of the Company’s written policies,
including payola, plugola and conflicts of interest.
Notwithstanding the foregoing, in addition to the duties and
responsibilities set forth in this Section 3(a), Employee
shall have the duties and responsibilities of the principal
executive officer of the Company only for that period beginning on
the Commencement Date and ending immediately after the complete and
final filing of the Company’s Form 10-Q for the fiscal
quarter ended September 30, 2005.
(b) Subject to the terms and
conditions set forth in this Agreement, Employee shall devote his
full business time, attention, and efforts to the performance of
his duties under this Agreement and shall not engage in any other
business or occupation during the Term of Employment, including,
without limitation, any activity that (x) conflicts with the
interests of the Company or its subsidiaries, (y) interferes
with the proper and efficient performance of his duties for the
Company, or (z) interferes with the exercise of his judgment
in the Company’s best interests. Notwithstanding the
foregoing, nothing herein shall preclude Employee from
(i) serving, with the prior written consent of the Board, as a
member of the board of directors or advisory boards (or their
equivalents in the case of a non-corporate entity) of non-competing
businesses, (ii) engaging in charitable activities and
community affairs, including serving as a member of the board of
directors or advisory boards of charitable organizations, industry
trade associations, condominiums or cooperatives, and
(iii) subject to the terms and conditions set forth in
Section 9 hereof, managing his personal investments and
affairs; provided , however , that the activities set
out in clauses (i), (ii) and (iii) shall be limited by
Employee so as not to materially interfere, individually or in the
aggregate, with the performance of his duties and responsibilities
hereunder. Provided that such activities do not materially
interfere with Employee’s duties for the Company, Employee
shall be permitted to (A) continue acting as Managing Partner
for Oak Feed Real Estate, LLC (a real estate holding company) and
for Aquatic Carpenter LLC (a boat and auto holding company), and
(B) invest in one or more radio stations and to serve as a
member of the board of directors (or other governing body) of any
such radio stations.
(c) Employee’s principal
place of employment shall be in West Palm Beach, Florida, although
Employee understands and agrees that he may be required to travel
from time to time for business reasons.
Section 4. Compensation
. During the Term of Employment, Employee shall be entitled to the
following compensation:
(a) Base Salary .
Employee shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of
not less than $800,000, subject to increase, if any, as may be
determined by the Chief Executive Officer and approved in writing
by the Compensation Committee of the Board, but not to decrease
from the then current Base Salary.
(b) Annual Bonus .
Employee shall be entitled to an annual incentive bonus award equal
to a maximum amount of one hundred percent (100%) of Base Salary in
respect of each fiscal year during the Term of Employment (the
“ Annual Bonus ”). Sixty-five percent (65%) of
the Annual Bonus shall be payable based upon achievement of Target
EBITDA of the Company for each such fiscal year, and thirty-five
percent (35%) of the Annual Bonus shall be payable based upon
achievement of other individual performance objectives or such
other mix of metrics as may be mutually agreed to by the
Compensation Committee of the Board and Employee from time to time
in the future. The maximum percentage of Base Salary payable as an
Annual Bonus pursuant to this subsection 3(b) (currently 100%) may
be increased in future fiscal years at the discretion of the Board,
but shall not be decreased below 100% of Base Salary. The Annual
Bonus shall be paid to Employee at the same time as annual bonuses
are generally payable to other senior executives of the Company,
but in no event later than the date which is two and one-half (2
1/2 ) months following the end
of the fiscal year to which such Annual Bonus relates.
Notwithstanding anything to the
contrary contained herein, the Annual Bonus described hereunder
shall be effective for fiscal year 2006 and the Annual Bonus terms
effective for Employee for fiscal year 2005 as set forth in any
superseded employment agreement or other arrangement, shall remain
effective and are hereby incorporated herein in their entirety.
Such Annual Bonus for fiscal year 2005 shall be determined based on
Employee’s Base Salary actually paid during 2005, as opposed
to the level of Base Salary in effect at the beginning or at the
end of such fiscal year.
With respect to the sixty five
percent (65%) of the Annual Bonus payable based upon achievement of
Target EBITDA, the Company shall provide for partial payment of
such bonus in the event Target EBITDA is not met for the 2005
fiscal year and future fiscal years (but a specified percentage of
Target EBITDA is attained) in a manner no less favorable than the
methodology adopted by the Compensation Committee of the Board in
its resolutions dated June 10, 2005.
(c) Signing and Retention
Bonus . Upon the execution of this Agreement, the Company shall
pay Employee a lump-sum amount equal to $1,500,000. Employee shall
also be entitled to a retention bonus pursuant to the Company
executive retention bonus plan adopted by the Board on
October 14, 2005. Such retention bonus shall be determined
based on Employee’s Base Salary in effect at the end of the
fiscal year 2005.
(d) Restricted Stock
Units . Effective as of the Commencement Date, Employee shall
be granted 333,333 restricted stock units (the “ RSUs
”) with a purchase price of $0.01 per RSU, where each RSU
notionally represents one share of Common Stock. Twenty-five
percent (25%) of the RSUs shall vest on each of the eighteenth (18
th ) month, twenty-fourth (24 th ) month,
thirty-sixth (36 th ) month and forty-eighth (48
th ) month anniversaries of the Commencement Date,
subject to Employee’s continued employment through the
applicable vesting date and acceleration of vesting upon
termination of employment hereunder as provided in Section 7
hereof. Vested RSUs shall be settled by payment of the purchase
price and delivery of the number of shares of Common Stock
underlying such vested RSUs upon the earlier to occur of
(i) Employee’s termination of employment hereunder for
any reason, or (ii) upon the forty-eighth (48 th )
month anniversary of the Commencement Date; provided ,
however , Employee may satisfy the purchase price and the
minimum statutory tax withholding obligation associated with the
settlement of the RSUs by having the Company withhold shares of
Common Stock otherwise deliverable to him upon such settlement.
(e) Stock Options .
Effective as of the Commencement Date, Employee shall be granted
options to purchase an aggregate of 666,667 shares of Common Stock
(the “ Options ”). Options covering 333,334
shares of Common Stock (the “ FMV Options ”)
shall have an exercise price per share equal to Fair Market Value,
and the remaining Options covering 333,333 shares of Common Stock
shall have an exercise price equal to $1.25 per share. The Options
shall vest in equal installments on each of the eighteenth (18
th ) month, twenty-fourth (24 th ) month,
thirty-sixth (36 th ) month and forty-eighth (48
th ) month anniversaries of the Commencement Date,
subject to Employee’s continued employment through the
applicable vesting date and acceleration of vesting upon
termination of employment hereunder as provided in Section 7
hereof. The Options shall expire on the seventh (7 th )
anniversary of the Commencement Date, subject to earlier expiration
upon termination of Employee’s employment, as follows:
(i) Upon
Employee’s termination of employment by reason of
Employee’s death or Disability, vested Options shall expire
on the forty-eight (48) month anniversary of the date of such
termination;
(ii) Upon
Employee’s termination of employment (A) by the Company
without Cause, or (B) by Employee with Good Reason, vested Options
shall expire on the forty-eight (48) month anniversary of the
date of such termination ;
(iii) Upon
expiration of the Term of Employment following the Company’s
failure to make a bona fide renewal offer to Employee as described
in Section 7(g), vested Options shall expire on the forty
eight (48) month anniversary of the date of such
termination;
(iv) Upon
Employee’s termination of employment for any reason not
described in subsections (i), (ii) or (iii) above, vested
Options shall expire ninety (90) days following the date of
such termination.
Employee may satisfy the applicable exercise price and any
minimum statutory tax withholding obligation associated with the
exercise of the Options by having the Company withhold shares of
Common Stock otherwise deliverable to him upon such exercise.
(f) Additional RSUs .
Effective as of the Commencement Date, Employee shall be granted an
additional 1.0 million RSUs, with a purchase price of $0.01
per RSU, under the Paxson Communications Corporation 1998 Stock
Incentive Plan (the “ Plan ”). Twenty percent
(20%) shall vest on each of the twelve (12) month, twenty-four
(24) month, thirty-six (36) month, forty-eight
(48) month and sixty (60) month anniversaries of the
Commencement Date, subject to acceleration of vesting upon
termination of employment hereunder as provided in Section 7
hereof. Such RSUs, to the extent vested, shall be settled by
payment of the purchase price and delivery of the number of shares
of Common Stock underlying such vested RSUs upon the earlier to
occur of (i) Employee’s termination of employment hereunder
for any reason, or (ii) upon the sixty (60) month
anniversary of the Commencement Date; provided ,
however , Employee may satisfy the purchase price and the
minimum statutory tax withholding obligation associated with
settlement of the RSUs by having the Company withhold shares of
Common Stock otherwise deliverable to him upon such settlement.
(g) Restrictions on Common
Stock; Voting Agreement . The RSUs and the Options shall be
documented in award agreements. No provision of any such award
agreement, or of any plan document under which such awards are
made, shall contravene, limit, reduce or otherwise adversely affect
any rights of Employee under this Agreement, and in the event of
any inconsistency between this Agreement and any such award
agreement or plan document, the provisions of this Agreement shall
govern. Notwithstanding the foregoing, each such award agreement
shall provide that shares of Common Stock acquired upon settlement
of RSUs and/or exercise of Options shall be subject to the
transferability and voting restrictions attached hereto as
Schedule A . Employee shall be entitled to the RSU and
Option awards described in this Agreement (subject to the
transferability and voting restrictions described in
Schedule A ) notwithstanding any delay or failure to
document such awards in formal award agreements.
In addition, and notwithstanding any
provision set forth in this Agreement or any applicable equity
compensation plan or agreement, in the event that the Call Option
Holder, or its permitted transferee, as applicable, is obligated to
commence or does commence a tender offer for all or any part of the
Company’s equity securities within 18 months of the date
hereof as contemplated under the Stockholder Agreement (a “
Tender Offer ”), Employee hereby agrees (i) not
to participate in and/or to tender any shares of Common Stock
received by Employee upon any prior exercise of Options or
settlement of RSUs into any such Tender Offer, and (ii) prior
to the earlier of (A) the closing of such Tender Offer or
(B) sixty (60) days following the commencement of such
Tender Offer, not to transfer any such shares to any Person, except
pursuant to a testamentary instrument or the laws of descent and
distribution, and then, only to a Person who shall agree to be
bound by the terms hereof to the same extent as Employee was bound.
No amendment to the Stockholder Agreement shall extend the
restriction period described in this paragraph.
Section 5. Employee
Benefits .
(a) General . During
the Term of Employment, Employee shall be entitled to participate
in any current and future health insurance, retirement and other
perquisites and benefits on a basis no less favorable than made
available to other senior executives of the Company from time to
time. Employee shall also be entitled to a number of holida
