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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
METRO NETWORKS, INC.
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
591918 10 7
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(CUSIP Number)
Gary L. Worobow, Esq.
Metro Networks, Inc.
681 Fifth Avenue, 10th Floor
New York, New York 10022
212-832-9500
--------------------------------
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
October 18, 1996
-----------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /
Page 1 of 6 pages
Exhibit Index on page 7
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SCHEDULE 13D
CUSIP No. 591918 10 7 Page 2 of 6 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David I. Saperstein
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF/00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES 8,300,357
BENEFICIALLY 8 SHARED VOTING POWER
OWNED None
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 8,300,357
PERSON WITH 10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,300,357
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.1%
14 TYPE OF REPORTING PERSON
IN
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this statement on Schedule 13D
relates is the common stock, $.001 par value (the "Common Stock"), of Metro
Networks, Inc., a Delaware corporation (the "Issuer"). The principal executive
offices of the Issuer are located at 2800 Post Oak Boulevard, Suite 4000,
Houston, Texas 77056.
ITEM 2. IDENTITY AND BACKGROUND.
(a) David I. Saperstein (the "Reporting Person").
(b) The Reporting Person's principal business address is 2800 Post
Oak Boulevard, Suite 4000, Houston, Texas 77056.
(c) The present principal occupation of the Reporting Person is
Chairman of the Board and Chief Executive Officer of the Issuer.
(d), (e) During the last five years, the Reporting Person has neither
been convicted in a criminal proceeding nor been a party to a civil proceeding
as a result of which it or he is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws.
(f) The Reporting Person is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Reporting Person acquired 200 shares of Common Stock for $40.00 in
cash on May 31, 1996 in connection with the formation of the Issuer. The other
8,300,157 shares of Common Stock reported herein were acquired by the Reporting
Person on October 18, 1996 in connection with a tax free reverse subsidiary
merger (the "Merger") of Metro Traffic Control, Inc. ("Traffic"), a majority
of the stock of which was held by the Reporting Person, and Metro Networks
Acquisition, Inc., a wholly owned subsidiary of the Issuer. Pursuant to the
terms of the Merger, the Reporting Person's entire equity interest in Traffic
was [effectively] converted into the right to receive 8,300,157 shares of Common
Stock of the Issuer and 2,549,750 shares of Series A Convertible Preferred Stock
(the "Preferred Stock") of the Issuer. See Item 5.
On October 16, 1996, the Reporting Person entered into a Stock Loan
and Pledge Agreement (the "Issuer Loan Agreement") with the Issuer, pursuant to
which the Reporting Person borrowed 2,549,750 shares of Common Stock from the
Issuer (the "Issuer Stock Loan"). As consideration for the Issuer Stock Loan,
the Reporting Person pledged the Preferred Stock he acquired in the Merger, paid
an upfront loan transaction fee of $2,550 and agreed to pay an
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annual fee over the term of the loan of 0.1% of the average fair market value of
such loaned shares during the five day period following the Issuer's initial
public offering (the "IPO") which commenced on October 17, 1996. In addition,
on October 16, 1996 the Reporting Person entered into five Stock Loan and Pledge
Agreements (the "Trust Loan Agreements") with, respectively, the Michelle Joy
Coppola 1994 Trust, the Jennifer Beth Saperstein 1994 Trust, the Jonathan
Alexander Saperstein 1994 Trust, the Alexis Daniella Saperstein 1994 Trust and
the Stefanie Nicole Saperstein 1994 Trust (such Trusts, collectively, the
"Trusts"), pursuant to which the Reporting Person borrowed an aggregate of
1,050,250 shares of Common Stock from the Trusts (the "Trust Stock Loans"). As
consideration for the Trust Stock Loans, the Reporting Person pledged an
aggregate of 1,050,250 shares of the Common Stock he acquired in the Merger and
agreed to pay an annual fee over the term of the loan of 0.1% of the average
fair market value of such loaned shares during the preceding twelve month
period, except for the period ending December 31, 1996, for which the fee
shall be 0.1% of the average fair market value of such loaned shares during
the five day period following the IPO. All 3,600,000 of such borrowed shares
were sold by the Reporting Person in the IPO for $16.00 per share. See Item 5.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Person acquired the shares of Common Stock reported
herein solely for investment purposes.
(a), (e) By its terms, each share of Preferred Stock is convertible
with no premium into one share of Common Stock at the option of the holder.
However, the Preferred Stock has been pledged to the Issuer by the Reporting
Person in connection with the Issuer Stock Loan pursuant to the Issuer Loan
Agreement. Under the Issuer Loan Agreement, the Reporting Person may not
convert the Preferred Stock into Common Stock prior to repaying the Issuer Stock
Loan. The Issuer Stock Loan may be repaid only by either delivering to the
Issuer the Preferred Stock or acquiring 2,549,750 shares of Common Stock in the
open market and delivering such Common Stock to the Issuer. The Reporting
Person has no plans at this time to repay the Issuer Stock Loan and convert the
Preferred Stock. See Items 3 and 5.
(b), (c), (d), (f), (g), (h), (i) and (j)
Not applicable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Person beneficially owns an aggregate of 8,300,357
shares of Common Stock, constituting 50.1% of the total class.
The shares of Common Stock reported herein as beneficially owned by
the Reporting Person do not include an aggregate of 1,050,250 shares of Common
Stock held by the Trusts, the beneficiaries of which are the children of the
Reporting Person. The Reporting Person disclaims beneficial ownership of such
shares. In addition, the shares of Common Stock reported herein as beneficially
owned by the Reporting Person do not include the Preferred Stock owned by the
Reporting Person and pledged to the Issuer pursuant to the Issuer Loan
agreement. The Preferred
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Stock has not been included in this item 5(a) and item 5(b) because it can only
be converted into Common Stock upon repayment of the Issuer Stock Loan. See
Item 4.
(b) The Reporting Person has sole voting and dispositive power as to
8,300,357 shares of Common Stock. See Item 4 and Item 5(a).
(c) Other than as provided herein, no transactions in the Common
Stock were effected during the past sixty days by the Reporting Person. See Item
3.
(d) Under the terms of the Issuer Loan Agreement, so long as the
Issuer Stock Loan is outstanding, the Issuer is entitled to receive
distributions, if any, from the 2,549,750 shares of Common Stock loaned to the
Reporting Person. Under the terms of each of the Trust Loan Agreements between
the Reporting Person and the Trusts, so long as the Trust Stock Loans are
outstanding, the Trusts are entitled to receive distributions, if any, from the
1,050,250 shares of Common Stock loaned, in the aggregate, to the Reporting
Person.
(e) Not applicable.
ITEM 6. CONTRACTS ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Items 3, 4(a) and (e) and 5(a) and (d).
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(i) Stock Loan and Pledge Agreement, dated as of October 16, 1996,
between Metro Networks, Inc. and David I. Saperstein.
(ii) Stock Loan and Pledge Agreement, dated as of October 16, 1996,
between Michelle Joy Coppola 1994 Trust and David I.
Saperstein.(1)
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Except for the names of the parties, the four other Trust Loan Agreements are
identical to the Trust Loan Agreement filed herewith and accordingly are not
being filed.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 28, 1996
/s/ David I. Saperstein
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David I. Saperstein
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EXHIBIT INDEX
(i) Stock Loan and Pledge Agreement, dated as of October 16, 1996,
between Metro Networks, Inc. and David I. Saperstein.
(ii) Stock Loan and Pledge Agreement, dated as of October 16, 1996,
between Michelle Joy Coppola 1994 Trust and David I. Saperstein.
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STOCK LOAN AND PLEDGE AGREEMENT
DATED AS OF OCTOBER 16, 1996
BETWEEN
METRO NETWORKS, INC.
AND
DAVID I. SAPERSTEIN
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TABLE OF CONTENTS
STOCK LOAN AND PLEDGE AGREEMENT
PAGE
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1. Loan of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Delivery of Collateral Securities . . . . . . . . . . . . . . . 1
2.2 Grant of Security Interest . . . . . . . . . . . . . . . . . . . 1
3. Obligations of Lender; Distributions. . . . . . . . . . . . . . . . . 2
3.1 Obligations of the Lender with Respect to the Collateral . . . . 2
3.2 Right of Borrower in Respect of Loaned Securities. . . . . . . . 2
3.3 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Term of Loan; Return of Loaned Securities . . . . . . . . . . . . . . 3
4.1 Term of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Return of Loaned Securities . . . . . . . . . . . . . . . . . . 3
5. Loan Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Remedies of Lender . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1 Rights of Secured Creditor . . . . . . . . . . . . . . . . . . . 5
7.2 Calculation of Unpaid Remedy Amount . . . . . . . . . . . . . . 5
7.3 Setoffs of Collateral . . . . . . . . . . . . . . . . . . . . . 6
7.4 No Counterclaim, Waiver, etc. . . . . . . . . . . . . . . . . . 6
7.5 No Rights Against Transferees. . . . . . . . . . . . . . . . . . 7
8. Transfer Taxes and Other Costs of Transfer . . . . . . . . . . . . . 7
9. Representations, etc. of Lender and Borrower . . . . . . . . . . . . 7
9.1 Representations of Lender . . . . . . . . . . . . . . . . . . . 7
9.2 Representations, Warranties and Covenants of the Borrower . . . 7
10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Payments, Deliveries, Notices . . . . . . . . . . . . . . . . . . . . 8
12. Deliveries to Custodian; Lender's Right to Appoint Agents . . . . . . 9
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13. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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STOCK LOAN AND PLEDGE AGREEMENT
STOCK LOAN AND PLEDGE AGREEMENT, dated as of October 16, 1996 (the
"AGREEMENT"), between Metro Networks, Inc. (the "LENDER") and David I.
Saperstein (the "BORROWER"). Capitalized terms used herein and not otherwise
defined are used as defined in Section 13.
The Lender and the Borrower agree as follows:
1. LOAN OF SHARES. Subject to the terms and conditions hereof, the
Lender agrees to lend (the "LOAN") to the Borrower and the Borrower agrees to
borrow from the Lender on the date hereof (the "LOAN DATE") 2,549,750 shares
of Common Stock (the "LOANED SHARES") of Metro Networks, Inc., a Delaware
corporation (the "COMPANY"), represented by the stock certificates identified
on Schedule A attached hereto, together with all securities which are
distributed by the Company with respect to the Loaned Shares, or are received
in exchange for the Loaned Shares in connection with a merger,
recapitalization or reorganization involving the Company (collectively, the
"LOANED SECURITIES"). The transfer of the Loaned Shares from the Lender to
the Borrower shall be reflected on the share register of the Company.
2. COLLATERAL.
2.1 DELIVERY OF COLLATERAL SECURITIES. The Borrower is concurrently
delivering to the Custodian a number of shares of Series A Convertible
Preferred Stock of the Company equal to the number of Loaned Shares (the
"PLEDGED SHARES"), represented by the stock certificates identified on
Schedule B attached hereto, and shall deliver the upfront fee set forth in
Section 5 hereof. The Pledged Shares shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Lender and the Custodian.
2.2 GRANT OF SECURITY INTEREST. To secure the due and punctual
performance of the obligations of the Borrower under this Agreement, the
Borrower hereby grants to the Lender a first lien on and security interest in
the Pledged Shares and all securities which are distributed by the Company
with respect thereto, or are received in exchange for any of the foregoing in
connection with a merger, recapitalization or reorganization involving the
Company (collectively the "COLLATERAL SECURITIES"), PROVIDED that Collateral
Securities shall not include any securities returned to the Borrower pursuant
to Section 3.1 or 4.2. The Borrower recognizes that the Collateral
Securities will
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be held by, or on the books and records of, the Custodian or other agents of
the Lender or one or more financial intermediaries to perfect the Lender's
security interest therein. Except for the security interests granted hereby,
the Borrower shall not create or suffer to exist any security interest, lien
or encumbrance in respect of any Collateral Securities.
3. OBLIGATIONS OF LENDER; DISTRIBUTIONS.
3.1 OBLIGATIONS OF THE LENDER WITH RESPECT TO THE COLLATERAL. The
Lender shall cause the Custodian to record on its books all Collateral
Securities delivered to it, and to keep the Collateral Securities
identifiable. The Lender shall cause the Custodian not to commingle the
Collateral Securities with the Custodian's or the Lender's other assets or
assets of the Custodian's other custodial clients or any collateral delivered
by other borrowers. The Lender shall not, and shall cause the Custodian not
to, use, invest, transfer, lend or pledge the Collateral Securities, except
as permitted by Section 7.1 or 7.3. The Lender shall cause the Custodian to
vote the Collateral Securities in accordance with the instructions of the
Borrower, so long as no Event of Default has occurred and is continuing.
Except as otherwise expressly provided herein, the sole obligations of
the Lender in respect of the Collateral Securities are to return to the
Borrower all Collateral Securities at the termination of the Loan, in
accordance with and subject to the provisions of Section 4.2 (against return
of the Loaned Securities), and, so long as no Event of Default has occurred
and is continuing, to pay over or deliver to the Borrower, in accordance with
its instructions to the Lender, all Distributions received by the Custodian
with respect to Collateral Securities.
3.2 RIGHT OF BORROWER IN RESPECT OF LOANED SECURITIES. Except as set
forth in Section 3.3, until the Loaned Securities are required to be
redelivered to the Lender upon termination of the Loan, the Borrower shall
have all the incidents of ownership of the Loaned Securities, including the
right to transfer the Loaned Securities to others and to have the Loaned
Securities transferred to any person on the share register of the Company,
including, without limitation, in connection with an initial public offering
of the Common Stock, but in the event the Borrower shall so transfer the
Loaned Securities to any other person, the Borrower shall not be relieved of
its obligations under Section 4.2 to return the Loaned Securities (or an
equivalent quantity of securities of the same class and issuer). The Lender
hereby waives the right to vote or to provide any consent or to take any
similar action with respect to the Loaned
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Securities in the event that the record date or deadline for such vote,
consent or other action falls during the term of the Loan.
3.3 DISTRIBUTIONS. If any Distribution on any Loaned Securities shall
be made, and the record or other date for determining the security holders
entitled to receive such Distribution shall be on or after the delivery of
such Loaned Securities to the Borrower and any necessary registration of
transfer in connection therewith, but before the return of such Loaned
Securities to the Lender and any necessary registration of transfer in
connection therewith, the Borrower shall on the date for such distribution,
and whether or not the same is actually received by the Borrower, pay to the
Custodian for the benefit of the Lender such cash, and shall deliver to the
Custodian for the benefit of the Lender such property (other than
securities), as shall have been included in such Distribution. Any
securities included in a distribution shall be added to the Loaned Securities
on the date for such distribution and shall thereupon for all purposes
constitute Loaned Securities delivered under the Loan.
4. TERM OF LOAN; RETURN OF LOANED SECURITIES.
4.1 TERM OF LOAN. The Loan shall terminate on the first to occur of
(a) three business Days after written or telephone notice of demand,
given to the Borrower by the Lender or the Custodian, for the return of any
Loaned Securities;
(b) any termination of the Loan pursuant to Section 6; and
(c) the tenth anniversary of the date hereof.
4.2 RETURN OF LOANED SECURITIES. Upon termination of the Loan, the
Borrower shall deliver the Loaned Securities (or an equivalent quantity of
securities of the same class and issuer) to the Custodian, together with all
Distributions thereon (i) which shall not have previously been paid over to
the Custodian pursuant to Section 3.3 and (ii) with respect to which the
record or other date for determining the security holders entitled to receive
payment or distribution thereof shall have occurred prior to the return of
the Loaned Securities (or such equivalent securities) to the Custodian and
any necessary registration of transfer in connection therewith, except that
if any such Distributions shall not have been made prior to such time, the
Borrower shall deliver such distributions to the Custodian immediately upon
the making thereof, whether or not the
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same is actually received by the Borrower. Delivery of Loaned Securities (or
such equivalent securities) by the Borrower in accordance with the first
sentence of this Section 4.2 shall be made against return of Collateral
Securities to the Borrower, PROVIDED, HOWEVER, that if an Event of Default
shall have occurred and be continuing, such Collateral Securities shall not
be returned to the Borrower, despite the return of such Loaned Securities (or
such equivalent securities), and all Collateral Securities shall be subject
to all of the terms and conditions hereof until such Event of Default shall
have been cured or waived.
5. LOAN FEE. In consideration of the Loan, the Borrower shall pay to
the Lender during the term of the Loan annually on each anniversary date of
this Agreement and on any termination of the Loan pursuant to Section 4.1, an
annual loan fee (the "LOAN FEE") equal to 0.10% of the average Value of the
Loaned Securities during the five day trading period (E.G., any day on which
trading takes place in the NASDAQ national market) following the Loan Date.
One-half of this fee will be paid on an annual basis and one-half will be
paid upon the termination of the Loan but the deferred portion shall only be
payable if such termination occurs pursuant to Section 4.1(b) or (c) hereof.
In the event of a termination pursuant to Section 4.1(b), the Loan Fee shall
be prorated on the basis of the number of months (including any portion of a
month) that have elapsed since the Loan Date or the date of the immediately
preceding payment of a portion of the Loan Fee. In addition, the Borrower
will pay the Lender an upfront fee of $2,550 payable on the date hereof.
6. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur,
(a) the Borrower shall fail in any material respect to perform or
observe any term hereof; or
(b) any representation or warranty made by the Borrower herein shall
have been untrue when made in any material respect and the Lender notifies
the Borrower that such untruth is to constitute an Event of Default; or
(c) the Borrower shall (i) file, or consent by answer or otherwise to
the filing against it of, a petition for relief, reorganization,
rehabilitation, arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency or
rehabilitation law of any jurisdiction, (ii) make an assignment for the
benefit of creditors,
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(iii) consent to the appointment of a custodian, receiver, trustee,
rehabilitator or other officer with similar powers of either or both of
itself or of any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated or (v) take action for the purpose of any of the
foregoing; or
(d) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without the consent of the Borrower, a
custodian, receiver, trustee, rehabilitator or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or if any order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Borrower, or if any petition
for any such relief shall be filed against the Borrower
then, unless otherwise specified by the Lender to the Borrower in writing,
the Loan shall terminate immediately without any further notice by the Lender.
7. REMEDIES OF LENDER.
7.1 RIGHTS OF SECURED CREDITOR. If any Event of Default shall have
occurred and be continuing, the Lender shall have all the rights and
remedies, with respect to all Collateral Securities, of a secured party under
Articles 8 and 9 of the Uniform Commercial Code of the State of New York in
effect at that time and as otherwise provided by law, and, in addition, may,
at its sole option, exercise, or cause the Custodian to exercise on its
behalf, any one or more of the remedies described in Sections 7.3 and 7.4.
7.2 CALCULATION OF UNPAID REMEDY AMOUNT. If any Event of Default shall
have occurred and be continuing, the Borrower will pay in cash to the
Custodian the "Unpaid Remedy Amount", which shall be equal to the sum of the
following amounts:
(a) the Value as of such time of the Loaned Securities other than any
Loaned Securities (or their equivalent) previously returned to the Lender;
(b) all taxes, fines, penalties or interest incurred by the Lender,
the Custodian or any other agent of the Lender as a result of the
Borrower's failure to
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perform its obligations hereunder, including (without limitation) the
Borrower's obligation to return Loaned Securities (or equivalent
securities) as provided by Section 4.2;
(c) any unpaid Loan Fee or other unpaid amounts (in the form of cash
or otherwise) owing to the Lender under this Agreement;
(d) any amounts not included in clauses (a) through (c) of this
Section 7.2 which are owing pursuant to Section 3, 4, 5, 8 or 10; and
(e) interest on each of the foregoing amounts until payment thereof
in full has been made, to accrue daily at an annual rate equal to 2% above
the amount announced by Citibank, N.A. as its "prime" rate (its "PRIME
RATE"), as in effect from time to time (such rate to be adjusted
simultaneously with each change in such prime rate);
minus the aggregate Value of Collateral Securities absolute ownership of
which has been assumed by the Lender under Section 7.3 (which ownership is
not subject to any judicial or statutor y stay against enforcement).
7.3 SETOFFS OF COLLATERAL. If any Event of Default shall have occurred
and be continuing, including, but not limited to, the Borrower's failure to
return the Loaned Securities (or their equivalents) in accordance with
Section 4.2, the Lender or the Custodian may, at any time and in the Lender's
sole discretion, set off all or any portion of the Collateral Securities
against any Unpaid Remedy Amount (or a portion thereof) as of such time, by
assuming absolute ownership of all or a portion of the Collateral Securities,
and, at the discretion of the Lender, selling any or all of such Collateral
Securities and assuming absolute ownership of the proceeds, PROVIDED that the
Value of the Collateral Securities absolute ownership of which is so assumed
does not exceed the Unpaid Remedy Amount as of the time of such assumption of
ownership.
7.4 NO COUNTERCLAIM, WAIVER, ETC. The Lender's rights against the
Collateral Securities shall be absolute and subject to no counterclaim,
offset, recoupment, deduction or defense in favor of the Borrower, whether
such counterclaim, offset, recoupment, deduction or defense relates to the
Lender or the Custodian. No failure on the part of the Lender or the
Custodian to exercise, and no delay on its part in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by the Lender
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or the Custodian of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided herein are cumulative and are not exclusive of
any remedies provided by law.
7.5 NO RIGHTS AGAINST TRANSFEREES. In no event shall the Lender have
any rights against any transferee of the Loaned Securities (or any further
transferees thereof) or against any Loaned Securities so transferred. The
Borrower agrees that this Section 7.5 is for the benefit of transferees and
may be enforced thereby as if such transferees were parties to this Agreement.
8. TRANSFER TAXES AND OTHER COSTS OF TRANSFER. The Borrower shall be
responsible for, and shall pay or reimburse the Lender for, all transfer
taxes and other costs involved in all transfers of Loaned Securities or
Collateral Securities between the Lender or the Custodian, on the one hand,
and the Borrower, on the other hand. In connection with deliveries
hereunder, the Borrower shall execute all appropriate transfer tax exemption
certificates.
9. REPRESENTATIONS, ETC. OF LENDER AND BORROWER.
9.1 REPRESENTATIONS OF LENDER. The Lender represents that (a) the
Lender has the legal right and authority to execute, deliver and perform this
Agreement, and no disability or contractual obligation exists which would
prohibit the Lender from so doing; (b) the Lender has obtained all necessary
approvals or authorizations by all regulatory bodies and other third parties
required to be obtained by the Lender to consummate the transactions
contemplated hereby; (c) the execution and delivery of this Agreement by the
Lender complies, and all transactions by the Lender contemplated hereby will
comply, with all applicable laws and regulations applicable to the Lender,
including, without limitation, all rules and regulations of the Securities
and Exchange Commission, and will not be in violation of any of the
foregoing; (d) when transferred to the Borrower pursuant hereto, the Loaned
Securities shall be transferred free and clear of any security interests,
liens or encumbrances, and (e) the Loaned Securities are validly issued,
fully paid and nonassessable.
9.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. The
Borrower represents, warrants and covenants to the Lender that (a) the
Borrower has the legal right and authority to execute, deliver and perform
this Agreement and no disability or contractual obligation exists which would
prohibit the Borrower from so doing; (b) the Borrower has obtained all
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<PAGE>
necessary approvals or authorizations by all regulatory bodies and other
third parties to consummate the transactions contemplated hereby; (c) the
execution and delivery of this Agreement complies, and all transactions
contemplated hereby will comply, with all applicable laws and regulations,
including, without limitation, all rules and regulations of the Securities
and Exchange Commission, and will not be in violation of any of the
foregoing; (d) the Collateral Securities are owned by the Borrower free and
clear of any security interests, liens or encumbrances other than the liens
contemplated hereby; and (e) the pledge of the Collateral Securities pursuant
to this Agreement creates a valid security interest in the Collateral
Securities in favor of the Lender and securing the payment of the Loan.
10. INDEMNIFICATION. Except for taxes (other than transfer taxes), the
Borrower agrees to indemnify, defend and hold and save harmless the Lender
and the Custodian from any claims, actions, demands or lawsuits of any kind
whatsoever arising (a) in any way out of the use that the Borrower may make
of the Loaned Securities, or (b) out of transactions by the Lender involving
the purchase or sale of securities, but only to the extent that the liability
arising out of such transactions is due, in whole or in part, to the
Borrower's failure to perform its obligations in accordance with the terms of
this Agreement, including the Borrower's obligation to return the Loaned
Securities (or equivalent securities) within the time specified in Section
4.2; PROVIDED, that the Borrower shall not be required to indemnify the
Lender or Custodian for any claims, actions, demands or lawsuits as may be
caused by the gross negligence or willful acts of the Lender or the
Custodian. The Borrower agrees that the Custodian shall have the right to
enforce its third party rights of indemnification under this Section 10
directly against the Borrower.
11. PAYMENTS, DELIVERIES, NOTICES. All payments under this Agreement
between the parties hereto shall be made by (a) certified or official bank
check, or (b) wire transfer in immediately available funds to the account of
the payee or its designated agent.
Except as otherwise expressly provided herein, all notices, requests,
consents, and other communications hereunder between the Lender or the
Custodian and the Borrower shall be in writing and shall be deemed to have
been given (a) when delivered, if sent by hand or first class mail, postage
prepaid, or (b) when sent, if transmitted by facsimile. Each such notice or
other communication shall be addressed as follows:
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<PAGE>
(i) if to the Borrower, at the address set forth after its signature
at the end of this Agreement, and
(ii) if to the Lender, at:
Metro Networks, Inc.
2800 Post Oak Boulevard
Suite 4000
Houston, Texas 77056
Attention: President
Fax: (713) 622-7045
(iii) if to the Custodian, at:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey
Fax: (212) 319-4090
or to such other addresses as either party may furnish the other party by
written notice under this Section 11.
12. DELIVERIES TO CUSTODIAN; LENDER'S RIGHT TO APPOINT AGENTS. The
Borrower agrees that at the time of giving any notice or making any
deliveries to the Custodian, the Borrower shall identify such notice or
delivery as relating to the Loan or a specific provision under this
Agreement. The Borrower acknowledges that the Custodian will be acting
hereunder as the Lender's agent, and not in its individual capacity.
The Borrower further acknowledges that the Lender may at any time
appoint such agent or agents as the Lender in its sole discretion may select
to perform any other functions on its behalf in connection with any provision
of this Agreement.
13. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following respective meanings:
BUSINESS DAY: any weekday other than one which is not recognized as a
settlement day by the NASDAQ National Market, or on which banking
institutions are authorized or required to be closed in the State of New York.
COMMON STOCK: common stock, par value $0.001 per share, issued by the
Company.
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<PAGE>
CUSTODIAN: Paul, Hastings, Janofsky & Walker LLP until such time as the
Lender shall give the Borrower notice of the Lender's appointment, as agent
for the Lender, of a different custodian for purposes of this Agreement.
DISTRIBUTION: with reference to any Loaned Securities or Collateral
Securities, any interest, dividend or other payment or distribution of cash,
securities, or other property with respect to such Loaned Securities, or any
option, warrant, right, privilege or other security of any kind distributed
with respect thereto or in exchange therefor.
SERIES A CONVERTIBLE PREFERRED STOCK: the Series A Preferred Stock, par
value $.001 per share, issued by the Company and convertible into Common
Stock.
VALUE: the Value at any time of any Loaned Securities or Collateral
Securities shall be determined as follows:
(a) if such Loaned Securities or Collateral Securities are traded on
one or more national securities exchanges, the Value thereof shall be
determined on the basis of the closing price on the preceding Business Day
on the consolidated tape as reported by the Wall Street Journal, or such
other pricing service as may be selected by the Custodian and approved by
the Lender; or
(b) if such Loaned Securities or Collateral Securities are not traded
on a national securities exchange, the Value thereof shall be determined on
the basis of the low asked price last quoted on the preceding Business
Day by any principal market maker for such Loaned Securities or Collateral
Securities chosen by the Custodian, PROVIDED that if no such quotations
shall be available for such day, such market value shall be determined on
the basis of the last low asked price quoted on the next preceding day
for which such quotations are available.
To the market value of any Loaned Securities or Collateral Securities as
determined under the foregoing clauses (a) and (b), shall be added all
interest accrued, and all amortized discount, on such Loaned Securities or
Collateral Securities as of the close of the preceding Business Day, to the
extent that such accrued interest or amortized discount is neither reflected
in the amounts computed under clauses (a) or (b) nor has previously been paid
to the Custodian.
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<PAGE>
14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties and supersedes any other oral or written
agreement between the parties concerning securities loans. The headings in
this Agreement are for convenience of reference only and shall not expand,
limit or otherwise affect the meaning hereof. This Agreement may be executed
in any number of counterparts, each of which shall be an original and all of
which together shall constitute one and the same instrument. This Agreement
shall not be assignable by either party without the prior written consent of
the other party, shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, distributees and
successors and permitted assigns, may not be amended, changed, modified or
terminated except by an instrument in writing signed by each of the parties
hereto, and shall be governed by and construed in accordance with New York
law (without giving effect to principles of conflicts of laws).
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<PAGE>
LENDER
METRO NETWORKS, INC. BORROWER
By: /s/ Charles I. Bortnick By /s/ David I. Saperstein
------------------------ -----------------------
Name: Charles I. Bortnick David I. Saperstein
Title: President
Address of Borrower
c/o Metro Networks, Inc.
2800 Post Oak Blvd.
Suite 4000
Houston, Texas 77056
Fax: (713) 622-7045
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<PAGE>
SCHEDULE A
----------
# of Shares of Common
Common Stock Certificate # Stock Represented
- -------------------------- ---------------------
14 2,549,750
<PAGE>
SCHEDULE B
----------
Series A Convertible
Preferred Stock # of Shares of Convertible
Certificate # Preferred Stock Represented
- -------------------- ----------------------------
1 1,387,064
2 1,162,686
<PAGE>
===============================================================================
STOCK LOAN AND PLEDGE AGREEMENT
DATED AS OF OCTOBER 16, 1996
BETWEEN
MICHELLE JOY COPPOLA 1994 TRUST
AND
DAVID I. SAPERSTEIN
===============================================================================
<PAGE>
Table of Contents
STOCK LOAN AND PLEDGE AGREEMENT
Page
----
1. Loan of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Delivery of Collateral Securities . . . . . . . . . . . . . . . . 1
2.2 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . 1
2.3 Substitution of Collateral Securities . . . . . . . . . . . . . . 2
2.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 2
3. Obligations of Lender; Distributions . . . . . . . . . . . . . . . . . 2
3.1 Obligations of the Lender with Respect to the Collateral . . . . . 2
3.2 Right of Borrower in Respect of Loaned Securities . . . . . . . . 3
3.3 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Term of Loan; Return of Loaned Securities . . . . . . . . . . . . . . . 4
4.1 Term of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Return of Loaned Securities . . . . . . . . . . . . . . . . . . . .4
5. Loan Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Remedies of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.1 Rights of Secured Creditor . . . . . . . . . . . . . . . . . . . . 6
7.2 Calculation of Unpaid Remedy Amount . . . . . . . . . . . . . . . 6
7.3 Setoffs of Collateral . . . . . . . . . . . . . . . . . . . . . . 7
7.4 No Counterclaim, Waiver, etc. . . . . . . . . . . . . . . . . . . 7
7.5 No Rights Against Transferees. . . . . . . . . . . . . . . . . . . 7
8. Transfer Taxes and Other Costs of Transfer . . . . . . . . . . . . . . 7
9. Representations, etc. of Lender and Borrower . . . . . . . . . . . . . 8
9.1 Representations of Lender . . . . . . . . . . . . . . . . . . . . 8
9.2 Representations, Warranties and Covenants of the Borrower . . . . 8
10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Payments, Deliveries, Notices . . . . . . . . . . . . . . . . . . . . . 9
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12. Deliveries to Custodian; Lender's Right to Appoint Agents . . . . . . .10
13. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .10
14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
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<PAGE>
STOCK LOAN AND PLEDGE AGREEMENT
STOCK LOAN AND PLEDGE AGREEMENT, dated as of October 16, 1996 (the
"AGREEMENT"), between the Michelle Joy Coppola 1994 Trust (the "LENDER")
and David I. Saperstein (the "BORROWER"). Capitalized terms used herein and
not otherwise defined are used as defined in Section 13.
The Lender and the Borrower agree as follows:
1. LOAN OF SHARES. Subject to the terms and conditions hereof, the
lender agrees to lend (the "LOAN") to the Borrower and the Borrower agrees
to borrow from the Lender on the date hereof (the "LOAN DATE") 210,050
shares of Common Stock (the "LOANED SHARES") of Metro Networks, Inc., a
Delaware corporation (the "COMPANY"), represented by the stock certificates
identified on Schedule A attached hereto, together with all securities which
are distributed by the Company with respect to the Loaned Shares, or are
received in exchange for the Loaned Shares in connection with a merger,
recapitalization or reorganization involving the Company (collectively, the
"LOANED SECURITIES"). The transfer of the Loaned Shares from the Lender to
the Borrower shall be reflected on the share register of the Company.
2. COLLATERAL.
2.1 DELIVERY OF COLLATERAL SECURITIES. The Borrower is concurrently
delivering to the Custodian a number of shares of Common Stock of the Company
equal to the number of Loaned Shares (the "PLEDGED SHARES"), represented by
the stock certificates identified on Schedule B attached hereto. The Pledged
Shares shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Lender and
the Custodian.
2.2 GRANT OF SECURITY INTEREST. To secure the due and punctual
performance of the obligations of the Borrower under this Agreement, the
Borrower hereby grants to the Lender a first lien on and security interest in
the Pledged Shares and all securities and obligations delivered by the
borrower after the Loan Date pursuant to section 2.3 and all securities which
are distributed by the Company with respect thereto, or are received in
exchange for any of the foregoing in connection with a merger,
recapitalization or reorganization involving the Company (collectively the
"COLLATERAL SECURITIES"), PROVIDED that Collateral Securities shall not
include any securities returned to the Borrower pursuant to Section 3.1 or
4.2. The Borrower recognizes that the Collateral Securities will be held by,
or on the books and records of, the Custodian or other agents of the
<PAGE>
Lender or one or more financial intermediaries to perfect the Lender's
security interest therein. Except for the security interests granted hereby,
the Borrower shall not create or suffer to exist any security interest, lien
or encumbrance in respect of any Collateral Securities.
2.3 SUBSTITUTION OF COLLATERAL SECURITIES. The Borrower may substitute
for all or any portion of the Collateral Securities cash or marketable
securities ("SUBSTITUTE COLLATERAL SECURITIES") so long as at all times
after giving effect to such substitution the Value of all Substitute
Collateral Securities shall be equal to at least 120% of the amount, if any,
by which the Value of the Loaned Securities exceeds the Value of the
Collateral Securities held by the Custodian and not withdrawn in connection
with such substitution, PROVIDED that the Borrower shall have given the
Lender at least ten (10) days' prior written notice of the proposed
substitution specifying the substitute Collateral Securities; and, PROVIDED
FURTHER, that, prior to effecting any such substitution, the Borrower shall
have received from its counsel an opinion to the effect that, after giving
effect to such substitution, the Borrower will not be in violation of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
2.4 FURTHER ASSURANCES. In connection with the delivery of any Substitute
Collateral Securities (other than cash) pursuant to Section 2.3, the Borrower
shall deliver to the Custodian certificates representing such securities and
shall execute and deliver all instruments and documents and take all further
action that may be necessary or desirable, in order to perfect the security
interest purported to be granted pursuant to Section 2.2 or to enable the
Lender to exercise and enforce its rights and remedies hereunder.
3. OBLIGATIONS OF LENDER; DISTRIBUTIONS.
3.1 OBLIGATIONS OF THE LENDER WITH RESPECT TO THE COLLATERAL. The Lender
shall cause the Custodian to record on its books all Collateral Securities
delivered to it, and to keep the Collateral Securities identifiable. The
Lender shall cause the Custodian not to commingle the Collateral Securities
with the Custodian's or the Lender's other assets or assets of the Custodian's
other custodial clients or any collateral delivered by other borrowers. The
Lender shall not, and shall cause the Custodian not to, use, invest,
transfer, lend or pledge the Collateral Securities, except as permitted
by Section 7.1 or 7.3. The Lender shall cause the Custodian to vote the
Collateral Securities in accordance with the instructions of the
Borrower, so long as no Event of Default has occurred and is continuing.
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<PAGE>
Except as otherwise expressly provided herein, the sole obligations of the
Lender in respect of the Collateral Securities are to return to the Borrower
all Collateral Securities at the termination of the Loan, in accordance with
and subject to the provisions of Section 4.2 (against return of the Loaned
Securities), and, so long as no Event of Default has occurred and is
continuing, to pay over or deliver to the Borrower, in accordance with its
instructions to the Lender, all Distributions received by the Custodian with
respect to Collateral Securities.
3.2 RIGHT OF BORROWER IN RESPECT OF LOANED SECURITIES. Except as set
forth in Section 3.3, until the Loaned Securities are required to be
redelivered to the Lender upon termination of the Loan, the Borrower shall
have all the incidents of ownership of the Loaned Securities, including the
right to transfer the Loaned Securities to others and to have the Loaned
Securities transferred to any person on the share register of the Company,
including, without limitation, in connection with an initial public offering
of the Common Stock, but in the event the Borrower shall so transfer the
Loaned Securities to any other person, the Borrower shall not be relieved of
its obligations under Section 4.2 to return the Loaned Securities (or an
equivalent quantity of securities of the same class and issuer). The Lender
hereby waives the right to vote or to provide any consent or to take any
similar action with respect to the Loaned Securities in the event that the
record date or deadline for such vote, consent or other action falls during
the term of the Loan.
3.3 DISTRIBUTIONS. If any Distribution on any Loaned Securities shall be
made, and the record or other date for determining the security holders
entitled to receive such Distribution shall be on or after the delivery of
such Loaned Securities to the Borrower and any necessary registration of
transfer in connection therewith, but before the return of such Loaned
Securities to the Lender and any necessary registration of transfer in
connection therewith, the Borrower shall on the date for such distribution,
and whether or not the same is actually received by the Borrower, pay to the
Custodian for the benefit of the Lender such cash, and shall deliver to the
Custodian for the benefit of the Lender such property (other than
securities), as shall have been included in such Distribution. Any
securities included in a distribution shall be added to the Loaned Securities
on the date for such distribution and shall thereupon for all purposes
constitute Loaned Securities delivered under the Loan.
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<PAGE>
4. TERM OF LOAN; RETURN OF LOANED SECURITIES.
4.1 TERM OF LOAN. The Loan shall terminate on the first to occur of
(a) three business Days after written or telephone notice of demand, given
to the Borrower by the Lender or the Custodian, for the return of any Loaned
Securities; and
(b) any termination of the Loan pursuant to Section 6.
4.2 RETURN OF LOANED SECURITIES. Upon termination of the Loan, the
Borrower shall deliver the Loaned Securities (or an equivalent quantity of
securities of the same class and issuer) to the Custodian, together with all
Distributions thereon (i) which shall not have previously been paid over to
the Custodian pursuant to Section 3.3 and (ii) with respect to which the
record or other date for determining the security holders entitled to receive
payment or distribution thereof shall have occurred prior to the return of
the Loaned Securities (or such equivalent securities) to the Custodian and
any necessary registration of transfer in connection therewith, except that
if any such Distributions shall not have been made prior to such time, the
Borrower shall deliver such distributions to the Custodian immediately upon
the making thereof, whether or not the same is actually received by the
Borrower. Delivery of Loaned Securities (or such equivalent securities) by
the Borrower in accordance with the first sentence of this Section 4.2 shall
be made against return of Collateral Securities to the Borrower, PROVIDED,
HOWEVER, that if an Event of Default shall have occurred and be continuing,
such Collateral Securities shall not be returned to the Borrower, despite the
return of such Loaned Securities (or such equivalent securities), and all
Collateral Securities shall be subject to all of the terms and conditions
hereof until such Event of Default shall have been cured or waived.
5. LOAN FEE. In consideration of the Loan, the Borrower shall pay to the
Lender during the term of the Loan annually on each anniversary date of this
Agreement and on any termination of the Loan pursuant to Section 4.1, an
annual loan fee (the "LOAN FEE") equal to 0.10% of the average Value of the
Loaned Securities during the preceding twelve months, PROVIDED that the Loan
Fee due upon any termination pursuant to Section 4.1 shall be prorated on the
basis of number of the months (including any portion of a month) that have
elapsed since the Loan Date or the date of the immediately preceding payment
of the
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<PAGE>
Loan Fee, as the case may be. The Loan Fee payable for the first year
shall equal 0.10% of the average Value of the Loaned Securities during the
five day trading period (E.G., any day on which trading takes place on the
NASDAQ national market) following the Loan Date.
6. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur,
(a) the Borrower shall fail in any material respect to perform or observe
any term hereof; or
(b) any representation or warranty made by the Borrower herein shall have
been untrue when made in any material respect and the lender notifies the
Borrower that such untruth is to constitute an Event of Default; or
(c) the Borrower shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief, reorganization, rehabilitation,
arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency or rehabilitation law of any
jurisdiction, (ii) make an assignment for the benefit of creditors, (iii)
consent to the appointment of a custodian, receiver, trustee, rehabilitator
or other officer with similar powers of either or both of itself or of any
substantial part of its property, (iv) be adjudicated insolvent or be
liquidated or (v) take action for the purpose of any of the foregoing; or
(d) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without the consent of the Borrower, a custodian,
receiver, trustee, rehabilitator or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or if
any order for relief shall be entered in any case or proceeding for
liquidation or reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Borrower, or if any petition
for any such relief shall be filed against the Borrower.
then, unless otherwise specified by the Lender to the Borrower in writing,
the loan shall terminate immediately without any further notice by the Lender.
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<PAGE>
7. REMEDIES OF LENDER.
7.1 RIGHTS OF SECURED CREDITOR. If any Event of Default shall have
occurred and be continuing, the Lender shall have all the rights and
remedies, with respect to all Collateral Securities, of a secured party under
Articles 8 and 9 of the Uniform Commercial Code of the State of New York in
effect at that time and as otherwise provided by law, and, in addition, may,
at its sole option, exercise, or cause the Custodian to exercise on its
behalf, any one or more of the remedies described in Sections 7.3 and 7.4.
7.2 CALCULATION OF UNPAID REMEDY AMOUNT. If any Event of Default shall
have occurred and be continuing, the Borrower will pay in cash to the
Custodian the "Unpaid Remedy Amount", which shall be equal to the sum of
the following amounts:
(a) the Value as of such time of the Loaned Securities other than any
Loaned Securities (or their equivalent) previously returned to the Lender;
(b) all taxes, fines, penalties or interest incurred by the Lender, the
Custodian or any other agent of the Lender as a result of the Borrower's
failure to perform its obligations hereunder, including (without limitation)
the Borrower's obligation to return Loaned Securities (or equivalent
securities) as provided by Section 4.2;
(c) any unpaid Loan Fee or other unpaid amounts (in the form of cash or
otherwise) owing to the Lender under this Agreement;
(d) any amounts not included in clauses (a) through (c) of this
Section 7.2 which are owing pursuant to Section 3, 4, 5, 8 or 10; and
(e) interest on each of the foregoing amounts until payment thereof in
full has been made, to accrue daily at an annual rate equal to 2% above the
amount announced by Citibank, N.A. as its "prime" rate (its "PRIME RATE"),
as in effect from time to time (such rate to be adjusted simultaneously with
each change in such prime rate);
minus the aggregate Value of Collateral Securities absolute ownership of
which has been assumed by the Lender under Section 7.3 (which ownership is
not subject to any judicial or statutory stay against enforcement).
-6-
<PAGE>
7.3 SETOFFS OF COLLATERAL. If any Event of Defaultshall have occurred
and be continuing, including, but not limited to, the Borrower's failure to
return the Loaned Securities (or their equivalents) in accordance with
Section 4.2, the Lender or the Custodian may, at any time and in the Lender's
sole discretion, set off all or any portion of the Collateral Securities
against any Unpaid Remedy Amount (or a portion thereof) as of such time, by
assuming absolute ownership of all or a portion of the Collateral Securities,
and, at the discretion of the Lender, selling any or all of such Collateral
Securities and assuming absolute ownership of the proceeds, PROVIDED that the
Value of the Collateral Securities absolute ownership of which is so assumed
does not exceed the Unpaid Remedy Amount as of the time of such assumption of
ownership.
7.4 NO COUNTERCLAIM, WAIVER, ETC. The Lender's rights against the
Collateral Securities shall be absolute and subject to no counterclaim,
offset, recoupment, deduction or defense in favor of the Borrower, whether
such counterclaim, offset, recoupment, deduction or defense relates to the
Lender or the Custodian. No failure on the part of the Lender or the
Custodian to exercise, and no delay on its part in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by the Lender or the Custodian of any right, power
or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided herein
are cumulative and are not exclusive of any remedies provided by law.
7.5 NO RIGHTS AGAINST TRANSFEREES. In no event shall the Lender have any
rights against any transferee of the Loaned Securities (or any further
transferees thereof) or against any Loaned Securities so transferred. The
Borrower agrees that this Section 7.5 is for the benefit of transferees and
may be enforced thereby as if such transferees were parties to this Agreement.
8. TRANSFER TAXES AND OTHER COSTS OF TRANSFER. The Borrower shall be
responsible for, and shall pay or reimburse the Lender for, all transfer
taxes and other costs involved in all transfers of Loaned Securities or
Collateral Securities between the Lender or the Custodian, on the one hand,
and the Borrower, on the other hand. In connection with deliveries
hereunder, the Borrower shall execute all appropriate transfer tax exemption
certificates.
-7-
<PAGE>
9. REPRESENTATIONS, ETC. OF LENDER AND BORROWER.
9.1 REPRESENTATIONS OF LENDER. The Lender represents that (a) the Lender
has the legal right and authority to execute, deliver and perform this
Agreement, and no disability or contractual obligation exists which would
prohibit the Lender from so doing; (b) the Lender has obtained all necessary
approvals or authorizations by all regulatory bodies and other third parties
required to be obtained by the Lender to consummate the transactions
contemplated hereby; (c) the execution and delivery of this Agreement by the
Lender complies, and all transactions by the Lender contemplated hereby will
comply, with all applicable laws and regulations applicable to the Lender,
including, without limitation, all rules and regulations of the Securities
and Exchange Commission, and will not be in violation of any of the
foregoing; (d) when transferred to the Borrower pursuant hereto, the Loaned
Securities shall be transferred free and clear of any security interests,
liens or encumbrances, and (e) the Loaned Securities are validly issued,
fully paid and non-assessable.
9.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE BORROWER. The Borrower represents, warrants and covenants to the Lender
that (a) the Borrower has the legal right and authority to execute, deliver
and perform this Agreement and no disability or contractual obligation exists
which would prohibit the Borrower from so doing; (b) the Borrower has
obtained all necessary approvals or authorizations by all regulatory bodies
and other third parties to consummate the transactions contemplated hereby;
(c) the execution and delivery of this Agreement complies, and all
transactions contemplated hereby will comply, with all applicable laws and
regulations, including, without limitation, all rules and regulations of the
Securities and Exchange Commission, and will not be in violation of any of
the foregoing; (d) the Collateral Securities are owned by the Borrower free
and clear of any security interests, liens or encumbrances other than the
liens contemplated hereby; and (e) the pledge of the Collateral Securities
pursuant to this Agreement creates a valid security interest in the
Collateral Securities in favor of the Lender and securing the payment of the
Loan.
10. INDEMNIFICATION. Except for taxes (other than
transfer taxes), the Borrower agrees to indemnify, defend, and
hold and save harmless the Lender and the Custodian from any
claims, actions, demands or lawsuits of any kind whatsoever
arising (a) in any way out of the use that the Borrower may make
of the Loaned Securities, or (b) out of transactions by the
Lender involving the purchase or sale of securities, but only to
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the extent that the liability arising out of such transactions is
due, in whole or in part, to the Borrower's failure to perform
its obligations in accordance with the terms of this Agreement,
including the Borrower's obligation to return the Loaned
Securities (or equivalent securities) within the time specified
in Section 4.2, PROVIDED that the Borrower shall not be required
to indemnify the Lender or Custodian for any claims, actions,
demands or lawsuits as may be caused by the gross negligence or
willful acts of the Lender or the Custodian. The Borrower agrees
that the Custodian shall have the right to enforce its third
party rights of indemnification under this Section 10 directly
against the Borrower.
11. PAYMENTS, DELIVERIES, NOTICES. All payments under this Agreement
between the parties hereto shall be made by (a) certified or official bank
check, or (b) wire transfer in immediately available funds to the account of
the payee or its designated agent.
Except as otherwise expressly provided herein, all notices, requests,
consents, and other communications hereunder between the Lender or the
Custodian and the Borrower shall be in writing and shall be deemed to have
been given (a) when delivered, if sent by hand or first class mail, postage
prepaid, or (b) when sent, if transmitted by facsimile. Each such notice or
other communication shall be addressed as follows:
(i) if to the Borrower, at the address set forth
after its signature at the end of this Agreement, and
(ii) if to the Lender, at:
Michelle Joy Coppola
33 Ardsley Avenue East
Irvington, New York 10533
(iii) if to the Custodian, at:
c/o Neil Torpey, Esq.
399 Park Avenue
Thirty-First Floor
New York, New York 10022-4697
Fax: (212) 319-4090
or to such other addresses as either party may furnish the other
party by written notice under this Section 11.
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12. DELIVERIES TO CUSTODIAN; LENDER'S RIGHT TO APPOINT AGENTS.
The Borrower agrees that at the time of giving any notice or making any
deliveries to the Custodian, the Borrower shall, identify such notice or
delivery as relating to the Loan or a specific provision under this
Agreement. The Borrower acknowledges that the Custodian will be acting
hereunder as the Lender's agent, and not in its individual capacity.
The Borrower further acknowledges that the Lender may at any time
appoint such agent or agents as the Lender in its sole discretion may select
to perform any other functions on its behalf in connection with any provision
of this Agreement.
13. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
have the following respective meanings:
BUSINESS DAY: any weekday other than one which is not recognized as a
settlement day by the NASDAQ National Market, or on which banking
institutions are authorized or required to be closed in the State of New York.
COMMON STOCK: means common stock, par value $0.001 per share, issued by
the Company.
CUSTODIAN: Paul, Hastings, Janofsky & Walker LLP until such time as the
Lender shall give the Borrower notice of the Lender's appointment, as agent
for the Lender, of a different custodian for purposes of this Agreement.
DISTRIBUTION: with reference to any Loaned Securities or Collateral
Securities, any interest, dividend or other payment or distribution of cash,
securities, or other property with respect to such Loaned Securities, or any
option, warrant, right, privilege or other security of any kind distributed
with respect thereto or in exchange therefor.
VALUE: the Value at any time of any Loaned Securities or Collateral
Securities shall be determined as follows:
(a) if such Loaned Securities or Collateral Securities are traded on
one or more national securities exchanges, the Value thereof shall be
determined on the basis of the closing price on the preceding Business
Day on the consolidated tape as reported by the Wall Street Journal, or
such other pricing service as may be selected by the Custodian and approved
by the Lender; or
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(b) if such Loaned Securities or Collateral Securities are not traded on
a national securities exchange, the Value thereof shall be determined on
the basis of the low asked price last quoted on the preceding Business Day by
any principal market maker for such Loaned Securities or Collateral Securities
chosen by the Custodian, PROVIDED that if no such quotations shall be
available for such day, such market value shall be determined on the basis of
the last low asked price quoted on the next preceding day for which such
quotations are available.
To the market value of any Loaned Securities or Collateral Securities as
determined under the foregoing clauses (a) and (b), shall be added all
interest accrued, and all amortized discount, on such Loaned Securities or
Collateral Securities as of the close of the preceding Business Day, to the
extent that such accrued interest or amortized discount is neither reflected
in the amounts computed under clauses (a) or (b) nor has previously been paid
to the Custodian.
14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties and supersedes any other oral or written
agreement between the parties concerning securities loans. The headings in
this Agreement are for convenience of reference only and shall not expand,
limit or otherwise affect the meaning hereof. This Agreement may be executed
in any number of counterparts, each of which shall be an original and all of
which together shall constitute one and the same instrument. This Agreement
shall not be assignable by either party without the prior written consent of
the other party, shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, distributees and
successors and permitted assigns, may not be amended, changed, modified or
terminated except by an instrument in writing signed by each of the parties
hereto, and shall be governed by and construed in accordance with New York
law (without giving effect to principles of conflicts of laws).
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LENDER BORROWER
By: /s/ Michelle Joy Coppola By: /s/ David I. Saperstein
- ---------------------------- -------------------------
Name: Michelle Joy Coppola Name: David I. Saperstein
Title: Trustee
Address of Borrower
c/o Metro Networks, Inc.
2800 Post Oak Blvd.
Suite 4000
Houston, Texas 77056
Fax: (713) 622-7045
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SCHEDULE A
# of Shares of Common
Common Stock Certificate # Stock Represented
- -------------------------- ---------------------
15 210,050
<PAGE>
SCHEDULE B
# of Shares of Common
Common Stock Certificate # Stock Represented
- -------------------------- ---------------------
11 1,050,250
