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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM
________ TO ________
COMMISSION FILE NO. 333-30795
RADIO ONE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1166660
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5900 PRINCESS GARDEN PARKWAY
8TH FLOOR
LANHAM, MARYLAND 20706
(Address of principal executive offices)
(301) 306-1111
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ].
One share of voting stock is held by a non-affiliate of the registrant as of
December 31, 1997. The registrant is a private equity company and it has no view
as to the value of its voting stock.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 31, 1997.
Class Outstanding at December 31, 1997
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Class A Common Stock, $.01 Par Value 138.45
Class B Common Stock, $.01 Par Value 0
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<PAGE>
RADIO ONE, INC.
Form 10-K
For the Fiscal Year Ended December 31, 1997
INDEX
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Page
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PART I
ITEM 1. Business 1
ITEM 2. Properties 18
ITEM 3. Legal Proceedings 19
ITEM 4. Submission of Matters to a Vote of Security Holders 20
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters 21
ITEM 6. Selected Financial Data 22
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 24
ITEM 8. Financial Statements and Supplementary Data 32
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 33
PART III
ITEM 10. Directors and Executive Officers of the Registrant 34
ITEM 11. Executive Compensation 35
ITEM 12. Security Ownership of Certain Beneficial Owners
and Management 37
ITEM 13. Certain Relationships and Related Transactions 39
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 41
<PAGE>
PART I
ITEM 1. BUSINESS
EXCEPT WHERE THE CONTEXT INDICATES OTHERWISE, (I) PRIOR TO MARCH 16, 1998, THE
TERM "COMPANY" REFERS TO THE REGISTRANT RADIO ONE, INC. AND ITS WHOLLY-OWNED
SUBSIDIARY RADIO ONE LICENSES, INC. (THE SURVIVING CORPORATION OF THE MERGER OF
RADIO ONE LICENSE LLC WITH AND INTO RADIO ONE LICENSES, INC.) AND (II) ON AND
AFTER MARCH 16, 1998, THE TERM "COMPANY" REFERS TO THE REGISTRANT RADIO ONE,
INC. AND ITS DIRECT WHOLLY-OWNED SUBSIDIARIES (RADIO ONE LICENSES, INC. AND WYCB
ACQUISITION CORPORATION) AND ITS INDIRECT WHOLLY-OWNED SUBSIDIARY (BROADCAST
HOLDINGS, INC.).
Radio One, Inc. ("Radio One") founded in 1980, is the largest radio
broadcasting company in the United States exclusively targeting African-American
listeners and consumers. After giving effect to the Bell Acquisition (as
defined), the Company will own and operate a total of twelve radio stations (six
FM and six AM) in four of the top-15 African-American markets. The Company seeks
to expand within its existing markets and into new, primarily top-30
African-American markets. The Company believes that the African-American
community is an attractive target market for radio broadcasters and that the
Company has a competitive advantage serving this target market due in part to
its African-American ownership and its active involvement in the
African-American community.
The Company owns and operates four radio stations in Washington, D.C., the
third largest African-American market with a metropolitan statistical area
("MSA") population of approximately 4.2 million in 1995 (approximately 27.4% of
which was African-American), and four radio stations in Baltimore, the eleventh
largest African-American market with an MSA population of approximately 2.5
million in 1995 (approximately 26.0% of which was African-American). In 1997 the
Company entered the Philadelphia market pursuant to the acquisition of WPHI-FM
(formerly WDRE-FM), the sixth largest African-American market with an MSA
population of approximately 4.9 million in 1995 (approximately 19.9% of which
was African-American). On November 19, 1997, WYCB Acquisition Corporation
entered into an Option and Stock Purchase Agreement (the "WYCB Agreement") with
Broadcast Holdings, Inc. ("BHI"), licensee of WYCB-AM, to acquire BHI for
approximately $3.75 million (the "DC Acquisition"). WYCB Acquisition Corporation
consummated the DC Acquisition effective March 16, 1998. WYCB-AM is currently
the top-rated Gospel radio station in Washington, D.C. In conjunction with the
issuance of its Promissory Note in the original principal amount of $3.75
million, WYCB Acquisition Corporation granted a security interest in all of the
stock and assets of BHI. This security interest was granted to Allied Capital
Financial Corporation ("Allied"). Allied also received a Stock Purchase Warrant
from Radio One which entitles it to acquire up to 40,000 shares of the Series A
Preferred Stock (as defined) of Radio One if WYCB Acquisition Corporation
defaults on the payment of such Promissory Note and the stock and assets of BHI
are insufficient to pay the entire amount owed under such Promissory Note. In
that event, and only in that event and subject to Allied's fulfillment of
certain conditions, Allied may acquire such shares of Radio One equal to the
amount owed under the Promissory Note. In conjunction with issuing the Stock
Purchase Warrant, the shareholders of Radio One approved an increase in the
number of authorized shares of Series A Preferred Stock to provide for
sufficient shares in the event that Allied is entitled to exercise its warrant.
Radio One also entered into an local marketing agreement formally referred to as
a Time Management and Services Agreement with WYCB Acquisition Corporation and
BHI, which allows Radio One to provide programming services to and retain all
advertising revenue from WYCB-AM in exchange for a monthly fee paid by Radio One
to WYCB Acquisition Corporation.
Additionally, on December 23, 1997, Radio One entered into a Stock Purchase
Agreement (the "Bell Agreement") with Bell Broadcasting Company ("Bell"), the
owner of two radio stations, one AM and one FM, located in the Detroit, Michigan
market and one AM radio station located in Kingsley, Michigan (the "Bell
Acquisition"). Pursuant to the Bell Agreement, Radio One agreed to pay
approximately $34.2 million in cash plus the cost of certain improvements to the
stations, $2.0 million of which was deposited in escrow upon the execution of
the Bell Agreement and will be available to the sellers as liquidated damages if
Radio One breaches its obligations thereunder. The consummation of the Bell
Acquisition is contingent upon certain matters, including the
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receipt of final approval from the Federal Communications Commission ("FCC") for
the transfer of the FCC licenses. Radio One expects to complete the Bell
Acquisition by the end of the third quarter of 1998 which may require the
exercise of up to four one month extensions of the closing date at an additional
cost of $150,000 per month. The Company anticipates that Bell will become a
Restricted Subsidiary, as such term is defined in the Indenture dated as of May
15, 1997 among Radio One, Inc., Radio One Licenses, Inc., and United States
Trust Company of New York (the "Indenture"), and a guarantor of the 12% Senior
Subordinated Notes due 2004 ("Notes"), as defined in the Indenture. Radio One
expects to fund the balance of the purchase price from the Company's free cash
balances as well as from the proceeds of a debt or equity offering (or
combination thereof) to be completed prior to the cosummation of this
acquisition. Detroit is the fifth largest African-American market with an MSA
population of approximately 4.5 million in 1995 (approximately 22.6% of which
was African-American). The Company may divest itself of the station located in
Kingsley, Michigan, following the consummation of the Bell Acquisition, because
that station is not integral or material to the transaction and is located a
substantial distance from Detroit.
The Company has grown significantly over the past five years through
acquisitions as well as internal expansion. From 1992 to 1997 net revenues and
broadcast cash flow increased from approximately $10.8 million to approximately
$32.4 million, and from approximately $4.8 million to approximately $13.5
million, respectively. The number of radio stations owned and operated by the
Company increased from two at the end of 1991 to eight by the end of 1997 and,
with the consummation of the DC Acquisition and the proposed Bell Acquisition,
will grow to 12.
The Company believes that operating radio stations targeting the
African-American population presents significant growth opportunities for the
following reasons:
o RAPID POPULATION GROWTH. According to the U.S. Department of Commerce,
Bureau of the Census (the "Census Bureau"), from 1980 to 1995, the
African-American population increased from approximately 26.7 million
to 33.1 million (a 24.0% increase, compared to a 16.0% increase in the
population as a whole). Furthermore, the African-American population
is expected to exceed 40 million by 2010 (a more than 20% increase
from 1995, compared to an expected increase of 13% for the population
as a whole).
o HIGHER INCOME GROWTH. According to the Census Bureau, from 1980 to
1995, the rate of increase in median household income in 1995 adjusted
dollars for African-Americans was approximately 12.3% compared to 3.9%
for the population as a whole.
o CONCENTRATED PRESENCE IN URBAN MARKETS. Approximately 58% of the
African-American population is located in the top-30 African-American
markets, and the Company believes that the African-American community
is usually geographically concentrated in such markets. This
concentration of African-Americans enables the Company to reach a
large portion of its target population with radio stations that may
have less powerful signals, thus potentially lowering the Company's
acquisition and operating costs.
o FEWER SIGNALS REQUIRED. The Company believes the current industry
trend is for radio broadcasters to acquire the maximum number of radio
stations allowed in a market under FCC ownership rules (up to eight
radio stations in the largest markets with no more than five being FM
or AM), unless restricted by other regulatory authorities. However,
relative to radio broadcasters targeting a broader audience, the
Company believes it can cover the various segments of its target niche
market with fewer programming formats and therefore fewer radio
station signals than the maximum allowed.
o STRONG AUDIENCE LISTENERSHIP AND LOYALTY. Based upon reports by
Arbitron (as defined) the Company believes that as a group,
African-Americans generally spend more time listening to radio than
non-African-American audiences. For example, during 1996,
African-Americans among all persons 12-years-old and older ("12-plus"
or the "12-plus market") in the ten largest 12-plus markets listened
to radio broadcasts an average of 27.2 hours per week compared to 22.9
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hours per week for non-African-Americans in such markets. In addition,
the Company believes African-American radio listeners exhibit a
greater degree of loyalty to radio stations which target the
African-American community because those radio stations become a
valuable source of entertainment and information responsive to the
community's interests and lifestyles. As a result, the Company
believes that its target demographic group provides greater audience
ratings stability than that of other demographic groups.
o COST EFFECTIVE FOR ADVERTISERS. The Company believes that advertisers
can reach the African-American community more cost effectively through
radio broadcasting than through newspapers or television because the
Company's radio broadcasts specifically target the African-American
community while newspapers and television typically target a much more
diverse audience.
Radio One is led by its Chairperson, Ms. Catherine L. Hughes, who is one of
the Company's founders, and her son, Mr. Alfred C. Liggins, III, its Chief
Executive Officer and President, who together have over three decades of
operating experience in radio broadcasting. Ms. Hughes and Mr. Liggins, together
with a strong management team, have implemented a successful strategy of
acquiring and turning around underperforming radio stations in top-30
African-American markets. In both Baltimore and Washington, D.C., the Company
has increased audience share at each radio station it has acquired. For all of
1997, the Company's radio stations on a combined basis, were ranked first in
combined audience and revenue share of radio stations targeting
African-Americans in both Baltimore and Washington, D.C. The Company believes
that it is well-positioned to apply its successful operating strategy to other
radio stations in existing and new markets as attractive acquisition
opportunities arise.
The following table sets forth certain information with respect to Radio
One and its markets as of December 31, 1997 (including WYCB-AM but excluding the
radio stations to be acquired pursuant to the Bell Agreement):
<TABLE>
<CAPTION>
PRO FORMA COMPANY DATA MARKET DATA
------------------------------------------------------------ ------------------------------------
NUMBER OF AFRICAN-AMERICAN RANKING BY
STATIONS MARKET ENTIRE MARKET SIZE OF
----------- ---------------------- ------------------- -------------------------------------
AFRICAN
AUDIENCE REVENUE AUDIENCE REVENUE RADIO AMERICAN
MARKET FM AM RANK RANK SHARE(%) SHARE(%) REVENUE($) POPULATION
- -------------------------- ---- ---- ---------- --------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Washington, D.C. ......... 2 2 1 1 12.4 9.4 $ 218.2 3
Baltimore ................ 2 2 1 1 15.1 16.3 88.5 11
Philadelphia ............ 1 -- N/A N/A 3.5 1.3 227.5 6
</TABLE>
OPERATING STRATEGY
In order to maximize broadcast cash flow at each of its radio stations, the
Company strives to create and operate the leading radio station group, in terms
of audience share, serving the African-American community and to effectively
convert these audience share ratings to advertising revenue while controlling
the costs associated with each radio station's operations. The success of the
Company's strategy relies on the following: (i) market research, targeted
programming and marketing; (ii) significant community involvement; (iii)
aggressive sales efforts; (iv) advertising partnerships and special events; (v)
strong management and performance-based incentives; and (vi) radio station
clustering, programming segmentation and sales bundling.
MARKET RESEARCH, TARGETED PROGRAMMING AND MARKETING
The Company uses market research to tailor the programming, marketing and
promotions of its radio stations to maximize audience share. To achieve these
goals, the Company uses market research to identify unserved or underserved
markets or segments of the African-American community in current and new markets
and to determine whether to acquire a new radio station or reprogram one of its
existing radio stations to target those markets or segments.
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The Company also seeks to reinforce its targeted programming by creating a
distinct and marketable identity for each of its radio stations. To achieve this
objective, in addition to its significant community involvement discussed below,
the Company employs and promotes distinct, high-profile on-air personalities at
many of its radio stations, many of whom have strong ties to the
African-American community.
SIGNIFICANT COMMUNITY INVOLVEMENT
The Company believes its active involvement and significant relationships
in the African-American community, together with its African-American ownership,
provide a competitive advantage in targeting African-American audiences. In this
way, the Company believes its proactive involvement in the African-American
communities in each of its markets greatly improves the marketability of its
radio broadcast time to advertisers who are targeting such communities.
Management believes that a radio station's image should reflect the
lifestyle and viewpoints of the target demographic group it serves. Due to the
Company's fundamental understanding of the African-American community,
management believes it is able to identify music and musical styles, as well as
political and social trends and issues, early in their evolution. This
understanding is then integrated into all aspects of the Company's operations
and enables it to create enhanced awareness and name recognition in the
marketplace. In addition, the Company believes its multi-level approach to
community involvement leads to increased effectiveness in developing and
updating its programming formats. Management believes its enhanced awareness and
more effective programming formats lead to greater listenership and higher
ratings over the long-term.
The Company has a history of sponsoring events that showcase its commitment
to the African-American community including:
o heightening the awareness of certain diseases and holding fundraisers to
fund the search for cures for diseases which disproportionately impact
African-Americans, such as sickle-cell anemia and leukemia;
o developing contests specifically designed to assist African-American single
mothers with day care expense;
o fundraising for the many African-American churches throughout the country
which have been the target of arsonists; and
o organizing seminars designed to educate African-Americans on personal
issues that include buying a home, starting a business, developing a credit
history, financial planning and health care.
AGGRESSIVE SALES EFFORTS
The Company has assembled an effective, highly-trained sales staff focused
on converting the Company's audience share into revenue. The Company employs a
dual sales strategy of selling stations individually where appropriate, by
targeting a certain demographic segment, or in combination by focusing on the
complementary aspects of the Company's multiple stations.
ADVERTISING PARTNERSHIPS AND SPECIAL EVENTS
The Company believes that in order to create advertiser loyalty it must
strive to be the recognized expert in marketing to the African-American consumer
in its markets. The Company believes that it has achieved this recognition by
focusing on serving the African-American consumer and by creating innovative
advertising campaigns and promotional tie-ins. The Company sponsors several
major entertainment events each year. The Stone Soul Picnic, developed by the
Company in 1989, is an all-day free outdoor concert which showcases advertisers,
local merchants and other organizations desiring exposure to over 100,000 people
in each of Washington, D.C. and Baltimore. The Company also sponsors The
People's Expo every March in Washington, D.C. and Baltimore. This event provides
entertainment, shopping and educational seminars to the Company's
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listeners and others from the communities that the Company serves. In connection
with these events, advertisers buy signage, booth space and broadcast promotions
to sell cars, groceries, clothing, financial services and other products and
services to the African-American consumer.
STRONG MANAGEMENT AND PERFORMANCE-BASED INCENTIVES
The Company focuses on hiring highly motivated and talented individuals in
each functional area of the organization who can effectively help the Company
implement its strategies of growth and value creation. The Company's management
team is comprised of a diverse group of individuals who bring strong expertise
to their respective functional areas. The Company looks to promote from within
and, thus, aims to build a middle management and lower-level employee base
comprised of individuals with great potential, the ability to operate with high
levels of autonomy and the appropriate team-orientation which will enable them
to grow their careers within the organization.
To enhance the quality of management in the sales and programming areas of
the Company, General Managers, Sales Managers and Program Directors have
significant portions of their compensation tied to the achievement of certain
performance goals. General Managers' compensation is based partially on
achieving cash flow benchmarks which creates an incentive for management to
focus not only on sales growth, but also on expense control. Additionally, Sales
Managers and sales personnel have incentive packages based on sales goals, and
Program Directors and on-air talent have incentive packages focused on
maximizing overall ratings as well as ratings in specific target segments.
RADIO STATION CLUSTERING, PROGRAMMING SEGMENTATION AND SALES BUNDLING
The Company strives to build clusters of radio stations in its markets,
with each radio station targeting different demographic segments of the
African-American population. This clustering and programming segmentation
strategy allows the Company to achieve greater penetration into each segment of
its target market. The Company is then able to offer advertisers multiple
audiences and to bundle the radio stations for advertising sales purposes when
advantageous.
The Company believes there are several potential benefits that result from
operating multiple radio stations within the same market. First, each additional
radio station in a market provides the Company with a larger percentage of the
prime advertising time available for sale within that market. Second, the more
signals programmed by the Company, the greater the market share the Company can
achieve in its target demographic groups through the use of segmented
programming. Third, the Company is often able to consolidate sales, promotional,
technical support and corporate functions to produce substantial cost savings.
Finally, the purchase of additional radio stations in an existing market allows
the Company to take advantage of its market expertise and existing relationships
with advertisers.
ACQUISITION STRATEGY
The Company's primary acquisition strategy is to acquire and turn around
under performing radio stations in the top-30 African-American markets. The
Company considers acquisitions in existing markets where expanded coverage is
desirable and considers acquisitions in new markets where the Company believes
it is advantageous to establish a presence. In analyzing potential acquisition
candidates, the Company generally considers (i) whether the radio station has a
signal adequate to reach a large percentage of the African-American community in
a market, (ii) whether the Company can reformat or improve the radio station's
programming in order to profitably serve the African-American community, (iii)
whether the radio station affords the Company the opportunity to segment program
formats within a market in which the Company already maintains a presence, (iv)
whether the Company can increase broadcast revenues of the radio station through
aggressive marketing, sales and promotions, (v) the price and terms of the
purchase, (vi) the level of performance that can be expected from the radio
station under the Company's management and (vii) the number of competitive radio
stations in the market.
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The Company believes that large segments of the African-American population
in its target markets are often concentrated in certain geographic sections of
such markets. The Company further believes that this geographic concentration
may provide it with an opportunity to acquire less expensive radio stations with
less powerful signals without materially diminishing the Company's coverage of
the African-American community. As a result, the Company believes it can have a
competitive advantage in securing a substantial share of the radio revenue at a
potentially lower acquisition cost per listener than radio stations targeting
other demographic groups.
The Company does not apply a fixed formula to determine the purchase price
of radio stations and does not focus solely on multiples of broadcast cash flow.
Rather the Company seeks to acquire radio stations consistent with its
acquisition and operating strategies. The Company will continue to evaluate
potential acquisitions in the top-30 African-American markets.
STATION OPERATIONS
The following is a general description of each of the Company's markets and
its radio stations in each market. As noted, the data provided in the tables
below includes information during periods the radio stations listed were not
owned or operated by the Company.
WASHINGTON D.C.
The Washington, D.C. market is estimated to be the eighth largest radio
market in terms of population and had 1997 radio advertising revenues totaling
an estimated $218.0 million. In 1995, Washington, D.C. had the third largest
African-American population in the United States with an MSA population of
approximately 4.2 million (approximately 27.4% of which was African-American).
The Company believes it owns the strongest franchise (in terms of audience share
and number of radio stations) of African-American targeted radio stations in the
Washington, D.C. market with two of the four FM radio stations and two of the
three AM radio stations that target African-Americans.
<TABLE>
<CAPTION>
1994(d) 1995(d) 1996(d) 1997(d)
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
WKYS-FM(a)
Audience share (12-plus) .............. 3.8% 3.8% 4.5% 5.8%
Audience share rank (12-plus) ......... 10 9(t) 6(t) 1
Audience share (18-34) ................ 5.6% 5.8% 7.5% 10.3%
Audience share rank (18-34) ........... 6 6 2 1
Revenue share ......................... 5.1% 3.8% 3.3% 4.5%
Revenue rank .......................... 8 14 14 10
WOL-AM and WMMJ-FM
(combined)(b)
Audience share (12-plus) .............. 6.0% 5.4% 5.5% 5.2%
Audience share (25-54) ................ 6.9% 6.4% 6.2% 5.9%
Revenue share ......................... 5.9% 5.6% 5.3% 4.5%
Revenue rank .......................... 7 7 8 12
WYCB-AM(c)
Audience share (12-plus) .............. 1.2% 1.6% 1.3% 1.2%
Audience share rank (12-plus) ......... 21 20 20 19
Audience share (35-64) ................ 1.3% 1.7% 1.5% 1.4%
Audience share rank (35-64) ........... 22 19 18 17
Revenue share ......................... N/A N/A 0.7% 0.6%
Revenue rank .......................... N/A N/A N/A N/A
</TABLE>
- ----------
As used in this table, "N/A" means not applicable or not available and "(t)"
means tied with one or more radio stations.
(a) WKYS-FM was acquired by the Company on June 6, 1995.
(b) WOL-AM and WMMJ-FM advertising time is sold in combination.
(c) Radio One acquired WYCB-AM in the first quarter of 1998 through an
Unrestricted Subsidiary (as defined).
(d) Audience share and audience share rank data is based on Arbitron four book
averages for the years indicated. Revenue share and rank data are based upon the
Radio Revenue Report of Hungerford for December 1997, 1996, 1995 and 1994 except
for WYCB-AM which does not report to Hungerford. Revenue share for WYCB-AM
represents the radio station's net revenues as a percentage of the market radio
revenue reported by the Hungerford Report, (December 1997), as adjusted for
WYCB-AM's net revenues.
WOL-AM. Radio One's first radio station, WOL-AM, was purchased in 1980 for
approximately $900,000. WOL-AM was a music station with declining revenue share
and audience share that the Company converted to one
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of the country's first all-talk radio stations targeting African-Americans.
Radio One's Chairperson, Ms. Catherine L. Hughes, who hosted WOL-AM's daily
four-hour morning show from 1983 to 1995, created a valuable niche for the radio
station as "The Voice of Washington's Black Community." The Company believes
that WOL-AM is a vital communications platform for the community, political and
business leaders in its market. WOL-AM's ratings have historically fluctuated
between a 1% and 2% audience share in the 12-plus market.
WMMJ-FM. Radio One purchased WMMJ-FM in 1987 for approximately $7.5
million. At the time, WMMJ-FM was being programmed in a general market adult
contemporary format, which led it to garner a 1.2% audience share of the 12-plus
market. However, given its relatively low signal strength (Class A with 3,000
watts of power since been upgraded to 6,000 watts) and low ratings, it was
generating minimal revenues and little or no broadcast cash flow. After
extensive research by the Company, WMMJ-FM was the first FM radio station on the
East Coast to introduce an Urban Adult Contemporary ("Urban AC") programming
format. This format focuses on African-Americans in the 25 to 54 age group and
provides adult-oriented Urban Contemporary music from the 1960s, 1970s, 1980s
and 1990s. The Urban AC format was almost immediately successful, and today
WMMJ-FM, with a 4.1% 1997 four-book audience share in the 12-plus market, is a
popular radio station among all 25 to 54-year-olds in Washington, D.C. with a
long-standing and loyal listener base.
WKYS-FM. Radio One purchased WKYS-FM in June 1995 for approximately $34.4
million. WKYS-FM is a Class B (as defined) Young Urban Contemporary radio
station targeting 18 to 34-year-old African-American adults. From 1978 to 1989,
WKYS-FM was Washington, D.C.'s perennial Urban Contemporary leader and was
frequently the market's number one radio station overall. However, in 1987,
WPGC-FM (now owned by CBS Corporation ("CBS")) changed its format from Adult
Contemporary to CHR/Urban and in the Spring of 1989, replaced WKYS-FM as the
number one urban radio station in terms of audience share. From 1986 to the Fall
of 1994, WKYS-FM's overall ratings rank fell from number one to number twelve
with a 3.3% audience share of the 12-plus market, while WPGC-FM moved from near
the bottom to number one with a 9.0% audience share of the 12-plus market. By
1995, the former owner of WKYS-FM abandoned the 18 to 34-year- old demographic
group and began to target 25 to 54-year-olds, making it a direct competitor to
Radio One's WMMJ-FM instead of CBS's WPGC-FM. When Radio One purchased WKYS-FM
in June 1995, it repositioned WKYS-FM's programming away from WMMJ-FM and back
towards 18 to 34-year-olds and WPGC-FM. Since June 1995, the Company has been
able to dramatically increase WKYS-FM's overall 12-plus market audience share
and in 1997 WKYS-FM became Washington, D.C.'s number one rated radio station for
the 12-plus as well as 18 to 34-year old markets. During this same period of
time, WPGC-FM has fallen to the number two position in the 12-plus and 18 to
34-year-old markets.
WYCB-AM. WYCB Acquisition Corporation, a wholly-owned Unrestricted
Subsidiary (as defined) of Radio One, entered into the WYCB Agreement with BHI,
licensee of WYCB-AM, on November 19, 1997 to acquire all of the outstanding
stock of BHI for approximately $3.75 million. WYCB Acquisition Corporation
consummated the DC Acquisition effective March 16, 1998. BHI is now a
wholly-owned subsidiary of WYCB Acquisition Corporation and also an Unrestricted
Subsidiary of Radio One. WYCB-AM is currently the top-rated Gospel radio station
in Washington, D.C. The Company believes WYCB-AM's Gospel programming format
will provide the Company with access to another segment of the African-American
community in Washington, D.C., which will complement its existing radio station
group in that market.
BALTIMORE, MARYLAND
The Baltimore market is the 19th largest radio market in terms of
population and had 1997 radio advertising revenues totaling an estimated $88.0
million. In 1995, Baltimore had the eleventh largest African-American population
in the United States with an MSA population of approximately 2.5 million
(approximately 26.0% of which was African-American). The Company believes
Baltimore is "under radioed" with only 15 viable FM radio stations (according to
Duncan's Radio Market Guide), in part because of its close proximity to
Washington, D.C., and therefore, a particularly attractive market. The Company
believes it owns the strongest franchise of African-American targeted radio
stations in the Baltimore market with the only two FM radio stations and two of
the four AM radio stations which target African-Americans.
7
<PAGE>
<TABLE>
<CAPTION>
1994(c) 1995(c) 1996(c) 1997(c)
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
WERQ-FM(a)
Audience share (12-plus) .............. 5.6% 5.2% 6.4% 9.3%
Audience share rank (12-plus) ......... 6 7 4 1
Audience share (18-34) ................ 8.3% 8.6% 10.7% 16.0%
Audience share rank (18-34) ........... 3 2 2 1
WOLB-AM(a)
Audience share (12-plus) .............. 0.4% 0.9% 0.6% 0.9%
Audience share rank (12-plus) ......... 32(t) 23(t) 28(t) 24
Audience share (35-64) ................ 0.6% 1.1% 0.9% 1.2%
Audience share rank (35-64) ........... 26(t) 19(t) 23 17
WERQ-FM and WOLB-AM (Combined)(a)
Audience share (12-plus) .............. 6.0% 6.1% 7.0% 10.2%
Audience share (25-54) ................ 4.3% 4.9% 5.7% 9.1%
Revenue share ......................... 5.2% 6.7% 6.7% 11.1%
Revenue rank .......................... 8 8 8 4
WWIN-FM(b)
Audience share (12-plus) .............. 3.3% 4.0% 3.6% 3.6%
Audience share rank (12-plus) ......... 11 10 10 9
Audience share (25-54) ................ 4.5% 5.5% 4.9% 4.9%
Audience share rank (25-54) ........... 7 5 7(t) 7
WWIN-AM(b)
Audience share (12-plus) .............. 1.0% 1.1% 1.1% 0.8%
Audience share rank (12-plus) ......... 21 18(t) 20(t) 26
Audience share (35-64) ................ 1.2% 1.1% 1.4% 1.1%
Audience share rank (35-64) ........... 19(t) 19(t) 18 19
WWIN-FM and WWIN-AM (Combined)(b)
Audience share (12-plus) .............. 4.3% 5.1% 4.7% 4.4%
Audience share (25-54) ................ 5.6% 6.6% 6.0% 5.8%
Revenue share ......................... 5.1% 5.7% 5.8% 5.2%
Revenue rank .......................... 9 10 10 9
</TABLE>
- ----------
As used in this table, "N/A" means not applicable or not available and "(t)"
means tied with one or more radio stations.
(a) Based upon the Hungerford Report, (December, 1997). WERQ-FM and WOLB-FM
jointly report revenue data to Hungerford.
(b) Based upon the Hungerford Report, (December, 1997). WWIN-FM and WWIN-AM
jointly report revenue data to Hungerford.
(c) Audience share and audience share rank data are based on Arbitron four book
averages for the years indicated. Revenue share and rank data are based on the
Radio Revenue Report by Hungerford for December 1997, 1996, 1995 and 1994.
WWIN-FM AND WWIN-AM. In January 1992, Radio One made its first acquisition
outside of the Washington, D.C. market with the purchase of two Baltimore radio
stations, WWIN-FM and WWIN-AM, for approximately $4.7 million. At the time,
these two radio stations were Black Adult Contemporary and Gospel radio
stations, respectively. Combined, the two Baltimore radio stations had
approximately $2.5 million in revenue and approximately $400,000 in broadcast
cash flow. During Radio One's first full year of ownership, through aggressive
selling efforts and expense control, revenues increased to approximately $3.5
million, and broadcast cash flow increased to approximately $1.0 million.
Additionally, at the time of the acquisition, WWIN-FM was a weak second to
WXYV-FM, the dominant Urban Contemporary radio station in the market, with less
than one-third of that radio station's market share. Today, WWIN-FM is a leading
urban radio station, second only to the Company's WERQ-FM, among 25 to
54-year-olds in the Baltimore market (in terms of audience share) and WWIN-AM
continues to occupy an attractive niche on the AM frequency with its Gospel
programming format.
WERQ-FM AND WOLB-AM. In September 1993, Radio One completed another
acquisition in the Baltimore market with the purchase of WERQ-FM and WOLB-AM
(formerly WERQ-AM) for approximately $9.0 million. WERQ-FM, which has a
full-powered signal, was, at the time of its acquisition, a CHR/Urban radio
station, while WERQ-AM was a satellite-fed, all-news radio station. Combined,
these radio stations were losing approximately $600,000 per year. Radio One
proceeded to convert the format of WERQ-FM to a more focused young Urban
Contemporary format targeted at 18 to 34-year-old African-Americans, while
WOLB-AM began simulcasting with Radio One's Black Talk radio station in
Washington, D.C., WOL-AM. These moves, in conjunction with more aggressive sales
efforts and savings from radio station clustering, increased revenues by
approximately $1.0 million and eliminated the operating loss in these radio
stations' first full year of ownership by Radio One. Over time, WERQ-FM's
audience share increased dramatically, and today, it is the number one radio
station in the 12-plus and 18 to 34-year-old market while its former primary
competitor, WXYV-FM, changed format during 1997 and no longer targets the same
listener base as that of WERQ-FM.
8
<PAGE>
PHILADELPHIA, PENNSYLVANIA
The Philadelphia market is the fifth largest radio market in terms of MSA
population and had 1997 radio advertising revenues totaling an estimated $226.0
million. In 1995, Philadelphia had the sixth largest African-American population
in the United States with an MSA population of approximately 4.9 million
(approximately 19.9% of which was African-American).
WPHI-FM. On February 8, 1997, Radio One entered into a local marketing
agreement ("LMA") with the then-current owner of WPHI-FM (at the time the
station's call sign was WDRE-FM), and the radio station's programming format
changed from Modern Rock to young Urban Contemporary targeting 18 to 34-year-old
African-Americans like that of WKYS-FM's, one of the Company's radio stations in
Washington, D.C., and WERQ-FM's, one of the Company's radio stations in
Baltimore. On May 19, 1997, Radio One acquired WPHI-FM, providing the Company
with an opportunity to apply its operating strategy in another top-30
African-American market. Although WPHI-FM is a Class A facility operating at the
equivalent of 3,000 watts, the Company believes it adequately reaches at least
90% of the African-Americans in Philadelphia. The Company believes the
acquisition of WPHI-FM fits the Company's acquisition model of finding lower
powered and lower priced radio stations that will adequately cover a target
African-American population due to the relatively high concentration of that
target market in certain geographic sections of a market. In the most recent
Arbitron Survey, WPHI-FM achieved a 3.5% audience share in the 12-plus market
and had solidly positioned itself as the number two young urban station in the
market behind WUSL-FM.
DETROIT, MICHIGAN
The Detroit market is the sixth largest radio market in terms of MSA
population and had 1997 radio advertising revenues totaling an estimated $200.0
million. In 1995, Detroit had the fifth largest African-American population in
the United States with an MSA population of approximately 4.5 million
(approximately 22.6% of which was African-American).
On December 23, 1997, Radio One entered into the Bell Agreement to
acquire all of the outstanding capital stock of Bell, the owner of two radio
stations located in the Detroit, Michigan market and one radio station located
in Kingsley, Michigan. Pursuant to the Bell Agreement, Radio One agreed to pay
approximately $34.2 million in cash plus the cost of certain improvements to the
stations, $2.0 million of which was deposited in escrow upon the execution of
the Agreement and will be available to the sellers as liquidated damages if
Radio One breaches its obligations thereunder. The consummation of the Bell
Acquisition is contingent upon certain matters, including the receipt of final
approval from the FCC for the transfer of the FCC licenses. Radio One expects to
complete the Bell Acquisition by the end of the third quarter of 1998 which may
require the exercise of up to four one month extensions of the closing date,
each extension to cost $150,000. Radio One anticipates that Bell will become a
Restricted Subsidiary, as that term is defined in the Indenture, and a guarantor
of the Notes.
ADVERTISING REVENUES
Substantially all of the Company's revenues are generated from the sale of
local and national advertising for broadcast on its radio stations. Additional
broadcasting revenue is generated from network compensation payments and other
miscellaneous transactions. Local sales are made by the sales staffs located in
Washington, D.C., Baltimore and Philadelphia. National sales are made by firms
specializing in radio advertising sales on the national level, in exchange for a
commission from the Company that is based on a percentage of the Company's gross
revenue from the advertising obtained. Approximately 69% of the Company's net
broadcasting revenues for the fiscal year ended December 31, 1997 were generated
from the sale of local advertising and 26% from sales to national advertisers
with the balance of net broadcasting revenues being derived from various special
events hosted by the Company as well as sponsorships and other similar forms of
revenue generation.
The Company believes that advertisers can reach the African-American
community more cost-effectively through radio broadcasting than through
newspapers or television. Advertising rates charged by radio stations are
9
<PAGE>
based primarily on (i) a radio station's audience share within the demographic
groups targeted by the advertisers, (ii) the number of radio stations in the
market competing for the same demographic groups and (iii) the supply and demand
for radio advertising time. Advertising rates are generally highest during the
morning and afternoon commuting hours.
A radio station's listenership is reflected in ratings surveys that
estimate the number of listeners tuned to a radio station and the time they
spend listening to that radio station. Each radio station's ratings are used by
its advertisers to consider advertising with the radio station, and are used by
the Company to chart audience growth, set advertising rates and adjust
programming. The radio broadcast industry's principal ratings are from The
Arbitron Company ("Arbitron"), to which the Company subscribes. Arbitron
publishes monthly and quarterly ratings surveys for significant domestic radio
markets. These surveys are the Company's primary source of ratings data with
respect to its radio stations.
COMPETITION
Radio broadcasting is a highly competitive business. Each of the Company's
radio stations competes for audience share and advertising revenue directly with
other radio stations, as well as with other media such as billboards, newspapers
and television. There are well-capitalized firms competing in the same
geographic markets as the Company, many of which have greater financial
resources.
The financial success of each of the Company's radio stations depends, to a
significant degree, upon its audience ratings, its share of the overall radio
advertising revenue within a specific market and the economic health of that
market. The audience ratings and advertising revenue of the Company's individual
radio stations are subject to change, and any adverse change in a particular
market could have a material adverse effect on the total revenue and broadcast
cash flow of the Company. The Company's radio stations compete for audience
share and advertising revenue directly with other FM and AM radio stations and
with other media within their respective markets. While the Company already
competes with other radio stations with comparable programming formats in each
of its markets, if another radio station in the market were to convert its
programming format to a format similar to one of the Company's radio stations,
if a new radio station were to adopt a competitive format or if an existing
competitor were to strengthen its operations, the Company's radio stations could
suffer a reduction in ratings and/or advertising revenue and could require
increased promotion and other expenses. In addition, certain of the Company's
radio stations compete, and in the future other radio stations of the Company
may compete, with duopolies or other combinations of radio stations operated by
a single operator.
Radio broadcasting is also increasingly subject to competition from new
media technologies that are being developed or introduced, such as the delivery
of audio programming over the Internet and by cable television systems or the
introduction of digital audio broadcasting ("DAB"). DAB may provide a medium for
the delivery by satellite or terrestrial means of multiple audio programming
formats to local and national audiences. The Company cannot predict the effect,
if any, that any such new technologies may have on the radio broadcasting
industry.
ANTITRUST
An important element of the Company's growth strategy involves the
acquisition of additional radio stations. Following the passage of the
Telecommunications Act of 1996, the Antitrust Division of the Department of
Justice has become more aggressive in reviewing proposed acquisitions of radio
stations and radio station networks which otherwise complied with the FCC's
ownership limitations, particularly in instances where the proposed acquiror
already owns one or more radio stations in a particular market and the
acquisition involves another radio station in the same market. The Department of
Justice reviews transactions on a case-by-case basis to determine whether
competition will be adversely affected after the transaction is consummated.
Recently, the Antitrust Division obtained consent decrees requiring an acquiror
to dispose of one or more radio stations in a particular market where the
acquisition (which would otherwise comply with the FCC's ownership limitations)
would have resulted in an undue concentration of market share by the acquiror.
The post-acquisition concentration of combined market share and combined
advertising revenues of the acquiror were the likely factors which caused
10
<PAGE>
the Antitrust Division to require divestiture. Additionally, any acquisitions
are potentially subject to review by the Federal Trade Commission.
FEDERAL REGULATION OF RADIO BROADCASTING
The radio broadcasting industry is subject to extensive and changing
regulation by the FCC of programming, technical operations, employment and other
business practices. The FCC regulates radio broadcast stations pursuant to the
Communications Act of 1934, as amended. The Communications Act permits the
operation of radio broadcast stations only in accordance with a license issued
by the FCC upon a finding that the grant of a license would serve the public
interest, convenience and necessity. The Communications Act provides for the FCC
to exercise its licensing authority to provide a fair, efficient and equitable
distribution of broadcast service throughout the United States. Among other
things, the FCC assigns frequency bands for radio broadcasting; determines the
particular frequencies, locations and operating power of radio broadcast
stations; issues, renews, revokes and modifies radio broadcast station licenses;
regulates transmitting equipment used by radio broadcast stations; adopts and
implements regulations and policies that directly or indirectly affect the
ownership, operation, program content and employment and business practices of
radio broadcast stations; and has the power to impose penalties, including
monetary forfeitures, for violations of its rules and the Communications Act.
The Communications Act prohibits the sale or assignment of an FCC license,
or other transfer of control of an FCC licensee, without the prior approval of
the FCC. In determining whether to grant requests for consents to assignments or
transfers, and in determining whether to grant or renew a radio broadcast
license, the FCC considers a number of factors pertaining to the licensee (and
any proposed licensee), including restrictions on foreign ownership, compliance
with FCC media ownership rules, licensee "character" and compliance with the
Anti-Drug Abuse Act of 1988.
The following is a brief summary of certain provisions of the
Communications Act and specific FCC rules and policies. This summary does not
purport to be complete and is qualified in its entirety by the text of the
Communications Act, the FCC's rules and regulations, and the public notices and
rulings of the FCC. A potential investor should refer to the Communications Act
and these FCC rules and policies for further information concerning the nature
and extent of federal regulation of radio broadcast stations.
A licensee's failure to observe the requirements of the Communications Act
or FCC rules and policies may result in the imposition of various sanctions,
including admonishment, fines, the grant of "short" (less than the full
eight-year) renewal terms, grant of a license with conditions or, for
particularly egregious violations, the denial of a license renewal application,
the revocation of an FCC license or the denial of FCC consent to acquire
additional broadcast properties. Congress and the FCC have had under
consideration, and may in the future consider and adopt, new laws, regulations
and policies regarding a wide variety of matters that could, directly or
indirectly, affect the operation, ownership and profitability of the Company's
radio stations, result in the loss of audience share and advertising revenues
for the Company's radio broadcast stations or affect its ability to acquire
additional radio broadcast stations or finance such acquisitions. Such matters
may include changes to the license authorization and renewal process; proposals
to impose spectrum use or other fees on FCC licensees; auction of new broadcast
licenses; changes to the FCC's equal employment opportunity regulations and
other matters relating to involvement of minorities and women in the
broadcasting industry; proposals to change rules relating to political
broadcasting including proposals to grant free air time to candidates, and other
changes regarding program content; proposals to restrict or prohibit the
advertising of beer, wine and other alcoholic beverages; technical and frequency
allocation matters, including those relative to the implementation of digital
audio broadcasting on both a satellite and terrestrial basis; changes in
broadcast cross-interest, multiple ownership, foreign ownership, cross-ownership
and ownership attribution policies; changes to technical broadcast requirements;
proposals to allow telephone companies to deliver audio and video programming to
homes in their service areas; and proposals to alter provisions of the tax laws
affecting broadcast operations and acquisitions.
The Company cannot predict whether or not any such changes might be adopted
nor can it predict what other matters might be considered in the future, nor can
it judge in advance what impact, if any, the implementation of any of these
proposals or changes might have on its business.
11
<PAGE>
FCC Licenses. The Communications Act provides that a broadcast station
license may be granted to any applicant if the public interest, convenience and
necessity will be served thereby, subject to certain limitations. In making
licensing determinations, the FCC considers an applicant's legal, technical,
financial and other qualifications. The FCC grants radio broadcast station
licenses for specific periods of time, and, upon application, may renew them for
additional terms. Under the Communications Act, radio broadcast station licenses
may be granted for a maximum term of eight years.
Generally, the FCC renews radio broadcast licenses without a hearing upon a
finding that: (i) the radio station has served the public interest, convenience
and necessity, (ii) there have been no serious violations by the licensee of the
Communications Act or FCC rules and regulations, and (iii) there have been no
other violations of the Communications Act or FCC rules and regulations which,
taken together, indicate a pattern of abuse. After considering these factors,
the FCC may grant the license renewal application with or without conditions,
including renewal for a lesser term, or hold an evidentiary hearing. In
addition, the Communications Act authorizes the filing of petitions to deny a
license renewal during specific periods of time after a renewal application has
been filed. Interested parties, including members of the public, may use such
petitions to raise issues concerning a renewal applicant's qualifications. If a
substantial and material question of fact concerning a renewal or other
application is raised by the FCC or other interested parties, or if for any
reason the FCC cannot determine that grant of the renewal application would
serve the public interest, convenience and necessity, the FCC will hold an
evidentiary hearing on the application. If as a result of an evidentiary hearing
the FCC determines that the licensee has failed to meet the requirements
specified above and that no mitigating factors justify the imposition of a
lesser sanction, then the FCC may deny a license renewal application. Only after
a license renewal application is denied will the FCC accept and consider
competing applications for the vacated frequency. Also, during certain periods
when a renewal application is pending, the transferability of the applicant's
license may be restricted. Historically, the Company's licenses have been
renewed without any conditions or sanctions imposed. However, there can be no
assurance that the licenses of each station owned by the Company will be
renewed.
The FCC classifies each AM and FM radio station. An AM radio station
operates on either a clear channel, regional channel or local channel. A clear
channel is one on which AM radio stations are assigned to serve wide areas,
particularly at night. Clear channel AM radio stations are classified as either:
(i) Class A radio stations, which operate unlimited time and are designed to
render primary and secondary service over an extended area, or (ii) Class B
radio stations, which operate unlimited time and are designed to render service
only over a primary service area. Class D radio stations, which operate either
daytime, or unlimited time with low nighttime power, may operate on the same
frequencies as clear channel radio stations. A regional channel is one on which
Class B and Class D AM radio stations may operate and serve primarily a
principal center of population and the rural areas contiguous to it. A local
channel is one on which AM radio stations operate unlimited time and serve
primarily a community and the suburban and rural areas immediately contiguous to
it. A Class C AM radio station operates on a local channel and is designed to
render service only over a primary service area that may be reduced as a
consequence of interference.
The minimum and maximum facilities requirements for an FM radio station are
determined by its class. Possible FM class designations depend upon the
geographic zone in which the transmitter of the FM radio station is located. In
general, commercial FM radio stations are classified as follows, in order of
increasing power and antenna height: Class A, B1, C3, B, C2, C1 or C radio
stations.
The following table sets forth with respect to each of the Company's radio
stations: (i) the market, (ii) the radio station call letters, (iii) the year of
acquisition, (iv) the class of FCC license, (v) the effective radiated power
("ERP"), if an FM radio station, or the power, if an AM radio station, (vi) the
antenna height above average terrain ("HAAT"), if an FM radio station, or the
above insulator measurement ("AI"), if an AM radio station, (vii) the operating
frequency and (viii) the date on which the radio station's FCC license expires.
12
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<TABLE>
<CAPTION>
ERP (FM) HAAT (FM)
STATION YEAR OF FCC POWER (AM) AI (AM) EXPIRATION
MARKET(a) CALL LETTERS ACQUISITION CLASS IN WATTS(b) IN METERS(c) FREQUENCY DATE OF LICENSE
- ------------------ -------------- ------------- ------- --------------- -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Washington, D.C. WOL-AM 1980 C 1,000 52.1 1450 kHz 10/1/2003
WMMJ-FM 1987 A 2,900(d) 146.0 102.3 MHz 10/1/2003
WKYS-FM 1995 B 24,000(e) 215.0 93.9 MHz 10/1/2003
WYCB-AM (f) C 1,000 50.9 1340 kHz 10/1/2003
Baltimore WWIN-AM 1992 C 1,000 61.0 1400 kHz 10/1/2003
WWIN-FM 1992 A 3,000 91.0 95.9 MHz 10/1/2003
WOLB-AM 1993 D 1,000 85.4 1010 kHz 10/1/2003
WERQ-FM 1993 B 37,000(e) 174.0 92.3 MHz 10/1/2003
Philadelphia WPHI-FM 1997 A 340(g) 305.0 103.9 MHz 8/1/1998
</TABLE>
- ----------
(a) A broadcast station's market may be different from its community of license.
(b) The coverage of an AM radio station is chiefly a function of the power of
the radio station's transmitter, less dissipative power losses and any
directional antenna adjustments. For FM radio stations, signal coverage area is
chiefly a function of the ERP of the radio station's transmitter and the HAAT of
the radio station's antenna.
(c) The height of an AM radio station's antenna is measured by reference to AI
and the height of an FM radio station's antenna is measured by reference to
HAAT.
(d) WMMJ-FM uses a directional antenna and it operates at a power equivalent to
6,000 watts at 100 meters.
(e) WKYS-FM and WERQ-FM operate at powers equivalent to 50,000 watts at 150
meters. WERQ-FM uses a directional antenna.
(f) Radio One acquired this radio station through an Unrestricted Subsidiary in
the first quarter of 1998.
g) WPHI-FM operates at a power equivalent to 3,000 watts at 100 meters.
Ownership Matters. The Communications Act requires prior approval of the
FCC for the assignment of a broadcast license or the transfer of control of a
corporation or other entity holding a license. In determining whether to approve
an assignment of a radio broadcast license or a transfer of control of a
broadcast licensee, the FCC considers, among other things, the financial and
legal qualifications of the prospective assignee or transferee, including
compliance with FCC restrictions on non-U.S. citizen or entity ownership and
control, compliance with FCC rules limiting the common ownership of certain
"attributable" interests in broadcast and newspaper properties, the history of
compliance with FCC operating rules, and the "character" qualifications of the
transferee or assignee and the individuals or entities holding "attributable"
interests in them. Applications to the FCC for assignments and transfers are
subject to petitions to deny by interested parties.
To obtain the FCC's prior consent to assign or transfer a broadcast
license, appropriate applications must be filed with the FCC. If the application
involves the assignment of the license or a "substantial change" in ownership or
control (i.e., the transfer of more than 50% of the voting stock), the
application must be placed on public notice for a period of 30 days during which
petitions to deny the application may be filed by interested parties, including
members of the public. If an assignment application does not involve new
parties, or if a transfer of control application does not involve a "substantial
change" in ownership or control, it is a "pro forma" application. The "pro
forma" application is nevertheless subject to informal objections filed against
it. If the FCC grants an assignment or transfer application, interested parties
have 30 days from public notice of the grant to seek reconsideration of that
grant. The FCC usually has an additional 10 days to set aside such grant on its
own motion. When ruling on an assignment or transfer application, the FCC is
prohibited from considering whether the public interest might be served by an
assignment or transfer to any party other than the assignee or transferee
specified in the application.
Under the Communications Act, a broadcast license may not be granted to or
held by any corporation that has more than one-fifth of its capital stock owned
or voted by non-U.S. citizens or entities or their representatives, by foreign
governments or their representatives, or by non-U.S. corporations. Furthermore,
the Communications Act provides that no FCC broadcast license may be granted to
any corporation directly or indirectly controlled by any other corporation of
which more than one-fourth of its capital stock is owned of record or voted by
non-U.S. citizens if the FCC finds the public interest will be served by the
refusal of such license. These restrictions apply in modified form to other
forms of business organizations, including partnerships, and limited liability
companies.
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<PAGE>
The FCC generally applies its other broadcast ownership limits to
"attributable" interests held by an individual, corporation, partnership or
other association or entity, including limited liability companies. In the case
of a corporation holding broadcast licenses, the interests of officers,
directors and those who, directly or indirectly have the right to vote five
percent or more of the stock of a licensee corporation are generally deemed
attributable interests, as are positions as an officer or director of a
corporate parent of a broadcast licensee. The FCC treats all partnership
interests as attributable, except for those limited partnership interests that
under FCC policies are considered "insulated" from "material involvement" in the
media-related activities of the partnership. The FCC currently treats limited
liability companies like limited partnerships for purposes of attribution. Stock
interests held by insurance companies, mutual funds, bank trust departments and
certain other passive investors that hold stock for investment purposes only
become attributable with the ownership of ten percent or more of the voting
stock of the corporation holding broadcast licenses. To assess whether a voting
stock interest in a direct or an indirect parent corporation of a broadcast
licensee is attributable, the FCC uses a "multiplier" analysis in which
non-controlling voting stock interests are deemed proportionally reduced at each
non-controlling link in a multi-corporation ownership chain. A time brokerage
agreement with another radio station in the same market creates an attributable
interest in the brokered radio station as well for purposes of the FCC's local
radio station ownership rules, if the agreement affects more than 15% of the
brokered radio station's weekly broadcast hours. See "Local Marketing
Agreements."
Debt instruments, non-voting stock, options and warrants for voting stock
that have not yet been exercised, insulated limited partnership interests where
the limited partner is not "materially involved" in the media-related activities
of the partnership, and minority voting stock interests in corporations where
there is a single holder of more than 50% of the outstanding voting stock whose
vote is sufficient to affirmatively direct the affairs of the corporation,
generally do not subject their holders to attribution. The FCC's rules also
specify other exceptions to these general principles for attribution. The FCC is
currently evaluating whether to: (i) raise the benchmark for voting stock from
five to ten percent, (ii) raise the benchmark for passive investors holding
voting stock from ten to twenty percent, (iii) continue the single 50%
stockholder exception, and/or (iv) attribute non-voting stock or perhaps
non-voting stock interests when combined with other rights such as voting shares
or contractual relationships. More recently, the FCC has solicited comment on
proposed rules that would (i) treat an otherwise nonattributable ownership
equity or debt interest in a licensee as an attributable interest where the
interest holder is a program supplier or the owner of a broadcast station in the
same market and the equity and/or debt holding is greater than a specified
benchmark and (ii) in certain circumstances, treat the licensee of a broadcast
station that sells advertising time on another station in the same market
pursuant to a joint sales agreement as having an attributable interest in the
station whose advertising is being sold.
The Communications Act and FCC rules generally restrict ownership operation
or control of, or the common holding of attributable interests in, (i) radio
broadcast stations above certain limits servicing the same local market, (ii) a
radio broadcast station and a television broadcast station servicing the same
local market, and (iii) a radio broadcast station and a daily newspaper serving
the same local market. These rules include specific signal contour overlap
standards to determine compliance. Under these "cross-ownership" rules, the
Company, absent waivers, would not be permitted to own a radio broadcast station
and acquire an attributable interest in any daily newspaper or television
broadcast station (other than a low-powered television station) in the same
market where it then owned any radio broadcast station, and the Company's
stockholders, officers or directors, absent a waiver, could not hold an
attributable interest in a daily newspaper or television broadcast station. The
FCC is currently reviewing the ban on common ownership of a radio station and a
daily newspaper in the same geographic area. The FCC's rules provide for the
liberal grant of a waiver of the rule prohibiting common ownership of radio and
television stations in the same geographic market in the top 25 television
markets if certain conditions are satisfied, and the FCC will consider waivers
in other markets under more restrictive standards. The FCC is reviewing its ban
on the common ownership of a radio station and a television station or newspaper
including extending the policy of liberal waivers of common ownership of radio
and television stations to the top 50 television markets.
Although current FCC nationwide radio broadcast ownership rules allow one
entity to own, control or hold attributable interests in an unlimited number of
FM radio stations and AM radio stations nationwide, the FCC's rules limit the
number of radio broadcast stations in local markets in which a single entity may
own an attributable interest as follows:
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<PAGE>
o In a radio market with 45 or more commercial radio stations, a party may
own, operate, or control up to 8 commercial radio stations, not more than 5
of which are in the same service (AM or FM).
o In a radio market with between 30 and 44 (inclusive) commercial radio
stations, a party may own, operate, or control up to 7 commercial radio
stations, not more than 4 of which are in the same service (AM or FM).
o In a radio market with between 15 and 29 (inclusive) commercial radio
stations, a party may own, operate, or control up to 6 commercial radio
stations, not more than 4 of which are in the same service (AM or FM).
o In a radio market with 14 or fewer commercial radio stations, a party may
own, operate, or control up to 5 commercial radio stations, not more than 3
of which are in the same service (AM or FM), except that a party may not
own, operate, or control more than 50 percent of the radio stations in such
market.
The FCC is currently reviewing the effect of local market ownership
limitations on competition in the broadcast industry to determine if a
recommendation to repeal or modify the rules should be made to Congress.
Because of these multiple and cross-ownership rules, if a stockholder of
Radio One holds an "attributable" interest in Radio One, such stockholder,
officer or director may violate the FCC's rules if such person or entity also
holds or acquires an attributable interest in other television or radio
stations, or in daily newspapers, depending on the number and location of those
radio stations and the location of those television broadcast stations or daily
newspapers. If an attributable stockholder, officer or director of Radio One
violates any of these ownership rules, the Company may be unable to obtain from
the FCC one or more authorizations needed to conduct its radio station business
and may be unable to obtain FCC consents for certain future acquisitions. As
long as one person or entity holds more than 50% of the voting power of the
Common Stock of the Company where the vote of such person or entity is
sufficient to affirmatively direct the affairs of the Company, another
stockholder, unless serving as an officer and/or director, generally would not
hold an attributable interest in Radio One. As of December 31, 1997, Ms. Hughes
owned approximately 54.2% of the total voting power of the Common Stock of the
Company. However, if the Warrants (as defined) are exercised, Ms. Hughes
ownership would be approximately 26.3% and no one person or entity would hold
sufficient voting power to direct the affairs of the Company.
Under its "cross-interest" policy, the FCC considers "meaningful"
relationships among competing media outlets in the same market, even if the
ownership rules do not specifically prohibit the realtionship. Under this
policy, the FCC may consider significant nonattributable equity interests
(including non-voting stock, voting stock, limited partnership and limited
liability company interests) combined with an attributable interest in a media
outlet in the same market, joint ventures or common key employees among
competitors. The cross-interest policy does not necessarily prohibit all of
these interests, but requires that the FCC consider whether, in a particular
market, the "meaningful" relationships between competitors could have a
significant adverse effect upon economic competition and program diversity. In a
rule making proceeding concerning the attribution rules, the FCC has sought
comment on, among other things, (i) whether the cross-interest policy should be
applied only in smaller markets, and (ii) whether non-equity financial
relationships such as debt, when combined with multiple business relationships,
such as local marketing agreements, raise concerns under the cross-interest
policy. The FCC has proposed treating joint sales arrangements, and debt or
equity interests as attributable interests in certain circumstances without
regard to the cross-interest policy.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." Since the late 1980's, the FCC gradually has
relaxed or eliminated many of the more formalized procedures it developed to
promote the broadcast of certain types of programming responsive to the needs of
a radio station's community. Nevertheless, a broadcast licensee continues to be
required to present programming in response to community problems, needs and
interests and to maintain certain records demonstrating its responsiveness. The
FCC will consider complaints from listeners about a broadcast station's
programming when it evaluates the licensee's renewal application, but listeners'
complaints also may be filed and considered at any time. Stations also must pay
regulatory and application fees, and follow various FCC rules that regulate,
among other things, political advertising, the broadcast of obscene or indecent
programming, sponsorship identification, the
15
<PAGE>
broadcast of contests and lotteries and technical operation (including limits on
human exposure to radio frequency radiation). From time to time, complaints may
be filed against the Company's radio stations alleging violations of these or
other rules.
In addition, licensees must develop and implement programs designed to
promote equal employment opportunities and must submit reports to the FCC on
these matters annually and in connection with each license renewal application.
The FCC rules also prohibit a broadcast licensee from simulcasting more than 25%
of its programming on another radio station in the same broadcast service (that
is, AM/AM or FM/FM). The simulcasting restriction applies if the licensee owns
both radio broadcast stations or owns one and programs the other through a local
marketing agreement, provided that the contours of the radio stations overlap in
a certain manner. Failure to observe these or other rules and policies can
result in the imposition of various sanctions, including fines or conditions,
the grant of "short" (less than the maximum eight year) renewal terms or, for
particularly egregious violations, the denial of a license renewal application
or the revocation of a license.
Local Marketing Agreements. Often radio stations enter into LMAs or time
brokerage agreements. These agreements take various forms. Separately owned and
licensed radio stations may agree to function cooperatively in programming,
advertising sales and other matters, subject to compliance with the antitrust
laws and the FCC's rules and policies, including the requirement that the
licensee of each radio station maintain independent control over the programming
and other operations of its own radio station. One type of time brokerage
agreement is a programming agreement between two separately owned radio stations
that serve a common service area whereby the licensee of one radio station
programs substantial portions of the broadcast day of the other licensee's radio
station (subject to ultimate editorial and other controls being exercised by the
radio station licensee) and sells advertising time during these program
segments. The FCC has held that such agreements do not violate the
Communications Act as long as the licensee of the radio broadcast station that
is being substantially programmed by another entity (i) remains ultimately
responsible for, and maintains control over, the operation of its radio station,
and (ii) otherwise ensures the radio station's compliance with applicable FCC
rules and policies.
A radio broadcast station that brokers time on another radio broadcast
station or engages in a time brokerage agreement with a radio broadcast station
in the same market will be considered to have an attributable ownership interest
in the brokered radio station for purposes of the FCC's local ownership rules,
if the time brokerage arrangement covers more than 15% of the brokered weekly
broadcast hours. As a result, a radio broadcast station may not enter into a
time brokerage agreement that allows it to program more than 15% of the
broadcast time, on a weekly basis, of another local radio broadcast station that
it could not own under the FCC's local multiple ownership rules. The FCC is
considering whether it should treat as attributable multiple business
arrangements among local radio stations such as joint sales accompanied by debt
financing. Also, as described above, FCC rules prohibit a radio broadcast
licensee from simulcasting more than 25% of its programming on another radio
broadcast station in the same broadcast service (that is, AM/AM or FM/FM) where
the two radio stations serve substantially the same geographic area, whether the
licensee owns both radio stations or owns one radio station and programs the
other through a time brokerage agreement. Thus far, the FCC has not considered
what relevance, if any, a time brokerage agreement may have upon its evaluation
of a licensee's performance at renewal time. On February 8, 1997, the Company
entered into an LMA with the then-owner of WPHI-FM in Philadelphia. The LMA
allowed the Company to program WPHI-FM 24 hours a day, seven days a week, and
continued in effect until the consummation of the Philadelphia Acquisition on
May 19, 1997. Radio One may enter into additional LMAs in the future.
RF Radiation. In 1985, the FCC adopted rules regarding human exposure to
levels of radio frequency ("RF") radiation. These rules require applicants for
renewal of broadcast licenses or modification of existing licenses to inform the
FCC at the time of filing such applications whether an existing broadcast
facility would expose people to RF radiation in excess of certain guidelines.
The FCC has since adopted more restrictive radiation limits which became
effective October 15, 1997.
Digital Audio Broadcasting. The FCC allocated spectrum to a new technology,
digital audio broadcasting, to deliver satellite-based audio programming to a
national or regional audience and issued regulations for a DAB service on March
3, 1997. DAB may provide a medium for the delivery by satellite or terrestrial
means of multiple new audio programming formats with compact disc quality sound
to local and national audiences. It is not known at
16
<PAGE>
this time whether this technology also may be used in the future by existing
radio broadcast stations either on existing or alternate broadcasting
frequencies. In addition, applicants who applied to the FCC for authority to
offer multiple channels of digital, satellite-delivered S-Band aural services
that could compete with conventional terrestrial radio broadcasting participated
in an auction of the spectrum reserved for DAB held in April 1997. Two licenses
were awarded through the auction pursuant to which the licensees will be
permitted to sell advertising and lease channels. The FCC's rules require that
the service begin by 2001 and be fully operational by 2003. These satellite
radio services use technology that may permit higher sound quality than is
possible with conventional AM and FM terrestrial radio broadcasting.
Recently, the FCC established a new Wireless Communications Service ("WCS")
in the 2305-2320 and 2345-2360 MHZ bands (the "WCS Spectrum"). The FCC awarded
licenses for the WCS Spectrum by competitive bidding using multiple round
electronic auction procedures. Licensees are permitted to provide any fixed,
mobile, radio location services, or digital satellite radio service using the
WCS Spectrum. Implementation of DAB would provide an additional audio
programming service that could compete with the Company's radio stations for
listeners, but the effect upon the Company cannot be predicted.
Low Power Radio. The FCC recently requested comments on a proposal to
establish a low power radio service that would be limited to a maximum of one
watt and would cover one to several square miles. The nationwide service would
target "niche markets" and be supported by advertising revenue. Each low power
station would be licensed to operate in a specific location referred to as a
"cell". Only one AM and one FM low power station would be licensed to each cell.
An entity would be able to own either the AM or the FM license in each cell
although one entity could own up to five licenses nationwide. The licenses would
be awarded randomly (if more than one were filed) rather than by auction.
Implementation of a low power radio service would provide an additional audio
programming service that could compete with the Company's radio stations for
listeners, but the effect upon the Company cannot be predicted.
SUBSIDIARIES AND RELATED ENTITIES
The FCC licenses for eight of the radio stations operated by Radio One are
held by Radio One Licenses, Inc., a Delaware corporation and a wholly-owned
Restricted Subsidiary of Radio One ("License Company"). License Company holds no
other material assets. Radio One formed WYCB Acquisition Corporation, a Delaware
corporation and a wholly-owned Unrestricted Subsidiary, to consummate the DC
Acquisition, which occurred effective as of March 16, 1998. As a result of this
acquisition, WYCB Acquisition Corporation acquired all of the outstanding
capital stock of BHI. BHI is also an Unrestricted Subsidiary of the Company and
holds the FCC license for WYCB-AM. BHI also holds the assets used in the
operation of WYCB-AM. The Company may have other subsidiaries in the future. The
terms "Restricted Subsidiary" and "Unrestricted Subsidiary" are defined in Radio
One's Indenture.
INDUSTRY SEGMENTS
The Company considers radio broadcasting to be its only business segment.
EMPLOYEES
As of December 31, 1997, the Company employed 249 people, approximately 90
of whom are part-time employees. The Company's employees are not unionized. The
Company has not experienced any work stoppages and believes its relations with
its employees are satisfactory.
Each radio station has its own on-air personalities and clerical staff.
However, in an effort to control broadcast and corporate expenses, the Company
centralizes certain radio station functions by market location. For example, the
Company employs one General Manager for each of its markets who is responsible
for all of the Company's radio stations located in such markets and Radio One's
Vice President of Programming oversees programming for all of the Company's
radio stations.
17
<PAGE>
ITEM 2. PROPERTIES
<TABLE>
<CAPTION>
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
TYPE OF FACILITY AND OWNED OR LEASED APPROXIMATE SIZE
PROPERTY ADDRESS USE (EXPIRATION DATE) TENANT (SQUARE FEET)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
5900 Princess Garden Parkway, Corporate Office, Leased Radio One, Inc. 17,175
8th Floor WKYS-FM, WOL-AM (expires
Lanham, Maryland WMMJ-FM, Office/Studio 12/31/2011)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
4001 Nebraska Avenue, N.W. WKYS-FM Leased Radio One, Inc. Tower and
Washington, D.C. Transmitter/Tower (expires transmitter space
11/30/2001)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
62 Pierce Street, N.E. WOL-AM, Tower Leased Radio One, Inc. Tower and
Washington, D.C. (expires transmitter space
3/31/2001)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
4400 Massachusetts Avenue, N.W. WMMJ-FM, Tower Leased Radio One, Inc. Tower space (+)
Washington, D.C. (expires 5/1/99) 200
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
100 St. Paul Street WWIN-AM/FM, Leased Radio One, Inc. 8,000
Baltimore, Maryland WERQ-FM, WOLB-AM (expires
Office/Studio 10/31/2003)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
Greenmount Avenue and 29th WWIN-AM, Tower Leased Radio One, Inc. 225
Street (expires
Baltimore, Maryland 8/31/2001)
(Waverly Towers)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
1315 W. Hamburg Street WOLB-AM Leased Radio One, Inc. Tower and
Baltimore, Maryland Tower (expires transmitter space
12/31/2000)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
7 St. Paul Street Satellite Dish Space Leased Radio One, Inc. 200
Baltimore, Maryland (expires 4/22/99)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
Baltimore, Maryland Underground Duct Space Leased Radio One, Inc. N/A
(automatic six
month renewals)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
*100 Old York Road WPHI-FM Leased Radio One, Inc. 4,485
Jenkintown, PA Office/Studio (expired 10/97)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
**Domino Lane and Fowler Street WPHI-FM Leased Radio One, Inc. Tower and
Philadelphia, PA Transmitter/Tower (expired 7/96) transmitter space
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
2501 Hawkins Point Road WWIN-FM, Tower Owned Radio One, Inc. 16,800
Baltimore City, Maryland
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
2709 Boarman Avenue WERQ-FM, Tower Owned Radio One, Inc. 24,920
(4334-4338 Park Heights Ave.)
Baltimore, Maryland
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
1025 Vermont Avenue WYCB-AM Leased BHI 3,100
Washington, D.C. Office/Studio (expires 7/98)
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
Walker Mill Road WYCB-AM Leased BHI Tower and
District Heights, MD Tower (expires 11/99) transmitter space
- -------------------------------- ------------------------ ------------------- ------------------- ------------------
</TABLE>
- ----------
*Radio One leases office space from Old York Road, L.L.C. on a month to month
basis as the lease expired October 1997. Radio One is currently negotiating with
the landlord for a new lease with a five-year term.
**The City of Philadelphia leases the transmitter site to Fox Television
Stations, Inc. under a Master Lease. Fox in turn subleases space on its tower to
Radio One. Both the underlying Master Lease and the sublease expired in 1996.
Fox timely notified the City of Philadelphia of its intent to renew and Fox was
timely notified of the renewal of the sublease. The City of Philadelphia and Fox
are currently negotiating a new Master Lease, including the amount of the
monthly rental. Therefore, Radio One has not been able to enter into a new
sublease with Fox.
The real property owned or leased by Radio One is the subject of a security
interest held pursuant to the terms of the Amended and Restated Credit Agreement
(as defined).
The Company owns substantially all of its other equipment, consisting
principally of studio equipment and office equipment. The towers, antennae and
other transmission equipment used by the Company's radio stations are generally
in good condition, although opportunities to upgrade facilities are periodically
reviewed.
The Company believes that its facilities for its radio stations and office
space in Washington, D.C., Baltimore, and Philadelphia, are generally suitable
and of adequate size for its current and intended purposes other than for
routine modifications and expansions which may be required from time to time but
would not be expected to have a material adverse effect on the Company or the
Company's financial position or performance.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened to which the Company
is a party or to which any of its properties are subject, other than routine
litigation incidental to its business which either is covered by insurance or,
in the opinion of management of the Company, is not expected to have a material
adverse effect on the Company.
19
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during
the fourth quarter of 1997.
20
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Class A Common Stock
or Class B Common Stock of Radio One. There are 138.45 outstanding shares of
Class A Common Stock of which there are three holders of record as of December
31, 1997, and there are no outstanding shares of Radio One's Class B Common
Stock. 147.04 shares of Class B Common Stock are issuable upon exercise of the
Amended and Restated Warrants dated May 19, 1997, issued by the Radio One (the
"Warrants").
DIVIDENDS
Radio One did not declare any dividends on its Common Stock during 1996 and
1997. Holders of shares of Common Stock are entitled to receive such dividends
as may be declared by Radio One's board of directors out of funds available for
such purpose to the extent not restricted by the terms of the Indenture, the
Preferred Stockholders' Agreement (as defined), and the Amended and Restated
Credit Agreement (as defined). The payment of dividends is currently restricted
by the Amended and Restated Credit Agreement, the Indenture, and the Preferred
Stockholders' Agreement dated May 14, 1997 (the "Preferred Stockholders'
Agreement"), among Catherine L. Hughes, Alfred C. Liggins, III, Jerry A. Moore
III, Alta Subordinated Debt Partners III, L.P. ("Alta"), BancBoston Investments,
Inc. ("BancBoston"), Syncom Capital Corporation ("Syncom"), Alliance Enterprise
Corporation ("Alliance"), Greater Philadelphia Venture Capital Corporation, Inc.
(whose interest was subsequently purchased by Mr. Liggins) ("Greater
Philadelphia"), Opportunity Capital Corporation ("Opportunity"), Capital
Dimensions Venture Fund, Inc. ("Capital"), TSG Ventures L.P. ("TSG"), and
Fulcrum Venture Capital Corporation ("Fulcrum"), and Grant Wilson ("Wilson")
(collectively, such persons other than Ms. Hughes and Messrs. Liggins and Moore,
are referenced to as the "Stockholders").
RECENT SALES OF UNREGISTERED SECURITIES
The Company has issued the following securities pursuant to offerings
exempt from registration under Section 4(2) of the Securities Act:
On June 6, 1995, Radio One issued subordinated promissory notes due in the
year 2003 in the principal amount of $17.0 million (the "2003 Notes") to the
Stockholders. In connection with the issuance of the 2003 Notes, Radio One also
issued (a) warrants to purchase an aggregate of 50.93 shares of Radio One's
Common Stock for an exercise price of $100 per share to Alta, BancBoston and
Wilson. Concurrently with this transaction, the Stockholders (other than Alta,
BancBoston and Wilson) exchanged all of their warrants to acquire shares of
Radio One's Common Stock for cash and a note in the aggregate amount of
approximately $6.6 million and new warrants to acquire up to 96.11 shares of
Common Stock of Radio One for an exercise price per share of $100. All of these
warrants were exchanged on May 19, 1997 for the Warrants.
On May 19, 1997, Radio One issued an aggregate amount of 84,843.03 shares
of Series A 15% Senior Cumulative Exchangeable Redeemable Preferred Stock (the
"Series A Preferred Stock") to Syncom, Alliance, Greater Philadelphia,
Opportunity, Capital, TSG and Fulcrum in exchange for all of their 2003 Notes.
On May 19, 1997, Radio One issued an aggregate amount of 124,467.10 shares
of Series B 15% Senior Cumulative Exchangeable Redeemable Preferred Stock (the
"Series B Preferred Stock") to Alta, BancBoston and Wilson in exchange for all
of their 2003 Notes.
On May 19, 1997, Radio One issued approximately $85.5 million aggregate
principal amount of 12% Senior Subordinated Notes due 2004 to certain "qualified
institutional buyers" as defined by Rule 144A under the Securities Act.
On June 6, 1995 Alfred C. Liggins, III exercised an option to purchase
57.45 shares of Radio One Common Stock pursuant to a stock option granted to Mr.
Liggins.
21
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table contains selected historical consolidated
information with respect to the Company. The selected historical consolidated
financial data for the fiscal years ended December 26, 1993, December 25, 1994,
and December 31, 1995, 1996 and 1997 have been derived from the Company's
audited Consolidated Financial Statements (dollars in thousands). The
Consolidated Financial Statements for the years ended December 31, 1995, 1996
and 1997 are included elsewhere in this Form 10-K.
The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
Fiscal Years Ended
December 26, December 25, Fiscal Years Ended December 31,
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues ................................. $ 11,638 $ 15,541 $ 21,455 $ 23,702 $ 32,367
Operating Expenses:
Station operating expenses ......................... 6,972 8,506 11,736 13,927 18,848
Corporate expenses ................................. 683 1,128 1,995 1,793 2,155
Depreciation and amortization ...................... 1,756 2,027 3,912 4,262 5,828
-------- -------- -------- -------- --------
Total operating expenses ............................... 9,411 11,661 17,643 19,982 26,831
Broadcast operating income ............................. 2,227 3,880 3,812 3,720 5,536
Interest expense, including amortization of deferred
financing costs and debt discount expense .............. 1,983 2,665 5,289 7,252 8,910
Other income (expense) ................................. -- 38 89 (77) 415
-------- -------- -------- -------- --------
Income (loss) before provision for income taxes
and extraordinary item ............................. 244 1,253 (1,388) (3,609) (2,959)
Provision for income taxes ............................. 92 30 -- -- --
-------- -------- -------- -------- --------
Income (loss) before extraordinary item ................ 152 1,223 (1,388) (3,609) (2,959)
Extraordinary item (loss on early retirement of debt) 138 -- 468 -- 1,985
-------- -------- -------- -------- --------
Net income (loss) ...................................... $ 14 $ 1,223 $ (1,856) $ (3,609) $ (4,944)
======== ======== ======== ======== ========
OTHER DATA:
Broadcast cash flow (a) ............................ $ 4,666 $ 7,035 $ 9,719 $ 9,775 $ 13,519
Broadcast cash flow margin ......................... 40.1% 45.3% 45.3% 41.2% 41.8%
EBITDA (b) ......................................... $ 3,983 $ 5,907 $ 7,724 $ 7,982 $ 11,364
EBITDA margin ...................................... 34.2% 38.0% 36.0% 33.7% 35.1%
Capital expenditures ............................... $ 212 $ 639 $ 224 $ 251 $ 2,053
BALANCE SHEET DATA:
Cash and cash equivalents .......................... $ 1,110 $ 1,417 $ 2,703 $ 1,708 $ 8,500
Total assets ....................................... 20,660 20,566 55,894 51,777 79,225
Total debt ......................................... 24,709 23,049 64,585 64,939 74,954
Senior Cumulative Redeemable Preferred
Stock .............................................. -- -- -- -- 22,968
Total stockholders' equity (deficit) ............... $ (5,498) $ (4,367) $(11,394) $(15,003) $(21,984)
</TABLE>
22
<PAGE>
(a) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses and depreciation and amortization of both tangible and
intangible assets. The Company has presented broadcast cash flow data,
which the Company believes is comparable to the data provided by other
companies in the radio broadcasting industry, and is commonly used as a
measure of performance for broadcast companies. Broadcast cash flow does
not purport to represent cash provided by operating activities as reflected
in the Company's consolidated statements of cash flow, is not a measure of
financial performance under generally accepted accounting principles and
should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining the Company's financial performance or liquidity which is
calculated in accordance with generally accepted accounting principles.
(b) "EBITDA" is defined as operating income before depreciation and
amortization.
23
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with "Selected
Financial Data" and the Financial Statements and the notes thereto included
elsewhere in this Form 10-K.
INTRODUCTION
The Company currently owns and operates nine radio stations in three major
markets within the United States. During 1997, WYCB Acquisition Corporation, an
Unrestricted Subsidiary of Radio One, entered into a definitive agreement to
acquire all of the outstanding capital stock of BHI, owner of WYCB-AM in
Washington, D.C., for approximately $3.75 million. This transaction was
consummated effective as of March 16, 1998. Also during 1997, Radio One entered
into a definitive agreement to acquire all of the outstanding capital stock of
Bell Broadcasting Company, owner and operator of two radio stations in the
Detroit, Michigan market and one radio station elsewhere in the state of
Michigan, for approximately $34.2 million in cash plus the cost of certain
improvements to the radio stations. Radio One expects to consummate this
transaction before the end of the third quarter of 1998 which may require the
purchase of up to four one month extensions, each extension to cost $150,000.
The operating revenues of the Company are derived from local and national
advertisers and, to a much lesser extent, ticket revenue related to special
events sponsored by the Company throughout the year as well as a management fee
earned for providing corporate services to Radio One of Atlanta, Inc., an
affiliate of the Company. The Company's primary operating expenses involved in
owning, operating and programming its radio stations are commissions on
revenues, employee salaries, and advertising and promotions expenses.
Amortization and depreciation of costs associated with the acquisition of the
stations and interest carrying charges are significant factors in determining
the Company's overall profitability.
The primary source of the Company's revenue is the sale of broadcasting
time on its radio stations for advertising. The Company's significant broadcast
expenses are employee salaries and commissions, programming expenses,
advertising and promotion expenses, rental of premises for studios and rental of
transmission tower space and music license royalty fees. The Company strives to
control these expenses by centralizing certain functions such as finance and
accounting, and the overall programming management function as well as using its
multiple stations, market presence and purchasing power to negotiate favorable
rates with certain vendors and national representative selling agencies.
The Company's revenues are affected primarily by the advertising rates the
Company's radio stations are able to charge as well as the overall demand for
radio advertising time in a market. Advertising rates are based primarily on (i)
a radio station's audience share in the demographic groups targeted by
advertisers, as measured principally by quarterly reports (and to a lesser
extent, by monthly reports) by Arbitron, (ii) the number of radio stations in
the market competing for the same demographic groups and (iii) the supply of and
demand for radio advertising time. Advertising rates are generally highest
during morning and afternoon commuting hours. Most of the Company's revenues are
generated from local advertising, which is sold by each radio station's sales
staff.
The performance of an individual radio station or group of radio stations
in a particular market is customarily measured by its ability to generate net
revenues and broadcast cash flow (i.e., net revenue less station operating
expenses), although broadcast cash flow is not a measure utilized under
generally accepted accounting principles. Broadcast cash flow should not be
considered in isolation from, nor as a substitute for, operating income, net
income, cash flow, or other consolidated income or cash flow statement data
computed in accordance with generally accepted accounting principles, nor as a
measure of the Company's profitability or liquidity. Despite its limitations,
broadcast cash flow is widely used in the broadcasting industry as a measure of
a company's operating performance because it provides a meaningful measure of
comparative radio station performance, without regard to items such as
depreciation and amortization (which can vary depending upon accounting methods
and the book value of assets, particularly in the case of acquisitions) and
corporate expenses.
24
<PAGE>
Radio One's operating results in any period may be affected by advertising
and promotion expenses that do not produce commensurate revenues in the period
in which such expenses are incurred. The Company generally incurs advertising
and promotion expenses in order to increase listenership and Arbitron ratings.
Increased advertising revenue may wholly or partially lag behind the incurrence
of such advertising and promotion expenses because Arbitron only reports
complete ratings information on a quarterly basis.
From 1993 to the present, Radio One acquired three radio stations. Most
recently, Radio One acquired WPHI-FM, a radio station in Philadelphia,
Pennsylvania on May 19, 1997 for approximately $20.0 million, and, effective
March 16, 1998, acquired WYCB-AM, a radio station located in Washington, D.C.,
for approximately $3.75 million. During the most recent five fiscal years, other
than the acquisition of WPHI-FM and WYCB-AM, Radio One completed one
acquisition, which was its acquisition in June 1995 of WKYS-FM, a radio station
located in Washington, D.C., for total consideration of approximately $34.4
million. The results of operations for WPHI-FM for approximately 11 months of
fiscal year 1997 and for WKYS-FM for the second half of fiscal year 1995 and for
fiscal years 1996 and 1997 are included in the Consolidated Financial Statements
of the Company included elsewhere in this Form 10-K. The discussion below
concerning results of operations reflects the operations of radio stations owned
and/or operated by the Company during the periods presented and therefore does
not include the pro forma results related to WYCB-AM or any other acquisitions.
As a result of the acquisition of WKYS-FM in June 1995, and WPHI-FM in May 1997
(with the LMA for this station beginning in February 1997) the Company's
historical financial data prior to such times are not directly comparable to the
Company's historical financial data subsequent thereto.
25
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
The following table sets forth certain operating data of the Company for
the fiscal years ended December 31, 1995, 1996 and 1997 (dollars in thousands):
STATEMENT OF OPERATIONS DATA:
(dollars in 000s)
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net broadcast revenues ........................................... $ 21,455 $ 23,702 $ 32,367
Operating expenses excluding depreciation and amortization ....... 13,731 15,720 21,003
Depreciation and amortization .................................... 3,912 4,262 5,828
-------- -------- --------
Broadcast operating income ....................................... 3,812 3,720 5,536
Interest expense, including amortization of deferred
financing costs and debt discount expense ...................... 5,289 7,252 8,910
Other income (expense), net ...................................... 89 (77) 415
-------- -------- --------
Income (loss) before provision for income taxes .................. (1,388) (3,609) (2,959)
Provision for income taxes ....................................... -- -- --
-------- -------- --------
Income (loss) before extraordinary item .......................... (1,388) (3,609) (2,959)
Extraordinary item ............................................... 468 -- 1,985
-------- -------- --------
Net loss ......................................................... $ (1,856) $ (3,609) $ (4,944)
======== ======== ========
Broadcast cash flow .............................................. $ 9,719 $ 9,775 $ 13,519
Broadcast cash flow margin ....................................... 45.3% 41.2% 41.8%
EBITDA ........................................................... $ 7,724 $ 7,982 $ 11,364
EBITDA margin .................................................... 36.0% 33.7% 35.1%
Corporate expenses ............................................... $ 1,995 $ 1,793 $ 2,155
</TABLE>
26
<PAGE>
FISCAL YEAR ENDED DECEMBER 31, 1997 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1996
Net broadcast revenues increased to approximately $32.4 million for the
fiscal year ended December 31, 1997 from approximately $23.7 million for the
fiscal year ended December 31, 1996 or 36.7%. This increase in net broadcast
revenues was primarily the result of significant broadcast revenue growth in the
Company's Washington, D.C. and Baltimore, markets as the Company benefited from
ratings increases at its larger radio stations as well as market industry
growth. Additional revenue gains were derived from the LMA of and, subsequently,
the Company's acquisition of, radio station WPHI-FM in Philadelphia in early
1997.
Operating expenses excluding depreciation and amortization increased to
approximately $21.0 million for the fiscal year ended December 31, 1997 from
approximately $15.7 million for the fiscal year ended December 31, 1996 or
33.8%. This increase in expenses was due to higher sales, programming and
administrative costs associated with the significant revenue growth and ratings
gains experienced by the Company's radio stations and increased overhead
expenses related to the overall growth experienced by the Company in the last
year. Additionally, disproportionately higher expenses relative to revenues at
the Philadelphia radio station acquired in 1997 caused the operating expenses of
the Company to be higher in 1997 relative to 1996's level.
Broadcast cash flow increased to approximately $13.5 million for the fiscal
year ended December 31, 1997 from approximately $9.8 million for the fiscal year
ended December 31, 1996 or 37.8%. This increase was attributable to the
increases in broadcast revenues partially offset by higher operating expenses.
The broadcast cash flow margin increased to 41.8% from 41.2% due to the
Company's growth in revenues relative to expenses.
Corporate expenses increased to approximately $2.2 million for the fiscal
year ended December 31, 1997 from approximately $1.8 million for the fiscal year
ended December 31, 1996 or 22.2%. This increase was due primarily to growth in
the corporate staff in conjunction with the Company's overall expansion as well
as higher costs associated with the Company's 1997 high yield bond offering and
the costs associated with the Company's public reporting requirements.
Broadcast operating income increased to approximately $5.5 million for the
fiscal year ended December 31, 1997 from approximately $3.7 million for the
fiscal year ended December 31, 1996 or 48.6%. This increase was attributable to
the increases in broadcast revenues partially offset by higher operating
expenses and higher depreciation and amortization expenses as well as start-up
losses earlier in 1997 related to the acquisition of WPHI-FM.
Interest expense increased to approximately $8.9 million for the fiscal
year ended December 31, 1997 from approximately $7.3 million for the fiscal year
ended December 31, 1996 or 21.9%. This increase related primarily to the May 19,
1997 issuance of the Company's $85.5 million in 12% Senior Subordinated Notes
Due 2004 and the associated retirement of the Company's $45.6 million bank
credit facility at that time.
Other income increased to approximately $415,000 for the fiscal year ended
December 31, 1997 from approximately ($77,000) for the fiscal year ended
December 31, 1996. This increase was primarily attributable to higher interest
income due to higher cash balances associated with the Company's cash flow
growth and capital raised in the Company's high yield debt offering.
Loss before provision for income taxes and extraordinary item decreased to
approximately $3.0 million for the fiscal year ended December 31, 1997 from
approximately $3.6 million for the fiscal year ended December 31, 1996 or 16.7%.
The decrease was due to higher operating and other income partially offset by
higher interest expense associated with the Company's high yield debt offering.
Net loss increased to approximately $4.9 million for the fiscal year ended
December 31, 1997 from approximately $3.6 million for the fiscal year ended
December 31, 1996 or 36.1%. This increase was due to an approximately $2.0
million loss on the early retirement of the indebtedness under the Company's
bank credit facility with the proceeds from the Company's high yield debt
offering as well as the conversion of the Company's then outstanding
subordinated debt into Series A Preferred Stock and Series B Preferred Stock.
27
<PAGE>
FISCAL YEAR ENDED DECEMBER 31, 1996 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1995
Net broadcast revenues increased to approximately $23.7 million for the
fiscal year ended December 31, 1996 from approximately $21.5 million for the
fiscal year ended December 31, 1995 or 10.2%. This increase was primarily
attributable to gains in both the Company's Washington, D.C. and Baltimore
operations. Net broadcast revenues in Washington, D.C. increased to $14.3
million from $12.7 million or 12.1%, due to the impact of a full year of
advertising revenue for WKYS-FM which was acquired in June 1995, offset by an
8.2% revenue decline to approximately $8.2 million from approximately $8.9
million for the WMMJ-FM/WOL-AM combination. Subsequent to the acquisition of
WKYS-FM in 1995 and for most of 1996, high turnover among the sales staff
relating to the integration of the existing and acquired sales staffs and a flat
Washington, D.C. radio market led to lower than expected advertising revenues.
However, by July 1996, Radio One hired three highly experienced sales managers
who contributed to the improvement in the Company's performance, as reflected in
the Company's improving revenues in the fourth quarter of 1996. In Baltimore,
net broadcast revenue increased to approximately $9.4 million from approximately
$8.8 million or 6.8%. This increase was due primarily to a 4.9% increase to
approximately $4.3 million from approximately $4.1 million at the Company's
WWIN-FM/WWIN-AM combination and an 11.9% increase to approximately $4.8 million
from approximately $4.3 million at the Company's WOLB-AM/WERQ-FM combination, as
both radio station combinations benefited from increasing ratings through much
of the year.
Operating expenses excluding depreciation and amortization increased to
approximately $13.9 million for the fiscal year ended December 31, 1996 from
approximately $11.7 million for the fiscal year ended December 31, 1995 or
18.8%. This increase resulted from greater operating expenses due to the
acquisition and integration of WKYS-FM, and higher marketing and promotion
expenses for all three of the Company's radio stations in the market.
Additionally, in conjunction with the reorganization of the Company's
Washington, D.C. operations following the acquisition of WKYS-FM, the Company
hired three highly experienced sales managers in Washington, D.C. as well as a
prominent on-air personality for its morning program on WKYS-FM which positively
impacted the Company's revenues and ratings beginning late in the fourth quarter
of 1996. In the Company's Baltimore operations, station operating expenses
increased as a result of the addition of a new high-profile on-air personality
for one of the Baltimore radio station's morning shows offset by effective
expense management. The relatively smaller increase in station operating
expenses in Baltimore helped mitigate the overall impact of higher station
operating expenses in Washington, D.C.
Broadcast cash flow increased to approximately $9.8 million for the fiscal
year ended December 31, 1996 from approximately $9.7 million for the fiscal year
ended December 31, 1995 or 1.0% due to higher revenues offset by higher
operating expenses as outlined above. The broadcast cash flow margin decreased
to 41.2% from 45.3% due to the factors noted above.
Corporate expenses decreased to approximately $1.8 million for the fiscal
year ended December 31, 1996 from approximately $2.0 million for the fiscal year
ended December 31, 1995 or 10.0%. This decrease was due to a $778,000 non-cash
compensation expense incurred during the fiscal year ended December 31, 1995
related to the grant of a stock option to Mr. Liggins to purchase 63.16 shares
of the Company's Common Stock, 57.45 shares of which vested in fiscal 1995. This
decrease was partially offset by higher legal and professional expenses during
the fiscal year ended December 31, 1996, as well as expenses associated with the
potential acquisition of various radio stations.
Broadcast operating income decreased to approximately $3.7 million of the
Company for the fiscal year ended December 31, 1996 from approximately $3.8
million for the fiscal year ended December 31, 1995 or 2.6% as a result of the
factors noted above as well as an increase in depreciation and amortization
expense associated with the inclusion of WKYS-FM in Company's financial
statements for the full year.
Interest expense increased to approximately $7.3 million for the fiscal
year ended December 31, 1996 from approximately $5.3 million for the fiscal year
ended December 31, 1995 or 37.7%, as the higher debt levels associated with the
acquisition of WKYS-FM impacted the Company's financial statements for a full
year.
28
<PAGE>
Other expenses increased to approximately $77,000 for the fiscal year ended
December 31, 1996 from approximately ($89,000) for the fiscal year ended
December 31, 1995 due to higher interest income associated with higher cash flow
and higher average cash balances more than offset by a loss on the disposal of
leasehold improvements associated with the Company's move to its new facilities
in Lanham, Maryland in 1997 as well as the payment of various corporate back
taxes.
Net loss increased to approximately $3.6 million for the fiscal year ended
December 31, 1996 from approximately $1.9 million for the fiscal year ended
December 31, 1995 or 89.5% due to lower operating income and higher interest
expense.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the capital structure of the Company consists of
the Company's outstanding long-term debt and stockholders' equity. The
stockholders' equity consists of common stock, additional paid-in capital and
accumulated deficit. The Company's balance of cash and cash equivalents was
approximately $8.5 million at December 31, 1997. The Company's increase in cash
to approximately $8.5 million at December 31, 1997 from approximately $1.7
million at December 31, 1996 resulted primarily from excess proceeds from the
Company's high yield debt offering in 1997 as well as cash from operations. In
addition, the Company has placed $2.0 million in a non-refundable escrow account
to be utilized in the consummation of the Bell Acquisition expected to occur
before the end of the third fiscal quarter of 1998. The balance of the expected
payment required to complete this acquisition will come from the Company's free
cash balances as well as proceeds from a debt or equity offering to be completed
prior to the consummation of the acquisition. As of December 31, 1997
approximately $7.5 million was available under the Company's $7.5 million bank
credit facility (the "Amended and Restated Credit Agreement").
In general, the Company's primary source of liquidity is cash provided by
operations and, to the extent necessary, on undrawn commitments available under
the Amended and Restated Credit Agreement. The Company's ability to borrow in
excess of the commitments set forth in the Amended and Restated Credit Agreement
is limited by the terms of the Indenture and the Preferred Stockholders'
Agreement. Additionally, such terms place restrictions on the Company with
respect to the sale of assets, liens, investments, dividends, debt repayments,
capital expenditures, transactions with affiliates, consolidation and mergers,
and the issuance of equity interests among other things.
Net cash provided by the Company's operating activities increased to
approximately $4.9 million for the fiscal year ended December 31, 1997 from
approximately $2.6 million for the fiscal year ended December 31, 1996 or 88.5%.
This increase was due to higher non-cash charges in excess of an increase in the
net loss. In addition, the Company experienced higher working capital
requirements associated with the Company's growth during the year.
Net cash used in the Company's investing activities increased to
approximately $23.2 million for the fiscal year ended December 31, 1997 from
approximately $1.3 million for the fiscal year ended December 31, 1996 or
1,685%. This increase was due primarily to the acquisition of WPHI-FM on May 19,
1997 as well as the expenditures associated with building new studios for the
Company's Washington, D.C.-based radio stations and new corporate offices in the
same location.
Cash provided by the Company's financing activities increased to
approximately $25.1 million for the fiscal year ended December 31, 1997 from
approximately ($2.4) million for the fiscal year ended December 31, 1996. The
increase was due primarily to the high yield bond financing completed by the
Company on May 19, 1997, partially offset by the retirement of debt under the
Company's commercial bank loan facility with the proceeds from the high yield
offering. During fiscal year ended December 31, 1996, the Company made principal
payments on its commercial bank loan facility of approximately $2.4 million,
leading to the negative cash provided by the Company's financing activities for
the fiscal year ended December 31, 1996.
The Company continuously reviews, and is currently reviewing, opportunities
to acquire additional radio stations, primarily in the top-30 African-American
markets. As of the date hereof, other than the Bell Acquisition,
29
<PAGE>
the Company has no written or oral understandings, letters of intent or
contracts to acquire radio stations. The Company anticipates that any future
radio station acquisitions would be financed through funds generated from
operations, equity financings, permitted debt financings, debt financings
through unrestricted subsidiaries or a combination thereof. However, there can
be no assurance that any such financing, if available, will be available on
favorable terms.
In connection with the consummation of the Radio One's high yield debt
offering on May 19, 1997, the S Corporation status of Radio One was terminated.
Generally, a corporation operating as a C corporation may carry forward for
fifteen years (this period of time would include any years during which Radio
One was an S corporation) an accumulated net operating loss ("NOL") incurred in
any taxable year during which it was a C corporation to offset taxable income in
a future year or years. There can be no assurance that Radio One will be able to
use its accumulated NOLs in future tax years. After giving effect to the
termination of the S Corporation status of the Company, Radio One had an NOL
carryforward for U.S. Federal income tax purposes of approximately $5.1 million,
as of December 31, 1997.
Management believes that, based on current levels of operations and
anticipated internal growth, cash flow from operations together with other
available sources of funds will be adequate for the foreseeable future to make
required payments of interest on the Company's indebtedness, to fund anticipated
capital expenditures and working capital requirements and to enable the Company
to comply with the terms of its debt agreements. The ability of the Company to
meet its debt service obligations and reduce its total debt, and the Company's
ability to refinance the Notes, at or prior to their scheduled maturity date in
2004, and redeem the Series A Preferred Stock and Series B Preferred Stock on or
before their maturity date of 2005, will depend upon the future performance of
the Company which, in turn, will be subject to general economic conditions and
to financial, business and other factors, including factors beyond the Company's
control.
YEAR 2000 COMPLIANCE
The Company is currently in the process of evaluating its information
technology infrastructure for the Year 2000 compliance. The Company does not
expect that the cost to modify its information technology infrastructure to be
Year 2000 compliant will be material to its financial condition or results of
operations. The Company does not anticipate any material disruption to its
operations as a result of any failure by the Company to be in compliance. The
Company has evaluated the Year 2000 compliance status of its major suppliers of
technology-based systems and determined that there is no indication that the
Company will experience any material disruption to its operations as a result of
any failure by the Company's suppliers to be in Year 2000 compliance. In the
event that any of these suppliers prove to have not successfully and timely
achieved Year 2000 compliance, the Company does not expect its financial
condition or results of operations to be adversely effected in any material way.
SEASONALITY
The Company's results usually are subject to seasonal fluctuations, which
result in third and fourth fiscal quarter broadcast operating income usually
being greater than first and second fiscal quarter broadcast operating income
with the first fiscal quarter having the lowest level of broadcast operating
income than any of the other three fiscal quarters.
CERTAIN RELEVANT FACTORS
Under the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, forward looking statements, such as earnings projections,
are protected from liability as long as they are accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from projected results. The Company wishes to
caution readers that the following important factors, among others, in some
cases have affected, and in the future could affect, the Company's actual
results and could cause the Company's actual results to differ materially from
those expressed in any forward-looking statements made by, or
30
<PAGE>
on behalf of, the Company whether contained herein, in other documents
subsequently filed by the Company with the SEC, or in oral statements:
o Changes in national and regional economies;
o Successful integration of acquired radio stations;
o Pricing fluctuations in local and national advertising;
o Volatility in programming costs;
o Significant leverage and debt service;
o Dependence on key personnel;
o Increased competition;
o Increased regulation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE CLOSURE ABOUT MARKET RISK
The Company has no quantitative or qualitative market risk to report.
31
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements of Radio One meeting the requirements of
Regulation S-X are filed on Pages F-1 to F-17. Supplementary financial data are
filed on pages S-1 to and in Exhibit 12.
32
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
33
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The current executive officers and directors of Radio One, as well as
additional information with respect to those persons, are set forth in the table
below. All directors serve for the term for which they are elected or until
their successors are duly elected and qualified or until death, retirement,
resignation or removal. Radio One has chosen not to enter into employment
agreements with any of the named executive officers of Radio One at this time.
As of March 1, 1998, the executive officers and directors of Radio One are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Catherine L. Hughes(a) ........... 50 Chairperson of the Board and Director
Alfred C. Liggins, III(a) ........ 33 Chief Executive Officer, President and Director
Scott R. Royster ................. 33 Executive Vice President and Chief Financial Officer
Terry L. Jones(b) ................ 51 Director
Brian W. McNeill(b) .............. 42 Director
P. Richard Zitelman(b) ........... 42 Director
</TABLE>
- ----------
(a) Mr. Alfred C. Liggins, III is the son of Ms. Catherine L. Hughes.
(b) Member of the Audit and Compensation Committees.
Ms. Hughes has been Chairperson of the Board, Secretary and a Director of
Radio One since 1980, and was Chief Executive Officer of Radio One from 1980 to
1997. She was one of the founders of Radio One's predecessor in 1980. Since
1980, Ms. Hughes has worked in various capacities for Radio One including
President, General Manager, General Sales Manager and talk show host. She began
her career in radio as the General Sales Manager of WHUR-FM, the Howard
University-owned, urban-contemporary radio station located in Washington, D.C.
Mr. Liggins has been Chief Executive Officer since 1997, and President,
Treasurer and a Director of Radio One since 1989. Mr. Liggins joined the Company
in 1985 as an Account Manager at WOL-AM. In 1987 he was promoted to General
Sales Manager and promoted again in 1988 to General Manager overseeing the
Company's Washington, D.C. operations. In 1989, Mr. Liggins became President of
Radio One and engineered the Company's expansion into other markets. Mr. Liggins
is a 1995 graduate of the Wharton School of Business/Executive M.B.A. Program.
Mr. Royster has been Executive Vice President of Radio One since 1997 and
Chief Financial Officer of Radio One since 1996. Prior to joining Radio One, he
served as an independent consultant to Radio One. From 1995 to 1996, Mr. Royster
was a principal at TSG Capital Group, LLC, a private equity investment firm
located in Stamford, Connecticut, which has been an investor in Radio One since
1987. Mr. Royster has also served as an associate and later a principal at
Capital Resource Partners from 1992 to 1995, a private capital investment firm
in Boston, Massachusetts, and as an analyst at Chemical Banking Corporation (now
Chase Banking Corporation) and a Senior Analyst at Chemical Venture Partners
(now Chase Venture Partners) from 1987 to 1990. Mr. Royster is a 1987 graduate
of Duke University and a 1992 graduate of Harvard Business School.
Mr. Jones has been a director of Radio One since 1995. Since 1990, Mr.
Jones has been President of Syndicated Communications, Inc. ("Syncom I"), a
communications venture capital investment company, and its wholly owned
subsidiary, Syncom. He joined Syncom I in 1978 as a Vice President. Mr. Jones
serves in various capacities, including director, president, general partner and
vice president, for various other entities affiliated with Syncom I. He also
serves on the board of directors of the National Association of Investment
Companies, Delta Capital Corporation, Sun Delta Capital Access Center and the
Southern African Enterprise Development Fund. Mr. Jones earned a B.S. degree
from Trinity College, an M.S. from George Washington University and an M.B.A.
from Harvard Business School.
Mr. McNeill has been a director of Radio One since 1995. Since 1986, Mr.
McNeill has been a General Partner of Burr, Egan, Deleage & Co., a private
equity firm which specializes in investments in the communications
34
<PAGE>
and technology industries. He has served as a director in many radio and
television broadcasting companies such as Tichenor Media Systems, OmniAmerica
Group, Panache Broadcasting and Shockley Communications. From 1979 to 1986, he
worked at the Bank of Boston where he started and managed that institution's
broadcast lending group. Mr. McNeill is a graduate of Holy Cross College and has
earned an M.B.A. from the Amos Tuck School at Dartmouth College.
Mr. Zitelman has been a director of Radio One since 1995. Since 1985, Mr.
Zitelman has been the President and sole principal of the Zitelman Group, Inc.,
a consulting firm. Since 1984, Mr. Zitelman has been involved in the ownership
and financial oversight of various radio stations. Mr. Zitelman is currently a
principal of Spring Broadcasting, L.L.C. which owns and operates nine radio
stations in four markets. From 1985 to 1994, Mr. Zitelman was a principal of
Media Capital, Inc., which invested in, operated and later sold various radio
stations. Mr. Zitelman is a Certified Public Accountant and earned a B.S. from
the Wharton School of Business at the University of Pennsylvania.
COMMITTEES OF THE BOARD OF DIRECTORS
Radio One has formed an Audit Committee and a Compensation Committee of the
board of directors of Radio One, and all of the directors serving on such Audit
Committee and Compensation Committee are directors who are not employees of
Radio One.
ITEM 11. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Non-officer directors of Radio One are reimbursed for all out-of-pocket
expenses related to meetings attended. Non-officer directors receive no
additional compensation for their services as directors of Radio One, except for
Mr. Zitelman, whose consulting firm bills Radio One for the time he spends
attending board meetings at his standard hourly consulting rate. Mr. Zitelman,
through his consulting firm, received a fee for consulting services rendered in
connection with the acquisition of station WPHI-FM. Officers of Radio One who
serve as directors do not receive compensation for their services as directors
other than the compensation they receive as officers of Radio One.
EXECUTIVE COMPENSATION
The following information relates to compensation of Radio One's Chief
Executive Officer and each of its other executive officers of Radio One as to
whom the total annual salary and bonus exceeded $100,000 (the "Named
Executives") during the fiscal years ended December 31, 1997, 1996 and 1995 (as
applicable):
35
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION
- ------------------------------- ------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Catherine L. Hughes,
Chairperson of the Board and Secretary.... 1997 $193,269 $50,000 $ 3,050
1996 150,000 31,477 2,161
1995 150,000 -- 2,604
Alfred C. Liggins, III,
Chief Executive Officer, President and
Treasurer................................. 1997 $193,269 $50,000 $ 3,125
1996 150,000 -- 3,091
1995 150,000 -- 3,124
Scott R. Royster,
Executive Vice President and
Chief Financial Officer................... 1997 $148,077 $25,000 --
1996 55,577(a) -- --
</TABLE>
- ----------
(a) Mr. Royster provided consulting services to Radio One in July 1996 and
joined Radio One as a full-time employee in August 1996. Disclosed compensation
represents consulting fees received by Mr. Royster and the portion of his
$125,000 annual salary paid during 1996.
Ms. Catherine L. Hughes is Radio One's Chairperson of the Board. Effective
May 26, 1997 for the remainder of the fiscal year ended December 31, 1997, Radio
One paid Ms. Hughes an annual salary of $225,000 and reimbursed her in the
aggregate amount of $3,050 for various expenses incurred by Ms. Hughes, which
represents additional compensation. Additionally, during 1997, a performance
bonus of $50,000 (which is scheduled to be paid during the first half of 1998)
was earned by Ms. Hughes. In 1998, Radio One anticipates Ms. Hughes continuing
to serve as Radio One's Chairperson of the Board with an annual base
compensation of $225,000, subject to an annual increase and an annual bonus at
the discretion of Radio One's board of directors.
Mr. Alfred C. Liggins, III is Radio One's Chief Executive Officer and
President. Effective May 26, 1997 for the remainder of the fiscal year ended
December 31, 1997, Radio One paid Mr. Liggins an annual salary of $225,000 and
reimbursed him in the aggregate amount of $3,125 for various expenses incurred
by Mr. Liggins which represents additional compensation. Additionally, during
1997, a performance bonus of $50,000 (which is scheduled to be paid during the
first half of 1998) was earned by Mr. Liggins. In 1998, Radio One anticipates
Mr. Liggins continuing to serve as Radio One's Chief Executive Officer and
President with an annual base compensation of $225,000, subject to an annual
increase and an annual bonus at the discretion of Radio One's board of
directors.
Mr. Scott R. Royster is Radio One's Executive Vice President and Chief
Financial Officer. Effective May 26, 1997 for the remainder of the fiscal year
ended December 31, 1997, Radio One paid Mr. Royster an annual salary of
$165,000. Additionally, during 1997, a performance bonus of $25,000 (which was
paid during the first quarter of 1998) was earned by Mr. Royster. In 1998, Radio
One anticipates Mr. Royster continuing to serve as Radio One's Executive Vice
President and Chief Financial Officer with an annual base compensation of
$165,000, subject to an annual increase and an annual bonus at the discretion of
management.
Ms. Mary Catherine Sneed joined Radio One effective January 1, 1998, as
Chief Operating Officer of Radio One. Ms. Sneed's annual base compensation is
$200,000 subject to an annual increase and an annual bonus payable at the
discretion of management.
Ms. Linda J. Eckard joined Radio One effective January 21, 1998, as its
General Counsel. Ms. Eckard's annual base compensation is $150,000 subject to an
annual increase and an annual bonus payable at the discretion of management.
36
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 10, 1998, Radio One's authorized capital stock consists of (i)
2,000 authorized shares of Common Stock, $.01 par value (the "Common Stock"),
which consists of (a) 1,000 shares of Class A Common Stock (the "Class A Common
Stock"), of which 138.45 shares are issued and outstanding, and (b) 1,000 shares
of Class B Common Stock the ("Class B Common Stock"), of which no shares are
issued and outstanding and (ii) 250,000 authorized shares of Senior Preferred
Stock, which consists of (a) 140,000 shares of Series A 15% Cumulative
Exchangeable Redeemable Preferred Stock, $.01 par value, of which 84,843.03
shares are issued and outstanding, and (b) 150,000 shares of Series B 15%
Cumulative Exchangeable Redeemable Preferred Stock, $.01 par value (Series B
Preferred Stock and together with the Series A Preferred Stock, the "Senior
Preferred Stock"), of which 124,467.10 shares are issued and outstanding. There
is no established trading market for the Common Stock or the Senior Preferred
Stock.
The following table sets forth as of the date hereof information regarding
Radio One's capital stock, including the beneficial ownership of the Common
Stock and Senior Preferred Stock by (i) each person beneficially owning more
than 5% of the outstanding shares of Common Stock or the Senior Preferred Stock,
(ii) each of Radio One's directors, (iii) each of the Named Executives in the
table under "Compensation of Directors and Executive Officers-Summary
Compensation Table," and (iv) all of Radio One's directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED,
WITHOUT SHARES OF COMMON STOCK
GIVING EFFECT TO EXERCISE BENEFICIALLY OWNED AFTER
OF THE GIVING EFFECT TO EXERCISE SHARES OF SENIOR PREFERRED
WARRANTS(A) OF THE WARRANTS(A) STOCK BENEFICIALLY OWNED
------------------------- -------------------------- ---------------------------
PERCENT OF PERCENT OF PERCENT OF
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
SHARES(B) OUTSTANDING SHARES(B) OUTSTANDING SHARES OUTSTANDING
----------- ------------- ----------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Catherine L. Hughes(c)(d) ................ 75.00 54.2% 75.00 26.3% -- --
Alfred C. Liggins, III(c)(d)(h)(p) ....... 62.45 45.1% 63.42 22.2% 2,359.67(q) 1.1%
Terry L. Jones(e)(f) ..................... -- -- 36.12 12.7% 13,595.69(q) 6.5%
Brian W. McNeill (f)(g) .................. -- -- 29.52 10.3% 72,139.57(r) 34.5%
ALTA Subordinated Debt Partners III,
L.P(h)(i) .............................. -- -- 29.52 10.3% 72,139.57(r) 34.5%
Alliance Enterprise Corporation(h)(j) .... -- -- 18.70 6.6% 9,126.55(q) 4.4%
BancBoston Investments Inc.(h)(k) ........ -- -- 20.15 7.1% 49,249.44(r) 23.5%
Capital Dimensions Venture Fund,
Inc.(h)(l) ............................. -- -- 15.24 5.3% 37,258.14(q) 17.8%
Fulcrum Venture Capital Corpora-
tion(h)(m) ............................. -- -- 15.61 5.5% 9,650.09(q) 4.6%
Syncom Capital Corporation(h)(n) ......... -- -- 36.12 12.7% 13,595.69(q) 6.5%
All Directors and Executive Officers of
Radio One as a group(o) ................ 137.45 99.3% 138.42 48.5% -- --
</TABLE>
- ----------
(a) The "Warrants" refer to the amended and restated warrants to purchase
147.04 shares of Common Stock issued by Radio One on May 19, 1997. The
information as to beneficial ownership is based on statements furnished to
Radio One by the beneficial owners. As used in this table, "beneficial
ownership" means the sole or shared power to vote or direct the voting of a
security, or the sole or shared investment power with respect to a security
(i.e., the power to dispose of, or direct the disposition of, a security).
Other than with respect to the Warrants, a person is deemed as of any date
to have "beneficial ownership" of any security that such person has the
right to acquire within 60 days of such date. For purposes of computing the
percentage of outstanding shares held by each person named above, other
than with respect to the Warrants, any security that such person has the
right to acquire within 60 days of the date of the calculation is deemed to
be outstanding, but is not deemed to be outstanding for purposes of
computing the percentage ownership of any other person.
(b) The shares of Common Stock are subject to a voting agreement with respect
to the election of Radio One's directors (which is included in the
Warrantholders' Agreement).
(c) The business address for such persons is c/o Radio One, 5900 Princess
Garden Parkway, 8th Floor, Lanham, Maryland 20706.
(d) Ms. Hughes and Mr. Liggins may be deemed to share beneficial ownership of
shares of capital stock owned by each other by virtue of the fact that Ms.
Hughes is Mr. Liggins' mother. Each of Ms. Hughes and Mr. Liggins disclaims
such beneficial ownership.
(e) Represents immediately exercisable Warrants to purchase 36.12 shares of
Common Stock held by Syncom. Mr. Jones is the President of Syncom and his
address is c/o Syncom Capital Corporation, 8401 Colesville Road, Suite 300,
Silver Spring, MD 20910. Mr. Jones may be deemed to share beneficial
ownership of shares of Common Stock issuable to Syncom upon exercise of the
Warrants by virtue of his affiliation with Syncom. Mr. Jones disclaims
beneficial ownership in such shares.
(f) Mr. Jones may be deemed to share beneficial ownership of shares of Senior
Preferred Stock to be owned of record by Syncom by virtue of his
affiliation with Syncom. Mr. Jones disclaims any beneficial ownership of
such shares of Senior Preferred Stock. Mr. McNeill
37
<PAGE>
may be deemed to share beneficial ownership of Senior Preferred Stock to be
owned of record by Alta by virtue of his affiliation with Alta. Mr. McNeill
disclaims any beneficial ownership of such shares.
(g) Represents immediately exercisable Warrants to purchase 29.52 shares of
Common Stock held by Alta Subordinated Debt Partners III, L.P. ("Alta").
Mr. McNeill is a general partner of Alta Subordinated Debt Partners III,
L.P. and his address is c/o Alta Subordinated Debt Partners III, L.P., c/o
Burr, Egan, Deleage & Co., One Post Office Square, Boston, MA 02109. Mr.
McNeill may be deemed to share beneficial ownership of shares of Common
Stock issuable to Alta upon exercise of the Warrants by virtue of his
affiliation with Alta. Mr. McNeill disclaims any beneficial ownership of
such shares.
(h) The Warrants are subject to the terms of a Standstill Agreement dated as of
May 19, 1997 among Radio One, the subsidiaries of Radio One, NationsBank of
Texas, N.A., the Trustee, and the other parties named therein (the
"Standstill Agreement") which provides, among other things, that for so
long as the Amended and Restated Credit Agreement, if any, or the Notes are
outstanding, the Warrants are collectively only exercisable for up to (but
not including) 50% of the Common Stock. Although the Warrants are currently
exercisable, the holders of a majority of the outstanding shares of Senior
Preferred Stock must exercise their Warrants if any are to be exercised
prior to the eighth anniversary of the Issue Date.
(i) Represents immediately exercisable Warrants to acquire 29.52 shares of
Common Stock. The principal address of Alta is c/o Burr, Egan, Deleage &
Co., One Post Office Square, Boston, MA 02109.
(j) Represents immediately exercisable Warrants to acquire 18.70 shares of
Common Stock. The principal address of Alliance Enterprise Corporation is
12655 N. Central Expressway, Suite 700, Dallas, TX 75243.
(k) Represents immediately exercisable Warrants to acquire 20.15 shares of
Common Stock. The principal address of BancBoston Investments, Inc. is 100
Federal Street, 32nd Floor, Boston, MA 02110.
(l) Represents immediately exercisable Warrants to acquire 15.24 shares of
Common Stock. The principal address of Capital Dimensions Venture Fund,
Inc. is 2 Appletree Square, Suite 335-T, Minneapolis, MN 55425.
(m) Represents immediately exercisable Warrants to acquire 15.61 shares of
Common Stock. The principal address of Fulcrum Venture Capital Corporation
is 300 Corporate Point, Suite 380, Culver City, CA 90230.
(n) Represents immediately exercisable Warrants to acquire 36.12 shares of
Common Stock. The principal address of Syncom Capital Corporation is 8401
Colesville Road, Suite 300, Silver Spring, MD 20910.
(o) The shares of Common Stock set forth on this line do not include any shares
of Common Stock or Senior Preferred Stock which Mr. Jones and Mr. McNeill
may be deemed to beneficially own. See footnotes (e), (f) and (g), above.
(p) Represents shares of Common Stock held plus immediately exercisable
Warrants to acquire .97 shares of Common Stock.
(q) Represents Series A Preferred Stock.
(r) Represents Series B Preferred Stock.
38
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RADIO ONE OF ATLANTA, INC.
Mr. Liggins, who is the Chief Executive Officer and President of Radio One,
is also the President of Radio One of Atlanta, Inc. ("ROA"), which owns and
operates one radio station in Atlanta and operates a second station through an
LMA with Dogwood Communications, Inc. ("Dogwood") in which ROA holds a minority
interest. Dogwood is the owner of radio station WAMJ-FM, located in the Atlanta
market. Mr. Liggins has voting control of ROA, subject to certain conditions,
and owns approximately 47% of the outstanding capital stock of ROA. Ms. Hughes,
who is Chairperson of the Board of Radio One, is a director and the Secretary of
ROA. Ms. Sneed, who is the Chief Operating Officer of Radio One, is also the
General Manager of ROA and receives performance-based bonus compensation and
stock options from ROA as General Manager. Mr. Royster, who is Chief Financial
Officer and Executive Vice President of Radio One, holds those same positions
with ROA. Ms. Eckard, who is General Counsel of Radio One, holds that same
position with ROA. Mr. Jones and Mr. McNeill, who are directors of Radio One,
are also directors of ROA. In addition, Syncom and Burr Egan, companies with
which Mr. Jones and Mr. McNeill, respectively, are associated, are creditors and
shareholders of ROA.
Radio One has entered into a management agreement with ROA whereby Radio
One, through some of its officers and employees, provides accounting, financial
and strategic planning, other general management services and general
programming support services to ROA and Dogwood. In exchange for such corporate
services, Radio One is paid an annual retainer of approximately $100,000 and is
reimbursed for all of its out-of-pocket expenses incurred in connection with the
performance of such corporate services. Radio One expects to receive approval
from the investors in ROA to increase the annual management fee to $300,000 per
annum for fiscal year 1998 and beyond. Radio One believes that the compensation
paid to Radio One under such management agreement and the other material terms
thereof are not materially different than if the agreement were with an
unaffiliated third party.
In addition, Mr. Liggins received a lump sum fee of $50,000 from ROA in
April 1997 as compensation for services he personally provided to ROA. Mr.
Liggins had not previously received any compensation from ROA or Dogwood. During
1997, Radio One's Vice President of Programming, Steve Hegwood, was also
employed by ROA and was paid a salary for programming ROA's radio station in
addition to the salary he received from Radio One. During 1997, Mr. Hegwood
utilized certain resources and the services of certain employees of Radio One in
performing services for ROA.
OFFICE LEASES
Lanham, Maryland
Radio One's principal executive offices and studios for its Washington,
D.C. radio stations ("Lanham Offices") are located in the office building
located at 5900 Princess Garden Parkway, Lanham, Maryland ("Lanham Building").
Radio One leases these offices from National Life Insurance Company, a Vermont
corporation (the "Landlord"). The Landlord has granted Radio One, and Radio One
has exercised, an option to purchase the Lanham Building for $3.75 million, less
a credit of up to $288,000 (related to the tenant improvements Radio One is
making to the Lanham Offices, and the rent payments Radio One is making for the
Lanham Offices) and subject to an increase attributable to Radio One's pro rata
share of the costs paid by the Landlord in connection with entering into each
lease of a portion of the Lanham Building. Closing of Radio One's purchase of
the Lanham Building was to occur on September 30, 1997, if the average monthly
building rents for the Lanham Building for July and August 1997 equaled or
exceeded a stated minimum gross rent amount. The minimum gross rent amount was
not met for such period. Therefore, pursuant to the option, Radio One may waive
the minimum gross rent condition and proceed to close the purchase of the Lanham
Building or elect to postpone the closing, on a month-to-month basis, until
average monthly building rents for a two-month period equal or exceed the
minimum gross rent amount. If the minimum gross rent condition has not been met
and therefore the closing has not occurred on or prior to July 31, 1998, or if,
prior to receipt of notice that the gross rent condition has been met, Radio One
39
<PAGE>
delivers written notice that it shall not proceed to closing on or before such
date, Radio One shall have no further obligation to purchase the Lanham Building
and the Landlord shall pay to Radio One an amount, not to exceed $240,000, equal
to Radio One's expenditures for tenant improvements to the Lanham Building. Even
upon termination of the option, Radio One will have the right of first refusal
to match an offer for the Lanham Building, provided that Radio One is not in
default under the lease. Radio One expects to assign its right to purchase the
Lanham Building to Mr. Liggins in order to preserve Radio One's borrowing
capacity. The holders of the Senior Preferred Stock will be provided with an
opportunity to purchase an interest in the Lanham Building at the closing, if
any, of the purchase of the Lanham Building. Mr. Liggins will be assigned the
lease for the Lanham Offices by the Landlord at the closing, if any, of the
purchase of the Lanham Building and Radio One shall continue to make lease
payments to Mr. Liggins (or such assignee). In addition, if the closing of the
purchase of the Lanham Building occurs, Mr. Liggins (or his assignee) will be
required to pay Radio One consideration, in some form, in an amount equal to an
aggregate of $288,000. Such consideration could take the form of a reduction in
Radio One's lease payment obligations in respect of the Lanham Offices, the
transfer of an interest in the Lanham Building to Radio One or some other form.
Radio One's management believes that the terms of the Lanham Lease, should Mr.
Liggins or his assignee acquire the Lanham Building, are not materially
different than if the agreement were with an unaffiliated third party with no
option to purchase the underlying property.
Baltimore, Maryland
Radio One leases office space located at 100 St. Paul Street, Baltimore,
Maryland from Chalrep Limited Partnership, a limited partnership controlled by
Ms. Hughes and Mr. Liggins. Radio One's management believes that the terms of
this lease are not materially different than if the agreement were with an
unaffiliated third party.
OTHER AFFILIATED TRANSACTIONS
The Zitelman Group, Inc. received a fee of $50,000 for consulting services
rendered in connection with the May 19, 1997 acquisition of WPHI-FM in
Philadelphia, Pennsylvania. The Zitelman Group, Inc. is owned by Mr. Zitelman,
who serves as a member of Radio One's board of directors and is a member of
Radio One's Compensation and Audit Committees. The Zitelman Group, Inc. also
receives consulting fees for the time Mr. Zitelman spends attending Radio One's
board meetings and providing other consulting services to Radio One, at his
standard hourly consulting rate.
RADIO ONE OF SAN FRANCISCO, INC.
Mr. Liggins, who is the Chief Executive Officer and President of the
Company, and Mr. Royster, who is the Chief Financial Officer and Executive Vice
President of Radio One, are also President and Executive Vice President,
respectively, of Radio One of San Francisco, Inc., which entered into asset
purchase agreements in December 1997 to acquire two FM stations in the San
Francisco market. In consideration for an opportunity to acquire a financial
interest in Radio One of San Francisco, Inc., Radio One agreed to be responsible
for certain expenses if successful. It is anticipated that these expenses will
not exceed $100,000. Radio One of San Francisco, Inc., subsequently decided not
to consummate the acquisition of the stations.
40
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Index to Financial Statements
The financial statements required by this item are submitted in a
separate section beginning on page F-1 of this report.
Index to Financial Statements....................................... F-1
Report of Independent Public Accountants............................ F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997........ F-3
Consolidated Statements of Operations for the years ended
December 31, 1995, 1996 and 1997.................................. F-4
Consolidated Statements of Changes in Stockholders' Deficit for the
years ended December 31, 1995, 1996 and 1997...................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997.................................. F-6
Notes to Consolidated Financial Statements.......................... F-7
(b) Exhibits
3.1 Amended and Restated Certificate of Incorporation of Radio One, Inc.
3.2 Amended and Restated By-laws of Radio One, Inc.*
3.3 Amended and Restated Certificate of Incorporation of Radio One Licenses,
Inc.
3.4 Amended and Restated By-laws of Radio One Licenses, Inc.
4.1 Indenture dated as of May 15, 1997 among Radio One, Inc., Radio One
Licenses, Inc. and United States Trust Company of New York. *
4.2 Purchase Agreement dated as of May 14, 1997 among Radio One, Inc., Radio
One Licenses, Inc., Credit Suisse First Boston Corporation and
NationsBanc Capital Markets, Inc.*
4.3 Registration Rights Agreement dated as of May 14, 1997 among Radio One,
Inc., Radio One Licenses, Inc., Credit Suisse First Boston Corporation
and NationsBanc Capital Markets, Inc.*
4.4 Standstill Agreement dated as of May 19, 1997 among Radio One, Inc.,
Radio One Licenses, Inc., NationsBank of Texas, N.A., United States Trust
Company of New York and the other parties thereto.*
5.1 Form of Opinion and consent of Kirkland & Ellis.*
8.1 Form of Opinion and consent of Kirkland & Ellis.*
10.1 Office Lease dated February 3, 1997 between National Life Insurance
Company and Radio One, Inc. for premises located at 5900 Princess Garden
Parkway, Lanham, Maryland, as amended on February 24, 1997.*
10.2 Purchase Option Agreement dated February 3, 1997 between National Life
Insurance Company and Radio One, Inc. for the premises located at 5900
Princess Garden Parkway, Lanham, Maryland.*
10.3 Asset Purchase Agreement dated December 6, 1996 by and between Jarad
Broadcasting Company of Pennsylvania, Inc. and Radio One, Inc.*
10.4 Office Lease commencing November 1, 1993 between Chalrep Limited
Partnership and Radio One, Inc., with respect to the property located at
100 St. Paul Street, Baltimore, Maryland.*
10.5 Preferred Stockholders' Agreement dated as of May 14, 1997 among Radio
One, Inc., Radio One Licenses, Inc. and the other parties thereto.*
- ----------
* Previously filed
41
<PAGE>
10.6 Warrantholders' Agreement dated as of June 6, 1995, as amended by the
First Amendment to Warrantholders' Agreement dated as of May 19, 1997,
among Radio One, Inc., Radio One Licenses, Inc. and the other parties
thereto.*
10.7 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Syncom Capital Corporation.*
10.8 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Alliance Enterprise Corporation.*
10.9 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Greater Philadelphia Venture Capital Corporation, Inc.*
10.10 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Opportunity Capital Corporation.*
10.11 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Capital Dimensions Venture Fund, Inc.*
10.12 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to TSG Ventures Inc.*
10.13 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Fulcrum Venture Capital Corporation.*
10.14 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Alta Subordinated Debt Partners III, L.P.*
10.15 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to BancBoston Investments, Inc.*
10.16 Amended and Restated Warrant of Radio One, Inc. dated as of May 19, 1997,
issued to Grant M. Wilson.*
10.17 Management Agreement dated as of August 1, 1996 by and between Radio One,
Inc. and Radio One of Atlanta, Inc.*
10.18 Letter of Intent dated March 12, 1997 by and between Radio One, Inc. and
Allied Capital Financial Corporation, as amended by that certain First
Amendment dated as of May 6, 1997, that certain Second Amendment dated as
of May 30, 1997, that certain Third Amendment dated as of June 5, 1997
and that certain Letter Agreement dated as of July 1, 1997.*
10.19 Fifth Amendment dated as of July 31, 1997 to that certain Letter of
Intent dated March 12, 1997 by and between Radio One, Inc. and Allied
Capital Financial Corporation, as amended.*
10.20 Sixth Amendment dated as of September 8, 1997 to that certain Letter of
Intent dated March 12, 1997 by and between Radio One, Inc. and Allied
Capital Financial Corporation, as amended.*
10.21 Time Management and Services Agreement dated March 17, 1998, among WYCB
Acquisition Corporation, Broadcast Holdings, Inc., and Radio One, Inc.
10.22 Stock Purchase Agreement dated December 23, 1997, between the
shareholders of Bell Broadcasting Company and Radio One, Inc.
10.23 Option and Stock Purchase Agreement dated November 19, 1997, among Allied
Capital Financial Corporation, G. Cabell Williams III, Broadcast
Holdings, Inc. and WYCB Acquisition Corporation.
10.24 Amended and Restated Warrant of Radio One, Inc., dated January 9, 1998,
issued to TSG Ventures L.P.
10.25 Stock Purchase Warrant of Radio One, Inc., dated March 16, 1998 issued to
Allied Capital Financial Corporation.
10.26 Amended and Restated Credit Agreement dated May 19, 1997 among several
lenders, NationsBank of Texas, N.A. and Radio One, Inc.
10.27 First Amendment to Credit Agreement dated December 31, 1997 among several
lenders, NationsBank of Texas, N.A. and Radio One, Inc.
10.28 Amendment to Preferred Stockholders' Agreement dated as of December 31,
1997 among Radio One, Inc., Radio One Licenses, Inc. and the other
parties thereto.
- ----------
* Previously filed
42
<PAGE>
10.29 Assignment and Assumption Agreement dated October 23, 1997, between
Greater Philadelphia Venture Capital Corporation, Inc. and Alfred C.
Liggins, III.
10.30 Agreement dated February 20, 1998 between WUSQ License Limited
Partnership and Radio One, Inc.
12.1 Statement of Computation of Ratios.
21.1 Subsidiaries of Radio One, Inc.
23.1 Consent of Arthur Andersen, L.L.P.
23.2 Consent of Coopers & Lybrand, L.L.P.*
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
23.4 Consent of Kirkland & Ellis (included in Exhibit 8.1)*
24.1 Powers of Attorney.*
25.1 Statement of Eligibility of Trustee on Form T-1.*
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
- ----------
* Previously filed
(c) Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the fourth
quarter of the fiscal year ended December 31, 1997.
43
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RADIO ONE, INC.
By: /s/ Scott R. Royster
----------------------------------------------------
Scott R. Royster
Executive Vice President and Chief Financial Officer
Principal Accounting Officer
Date: 3/30/98
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Catherine L. Hughes
- ---------------------------------------------------- Chairperson, Director and Secretary
Catherine L. Hughes
Date: 3/30/98
--------
/s/ Alfred C. Liggins, III
- --------------------------------------------------- Chief Executive Officer, President and Director
Alfred C. Liggins, III
Date: 3/30/98
--------
/s/ Terry L. Jones
- ---------------------------------------------------- Director
Terry L. Jones
Date: 3/30/98
--------
/s/ Brian W. McNeill
- ---------------------------------------------------- Director
Brian W. McNeill
Date: 3/30/98
--------
/s/ P. Richard Zitelman
- ---------------------------------------------------- Director
P. Richard Zitelman
Date: 3/30/98
--------
</TABLE>
44
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997.............. F-3
Consolidated Statements of Operations for the Years Ended December 31,
1995, 1996 and 1997..................................................... F-4
Consolidated Statements of Changes in Stockholders' Deficit for the
Years Ended December 31, 1995, 1996 and 1997............................ F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1995, 1996 and 1997..................................................... F-6
Notes to Consolidated Financial Statements................................ F-7
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Radio One, Inc.:
We have audited the accompanying consolidated balance sheets of Radio One, Inc.
(a Delaware corporation) and subsidiaries (the Company) as of December 31, 1996
and 1997, and the related consolidated statements of operations, changes in
stockholders' deficit and cash flows for each of the years in the three-year
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Radio One, Inc. and
subsidiaries as of December 31, 1996 and 1997 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Baltimore, Maryland,
February 19, 1998
F-2
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
ASSETS 1996 1997
---------------- ----------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents................................................... $ 1,708,000 $ 8,500,000
Trade accounts receivable, net of allowance for doubtful
accounts of $765,000 and $904,000, respectively.......................... 6,420,000 8,722,000
Prepaid expenses and other.................................................. 117,000 315,000
---------------- ----------------
Total current assets.................................................. 8,245,000 17,537,000
PROPERTY AND EQUIPMENT, net..................................................... 3,007,000 4,432,000
INTANGIBLE ASSETS, net.......................................................... 39,358,000 54,942,000
OTHER ASSETS 1,167,000 2,314,000
---------------- ----------------
Total assets.......................................................... $ 51,777,000 $ 79,225,000
================ ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable............................................................ $ 389,000 $ 258,000
Accrued expenses............................................................ 1,453,000 3,029,000
Current portion of long-term debt........................................... 5,633,000 -
---------------- ---------------
Total current liabilities............................................. 7,475,000 3,287,000
LONG-TERM DEBT AND DEFERRED INTEREST, net of current
portion .................................................................. 59,305,000 74,954,000
---------------- ----------------
Total liabilities..................................................... 66,780,000 78,241,000
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
SENIOR CUMULATIVE REDEEMABLE PREFERRED STOCK:
Series A, $.01 par value, 100,000 shares authorized, 84,843shares...........
issued and outstanding; 9,310,000
Series B, $.01 par value, 150,000 shares.................................... --
authorized, 124,467 shares issued and outstanding 13,658,000
STOCKHOLDERS' DEFICIT:
Common stock - Class A, $.01 par value, 1,000 shares authorized,
138.45 shares issued and outstanding..................................... -- --
Common stock - Class B, $.01 par value, 1,000 shares authorized,
no shares issued and outstanding......................................... -- --
Additional paid-in capital.................................................. 1,205,000 --
Accumulated deficit......................................................... (16,208,000) (21,984,000)
---------------- ----------------
Total stockholders' deficit........................................... (15,003,000) (21,984,000)
---------------- ----------------
Total liabilities and stockholders' deficit........................... $ 51,777,000 $ 79,225,000
================ ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
F-3
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------
<S> <C> <C> <C>
REVENUES:
Broadcast revenues, including barter revenues
of $921,000, $1,122,000 and $1,010,000,
respectively.......................................... $ 24,626,000 $ 27,027,000 $ 36,955,000
Less: Agency commissions................................ 3,171,000 3,325,000 4,588,000
---------------- ---------------- ----------------
Net broadcast revenues............................. 21,455,000 23,702,000 32,367,000
---------------- ---------------- ----------------
OPERATING EXPENSES:
Program and technical.................................... 3,642,000 4,157,000 5,934,000
Selling, general and administrative...................... 8,094,000 9,770,000 12,914,000
Corporate expenses ...................................... 1,995,000 1,793,000 2,155,000
Depreciation and amortization ........................... 3,912,000 4,262,000 5,828,000
---------------- ---------------- ----------------
Total operating expenses........................... 17,643,000 19,982,000 26,831,000
---------------- ---------------- ----------------
Broadcast operating income......................... 3,812,000 3,720,000 5,536,000
INTEREST EXPENSE, including amortization of
deferred financing costs................................. 5,289,000 7,252,000 8,910,000
OTHER (INCOME) EXPENSE, net.................................. (89,000) 77,000 (415,000)
---------------- ---------------- ----------------
Loss before provision for income
taxes and extraordinary item................... (1,388,000) (3,609,000) (2,959,000)
PROVISION FOR INCOME TAXES................................... -- -- --
---------------- ---------------- ---------------
Loss before extraordinary item..................... (1,388,000) (3,609,000) (2,959,000)
EXTRAORDINARY ITEM:
Loss on early retirement of debt......................... 468,000 -- 1,985,000
---------------- ---------------- ----------------
Net loss........................................... $ (1,856,000) $ (3,609,000) $ (4,944,000)
============== ============== ================
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
F-4
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 1995, 1996 AND 1997
<TABLE>
<CAPTION>
Common Common Additional Total
Preferred Stock Stock Paid-In Accumulated Treasury Stockholders'
Stock Class A Class B Capital Deficit Stock Deficit
----------- ----------- ----------- ------------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, as of
December 25,
1994 $ 1,000 $ 1,000 $ -- $ -- $ (4,104,000) $ (265,000) $ (4,367,000)
Net loss -- -- -- -- (1,856,000) -- (1,856,000)
Purchase of
stock warrants -- -- -- -- (6,639,000) -- (6,639,000)
Issuance of stock
options -- -- -- 778,000 -- -- 778,000
Allocation of
detachable
stock warrants -- -- -- 690,000 -- -- 690,000
Cancallation and
issuance of
stock (1,000) (1,000) -- (263,000) -- 265,000 --
----------- ----------- ----------- ----------- -------------- ----------- -------------
BALANCE, as of
December 31,
1995 -- -- -- 1,205,000 (12,599,000) -- (11,394,000)
Net loss -- -- -- -- (3,609,000) -- (3,609,000)
----------- ----------- ----------- ----------- -------------- ----------- --------------
BALANCE, as of
December 31,
1996 -- -- -- 1,205,000 (16,208,000) -- (15,003,000)
Net loss -- -- -- -- (4,944,000) -- (4,944,000)
Effect of
conversion to
C corporation -- -- -- (1,205,000) 1,205,000 -- --
Preferred stock
dividends -- -- -- -- (2,037,000) -- (2,037,000)
----------- ----------- ----------- ----------- -------------- ----------- --------------
BALANCE, as of
December 31,
1997 $ -- $ -- $ -- $ -- $ (21,984,000) $ -- $ (21,984,000)
=========== =========== =========== =========== ============== =========== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
F-5
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..................................................... $ (1,856,000) $ (3,609,000) $ (4,944,000)
Adjustments to reconcile net loss to net cash from
operating activities:.....................................
Depreciation and amortization............................. 3,912,000 4,262,000 5,828,000
Amortization of debt financing costs and
unamortized discount.................................. 208,000 366,000 2,166,000
Compensation expense from stock options granted........... 778,000 -- --
Loss on disposals......................................... -- 153,000 --
Loss on extinguishment of debt............................ -- -- 1,985,000
Deferred interest......................................... 235,000 2,639,000 1,104,000
Effect of change in operating assets and liabilities-
Trade accounts receivable............................. (2,065,000) (656,000) (2,302,000)
Prepaid expenses and other............................ (85,000) 114,000 (198,000)
Other assets.......................................... (24,000) (71,000) (147,000)
Accounts payable...................................... 605,000 (818,000) (131,000)
Accrued expenses...................................... 214,000 234,000 1,576,000
---------------- ---------------- ----------------
Net cash flows from operating activities.......... 1,922,000 2,614,000 4,937,000
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment........................... (225,000) (252,000) (2,035,000)
Proceeds from disposal of property and equipment............. 62,000 -- --
Deposits and payments for station purchases.................. (33,770,000) (1,000,000) (21,164,000)
---------------- ---------------- ----------------
Net cash flows from investing activities............... (33,933,000) (1,252,000) (23,199,000)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt............................................ (23,049,000) (2,408,000) (45,599,000)
Proceeds from new debt....................................... 65,000,000 51,000 72,750,000
Deferred debt financing cost................................. (2,015,000) -- (2,148,000)
Financed equipment purchases................................. -- -- 51,000
Purchase of stock and stock warrants......................... (6,639,000) -- --
---------------- ---------------- ---------------
Net cash flows from financing activities........... 33,297,000 (2,357,000) 25,054,000
---------------- ---------------- ----------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................................. 1,286,000 (995,000) 6,792,000
CASH AND CASH EQUIVALENTS, beginning of year..................... 1,417,000 2,703,000 1,708,000
---------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS, end of year........................... $ 2,703,000 $ 1,708,000 $ 8,500,000
============== ============== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:.................................................
Cash paid for
Interest.................................................. $ 5,103,000 $ 4,815,000 $ 4,413,000
============== ============== ================
Income taxes.............................................. $ 35,000 $ 50,000 $ --
============== ============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
F-6
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Business
Radio One, Inc. (a Delaware corporation referred to as Radio One) and its
subsidiaries, Radio One Licenses, Inc. (successor by merger to Radio One License
LLC) and WYCB Acquisition Corporation (Delaware corporations) (collectively
referred to as the Company) were organized to acquire, operate and maintain
radio broadcasting stations. The Company owns and operates three radio stations
in Washington, D.C.; WOL-AM, WMMJ-FM and WKYS-FM, four radio stations in
Baltimore, Maryland; WWIN-AM, WWIN-FM, WOLB-AM and WERQ-FM and one radio station
in Philadelphia, Pennsylvania; WPHI-FM. The Company is highly leveraged, which
requires substantial semi-annual interest payments and may impair the Company's
ability to obtain additional working capital financing. The Company's operating
results are significantly affected by its market share in the markets that it
has stations.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Radio
One, Inc. and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. The
accompanying consolidated financial statements are presented on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. While
actual results could differ from those estimates, management believes that
actual results will not be materially different from amounts provided in the
accompanying consolidated financial statements.
Reporting Periods
Prior to the year ended December 31, 1996, the Company's financial reporting
period was based on a fifty-two/fifty-three week period ending on the last
Sunday of the calendar year. During 1996, the Company elected to end its year on
December 31 of each year. The effect of this change was not material.
Acquisition of WPHI-FM
On May 19, 1997, Radio One acquired the broadcast assets of WDRE-FM licensed to
Jenkintown, Pennsylvania, for approximately $16,000,000. In connection with the
purchase, Radio One entered into a three-year noncompete agreement totaling
$4,000,000 with the former owners. Radio One financed this purchase with a
portion of the proceeds from the issuance of approximately $85,500,000 of 12%
Senior Subordinated Notes due 2004. Radio One assumed operational responsibility
of WDRE-FM on February 8, 1997, under a local marketing agreement with the
former owners of the station. Following this acquisition, Radio One converted
the call letters of the radio station from WDRE-FM to WPHI-FM.
F-7
<PAGE>
The unaudited pro forma summary consolidated results of operations for the years
ended December 31, 1996 and 1997, assuming the acquisition of WPHI-FM had
occurred in the beginning of each fiscal year, are as follows:
<TABLE>
<CAPTION>
1996 1997
-------------- ---------------
<S> <C> <C>
Net broadcast revenues.............................................. $ 26,558,000 $ 32,642,000
Operating expenses, excluding depreciation and
amortization.................................................... 18,071,000 21,285,000
Depreciation and amortization....................................... 7,347,000 6,872,000
Interest expense.................................................... 8,692,000 8,910,000
Other expense (income), net......................................... 77,000 (415,000)
Provision for income taxes.......................................... -- --
Extraordinary loss.................................................. -- 1,985,000
-------------- --------------
Net loss..................................................... $( 7,629,000) $( 5,995,000)
============== ==============
</TABLE>
Acquisition of WKYS-FM
On June 6, 1995, Radio One purchased WKYS-FM for approximately $34,410,000.
Radio One accounted for the acquisition by allocating the purchase price paid to
the assets acquired based upon the appraised value of the assets. The excess
purchase price over the appraised value of assets acquired of approximately
$3,846,000 was allocated to goodwill. The financial activities of WKYS-FM for
the periods prior to June 6, 1995, are not included in the accompanying
consolidated statements of operations.
The unaudited pro forma summary consolidated results of operations for the year
ended December 31, 1995, assuming the acquisition of WKYS-FM had occurred in the
beginning of the fiscal year, is as follows:
<TABLE>
<CAPTION>
1995
--------------
<S> <C>
Net broadcast revenues.............................................. $ 23,926,000
Operating expenses, excluding depreciation and
amortization.................................................... 15,524,000
Depreciation and amortization....................................... 5,107,000
Interest expense.................................................... 6,724,000
Other (income) expense, net......................................... (89,000)
Provision for income taxes.......................................... --
Extraordinary loss.................................................. 468,000
--------------
Net loss..................................................... $ (3,808,000)
===============
</TABLE>
F-8
<PAGE>
Proposed Acquisitions
On November 19, 1997, WYCB Acquisition Corporation entered into an Option and
Stock Purchase Agreement to acquire all of the outstanding stock of Broadcast
Holdings, Inc., owner of radio station WYCB-AM, located in Washington, D.C., for
a total consideration, which will consist of a note, of $3,750,000. WYCB
Acquisition Corporation expects to complete this purchase in early 1998.
During December 1997, Radio One signed an agreement to purchase all of the
outstanding stock of a company which owns three radio stations for approximately
$34,200,000. Radio One expects to finalize the purchase during 1998. Radio One
made a $2,000,000 nonrefundable deposit towards the purchase price. This deposit
is included in other assets in the accompanying consolidated balance sheet as of
December 31, 1997.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and money market accounts at various
commercial banks. All cash equivalents have original maturities of 90 days or
less. For cash and cash equivalents, cost approximates market value.
Property and Equipment
Property and equipment are recorded at cost and are being depreciated on a
straight-line basis over various periods. The components of the Company's
property and equipment as of December 31, 1996 and 1997, are as follows:
<TABLE>
<CAPTION>
Period of
1996 1997 Depreciation
---------------- ---------------- ---------------
PROPERTY AND EQUIPMENT:
<S> <C> <C> <C>
Land........................................... $ 117,000 $ 117,000 --
Building and improvements...................... 148,000 148,000 31 years
Transmitter towers............................. 2,142,000 2,146,000 7 or 15 years
Equipment...................................... 2,615,000 3,651,000 5 to 7 years
Leasehold improvements......................... 626,000 1,757,000 Life of Lease
--------------- ---------------
5,648,000 7,819,000
Less - Accumulated depreciation................ (2,641,000) (3,387,000)
--------------- ---------------
Property and equipment, net.................... $ 3,007,000 $ 4,432,000
=============== ===============
</TABLE>
Depreciation expenses for the fiscal years ended December 31, 1995, 1996 and
1997, were $742,000, $706,000 and $746,000, respectively.
F-9
<PAGE>
Revenue Recognition
In accordance with industry practice, revenue for broadcast advertising is
recognized when the commercial is broadcast.
Barter Arrangements
Certain program contracts provide for the exchange of advertising air time in
lieu of cash payments for the rights to such programming. These contracts are
recorded as the programs are aired at the estimated fair value of the
advertising air time given in exchange for the program rights.
The Company broadcasts certain customers' advertising in exchange for equipment,
merchandise and services. The estimated fair value of the equipment, merchandise
or services received is recorded as deferred barter costs and the corresponding
obligation to broadcast advertising is recorded as deferred barter revenues. The
deferred barter costs are expensed or capitalized as they are used, consumed or
received. Deferred barter revenues are recognized as the related advertising is
aired.
Financial Instruments
Financial instruments as of December 31, 1996 and 1997, consist of cash and cash
equivalents, trade accounts receivables, accounts payable, accrued expenses and
long-term debt, all of which the carrying amounts approximate fair value.
Stock Warrants
During 1995, Radio One purchased outstanding stock warrants to acquire Common
Stock of Radio One for approximately $6,639,000. The cost of these warrants
purchased increased the accumulated deficit. Also during 1995, Radio One issued
detachable stock warrants that had an allocated value of $690,000 with certain
subordinated notes (Note 3).
New Accounting Standards
During 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
130, "Reporting Comprehensive Income." The Company has not analyzed the impact
of this new pronouncement on the financial statements; however, management does
not expect this pronouncement to have a significant impact on the financial
statements. Also during 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company is still
reviewing the effects of adoption of this pronouncement and has not determined
the effect on its financial statement presentation. Once management has analyzed
these pronouncements, they will be implemented within the required time frame.
F-10
<PAGE>
2. INTANGIBLE ASSETS:
Intangible assets are being amortized on a straight-line basis over various
periods. The intangible asset balances and periods of amortization as of
December 31, 1996 and 1997, are as follows:
<TABLE>
<CAPTION>
Period of
1996 1997 Amortization
--------------- --------------- ------------
<S> <C> <C> <C>
FCC broadcast license..................................... $ 40,207,000 $ 56,179,000 7-15 Years
Goodwill.................................................. 7,553,000 7,609,000 15 Years
Debt financing............................................ 2,015,000 2,147,000 Life of Debt
Favorable transmitter site and other intangibles.......... 1,922,000 1,922,000 6-17 Years
Noncompete agreement...................................... 900,000 4,900,000 3 Years
---------------- ----------------
Total.............................................. 52,597,000 72,757,000
Less: Accumulated amortization.................... (13,239,000) (17,815,000)
---------------- ----------------
Net intangible assets.............................. $ 39,358,000 $ 54,942,000
================ ================
</TABLE>
Amortization expense for the fiscal years ended December 31, 1995, 1996 and
1997, was $3,170,000, $3,556,000 and $5,082,000, respectively. The amortization
of the deferred financing cost was charged to interest expense.
3. DEBT AND SENIOR CUMULATIVE REDEEMABLE PREFERRED STOCK:
As of December 31, 1996 and 1997, the Company's outstanding debt is as follows:
<TABLE>
<CAPTION>
1996 1997
----------------- ----------------
<S> <C> <C>
Senior subordinated notes (net of $10,640,000 unamortized
discount)....................................................... $ -- $ 74,838,000
NationsBank Credit Agreement........................................ 45,597,000 --
Subordinated Notes (net of $579,000 unamortized
discount allocated to detachable stock warrants)................ 16,421,000 --
Deferred interest on subordinated notes............................. 2,874,000 --
Notes payable....................................................... 46,000 35,000
Capital lease obligations........................................... -- 81,000
---------------- ----------------
Total........................................................ 64,938,000 74,954,000
Less: Current portion....................................... (5,633,000) --
---------------- ---------------
Total........................................................ $ 59,305,000 $ 74,954,000
================ ================
</TABLE>
To finance the WPHI-FM acquisition (as discussed in Note 1) and to refinance
certain other debt, Radio One issued approximately $85,500,000 of 12% Senior
Subordinated Notes due 2004. The notes were sold at a discount, with the net
proceeds to Radio One of approximately $72,750,000. The notes pay cash interest
at 7% per annum through May 15, 2000, and at 12% thereafter. In connection with
this debt offering, Radio One retired approximately $45,600,000 of debt
outstanding with the proceeds from the offering. Radio One also exchanged
approximately $20,900,000 of 15% Senior Cumulative Redeemable Preferred Stock
which must be redeemed by May 24, 2005, for an equal amount of Radio One's then
outstanding subordinated notes and accrued interest. In connection with these
refinancings, Radio One recognized an extraordinary loss of $1,985,000 during
the year ended December 31, 1997.
F-11
<PAGE>
NationsBank Credit Agreement
During 1995, through a revolving credit agreement (the NationsBank Credit
Agreement) with NationsBank of Texas, N.A. and the other lenders who are
parties, Radio One borrowed $53,000,000 which was to mature on March 31, 2002.
The NationsBank Credit Agreement was refinanced on May 19, 1997, as part of the
Senior Subordianted Notes discussed above. The NationsBank Credit Agreement bore
interest at the LIBOR 30-day rate, plus an applicable margin. The average
interest rate for the years ending December 31, 1995, 1996 and 1997, was 8.53%,
8.25% and 9.28%, respectively. The credit agreement was secured by all property
of the Company (other than Unrestricted Subsidiaries) and interest and proceeds
of real estate and Key Man life insurance policies.
Senior Cumulative Redeemable Preferred Stock
On May 19, 1997, concurrent with the debt issuance, all of the holders of Radio
One's Subordinated Promissory Notes converted all of their existing subordinated
notes consisting of approximately $17,000,000, together with all accrued
interest thereon of approximately $3,900,000 and outstanding warrants, for
shares of Senior Cumulative Redeemable Preferred Stock, which must be redeemed
on May 29, 2005, and stock warrants to purchase 147.04 shares of Common Stock.
The Senior Cumulative Redeemable Preferred Stock can be redeemed at 100% of its
liquidation value. The dividends on each share accrues on a daily basis at a
rate of 15% per annum (the Dividend Rate) on the sum of the liquidation value
basis thereof, plus all unpaid accumulated dividends thereon. Preferred stock
dividends of approximately $2,037,000 was accrued as of December 31, 1997. If
Radio One does not redeem all of the issued and outstanding preferred shares on
the mandatory redemption date or upon the occurrence of an event of
noncompliance, the holders may elect to have the Dividend Rate increase to 18%
per annum. In the event Radio One does not meet any required performance target
relating exclusively to the operation of WPHI-FM, the Dividend Rate for each
preferred share shall be increased to 17% per annum.
The Subordinated Promissory Notes bore interest at 15%. Outstanding principal
and interest was due on the maturity date, December 31, 2003. These notes were
subordinate to the NationsBank Credit Agreement.
During 1995, Radio One retired certain subordinated debt with outstanding
detachable warrants. Radio One purchased the outstanding detachable warrants,
which allowed the subordinated debt holders to acquire 52.46% of the outstanding
common stock, for $6,639,000. Radio One issued new debt with detachable warrants
that allow these same subordinated debt holders to acquire 33.66% of outstanding
common stock. The acquisition of the warrants was accounted for by charging the
$6,639,000 to accumulated deficit, and valued the new detachable warrants at the
same value per share as the old warrants acquired. As part of the subordinated
debt acquired in 1995, $10,109,000 was acquired from new lenders which received
detachable warrants to acquire 17.84% of the outstanding common stock of Radio
One. Radio One allocated the proceeds between debt and additional paid-in
capital, based on the pro-rata value of the debt and detachable warrants issued.
As such, $9,419,000 was assigned to debt and $690,000 was assigned to the value
of the warrants. The value assigned to the warrants was recorded as an increase
in additional paid-in capital. The value assigned to debt was discounted and was
to be amortized over the life of the related debt using the effective interest
method.
Notes Payable
During 1996, Radio One entered into two notes totaling $51,000 with NationsBank
to purchase vehicles. These notes bear interest at 8.74% and 8.49%, require
monthly principal and interest payments of $789 and $471 and mature on April 30,
2000, and December 2, 2000.
Refinancing of Debt
During 1995, Radio One retired $22,988,000 of outstanding debt with a portion of
the proceeds from the NationsBank Credit Agreement and the proceeds from the
$17,000,000 in subordinated debt issued in 1995.
F-12
<PAGE>
Associated with the retirement of the debt, Radio One incurred certain early
prepayment penalties and legal fees, and had to write-off certain deferred
financing costs associated with the debt retired. These costs amounted to
$468,000 and were recorded as an extraordinary item in the accompanying
statements of operations.
During 1997, Radio One retired $45,600,000 of outstanding debt. Associated with
the retirement of the debt, the Radio One incurred certain early prepayment
penalties and legal fees, and had to write-off certain deferred financing costs
associated with the debt retired. These costs amounted to $1,985,000 and were
recorded as an extraordinary item in the accompanying statements of operations.
4. COMMITMENTS AND CONTINGENCIES:
Leases
Radio One has an operating lease for Baltimore office space with a partnership
in which two of the partners are stockholders of Radio One (Note 7). This lease
expires October 31, 2003. Radio One entered into an operating lease in Lanham,
Maryland, for office and studio space. This lease expires December 31, 2011. The
operating lease for office and studio space in Philadelphia, Pennsylvania,
expired October 31, 1997, and Radio One is currently on a month-to-month basis
and negotiating to renew this lease.
The Company leases, under operating lease agreements, a broadcast tower and
transmitter facilities in Maryland, Washington, D.C. and Pennsylvania. The
leases for the Maryland facilities expire during the period from December 2000
to August 2001. The leases for the Washington, D.C., broadcast tower and
transmitter facilities expire during the period May 1999 to November 2001. In
addition, the Company leases equipment under various leases, which expire over
the next five years.
F-13
<PAGE>
The following is a schedule of the future minimum rental payments required under
the operating leases that have an initial or remaining noncancelable lease term
in excess of one year as of December 31, 1997.
<TABLE>
<CAPTION>
For the Year
Ending December 31, Total
------------------- ------
<S> <C> <C>
1998................................................................. $ 521,000
1999................................................................. 553,000
2000................................................................. 591,000
2001................................................................. 590,000
2002................................................................. 391,000
Thereafter .......................................................... 3,086,000
--------------
Total.............................................................. $ 5,732,000
==============
</TABLE>
Total rent expense for the years ended December 31, 1995, 1996 and 1997, was
$570,000, $777,000 and $809,000, respectively.
FCC Broadcast Licenses
Each of the Company's radio stations operates pursuant to one or more licenses
issued by the Federal Communications Commission (FCC) that have a maximum term
of eight years prior to renewal. The Company's radio operating licenses expire
at various times from August 1, 1998 to October 1, 2003. Although the Company
may apply to renew its FCC licenses, third parties may challenge the Company's
renewal applications. The Company is not aware of any facts or circumstances
that would prevent the Company from having its current licenses renewed.
Litigation
Radio One has been named as a defendant in several legal actions occurring in
the ordinary course of business. It is management's opinion, after consultation
with its legal counsel, that the outcome of these claims will not have a
material adverse effect on the Company's financial position or results of
operations.
Line of Credit
As of December 31, 1997, Radio One had a $7,500,000 outstanding line of credit
which will expire October 31, 2000. If this line of credit is drawn on, the
interest rate will include the NationsBank base rate plus 1.375%. Radio One's
collateral for this line of credit consists of liens and security interest in
all common and voting securities convertible or exchangeable into common stock
of the Company and substantially all of its assets (other than WYCB Acquisition
Corporation and other than common stock of Radio One issued in connection with a
public equity offering). This line of credit was not drawn on as of December 31,
1997.
5. STOCK OPTION PLAN:
Radio One had an Incentive Stock Option Plan (the Plan) which provided for the
issuance of qualified and nonqualified stock options to all full-time key
employees. The Plan allowed the issuance of up to 25% of the authorized common
stock provided certain performance benchmarks are achieved by the Company. Radio
One terminated the Plan on May 12, 1997.
During 1995, options were granted to acquire 63.16 shares of common stock at $1
per share. Of the options granted in 1995, options to acquire 57.45 shares
vested and were exercised during 1995. As the options were granted significantly
below their market value, the Company recognized compensation expense of
$778,000 related to the options granted. During June 1997, the remaining option
of 5.71 shares of common stock expired.
F-14
<PAGE>
6. INCOME TAXES:
Effective January 1, 1996, Radio One converted from a C Corporation to an S
Corporation under Subchapter S of the Internal Revenue Code. As an S
Corporation, the stockholders separately account for their pro-rata share of
Radio One's income, deductions, losses and credits. Effective May 19, 1997,
Radio One converted back to a C Corporation.
In connection with the conversion to a C corporation, in accordance with SEC
Staff Accounting Bulletin 4.B, Radio One transferred the amount of the
undistributed losses up to the amount of additional paid in capital at the date
of conversion to additional paid-in capital.
Prior to January 1, 1996, and subsequent to May 19, 1997, the Company accounted
for income taxes in accordance with Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109). Under SFAS 109, deferred
income taxes reflect the impact of temporary differences between the assets and
liabilities recognized for financial reporting purposes and amounts recognized
for tax purposes. Deferred taxes are based on tax laws as currently enacted.
A reconciliation of the statutory federal income taxes to the recorded income
tax provision for the years ended December 31, 1995, 1996 and 1997, is as
follows:
<TABLE>
<CAPTION>
1995 1996 1997
-------------- -------------- ---------
<S> <C> <C> <C>
Statutory tax (@ 34% rate)......................... $ (630,000) $ (1,227,000) $ (1,681,000)
Effect of state taxes, net of federal.............. (111,000) (217,000) (245,000)
Effect of stock option compensation
expense ..................................... 275,000 -- --
Establishment of S corporation loss to its
stockholders................................... -- 1,444,000 935,000
Effect of net deferred tax asset in
conversion to C corporation.................... -- -- (1,067,000)
Valuation reserve.................................. 466,000 -- 2,058,000
-------------- -------------- --------------
Provision for income taxes..................... $ -- $ -- $ --
============== ============== =============
</TABLE>
F-15
<PAGE>
The components of the provision for income taxes for the years ended December
31, 1995 and 1997, are as follows:
<TABLE>
<CAPTION>
1995 1997
-------------- --------------
<S> <C> <C>
Current........................................................... $ -- $ --
Deferred.......................................................... (466,000) (991,000)
Establishment of net deferred tax asset in
conversion to C corporation................................... -- (1,067,000)
Valuation reserve................................................. 466,000 2,058,000
-------------- --------------
Provision for income taxes.................................... $ -- $ --
============== =============
</TABLE>
Deferred income taxes reflect the net tax effect of temporary differences
between the financial statement and tax basis of assets and liabilities. The
significant components of the Company's deferred tax assets and liabilities as
of December 31, 1997, are as follows:
<TABLE>
<CAPTION>
1997
<S> <C>
Deferred tax assets- ----------
FCC and other intangibles amortization.......................................... $ 180,000
Reserve for bad debts........................................................... 353,000
Goodwill........................................................................ 66,000
NOL carryforward................................................................ 1,746,000
Other........................................................................... 2,000
----------
Total deferred tax assets................................................. 2,347,000
Deferred tax liabilities-
Depreciation....................................................................
Other...........................................................................
Total deferred tax liabilities............................................ (279,000)
(10,000)
----------
Net deferred tax asset.............................................................. (289,000)
----------
Less: Valuation reserve............................................................ 2,058,000
Deferred taxes included in the accompanying
consolidated balance sheets......................................................... $(2,058,000)
============
</TABLE>
A 100% valuation reserve has been applied against the net deferred tax asset as
its realization was not more likely than not to be realized.
As of December 31, 1997, there was an approximate $5,100,000 of available net
operating loss carryforwards.
F-16
<PAGE>
7. RELATED PARTY TRANSACTIONS:
In September 1990, Radio One purchased a building in the name of the majority
stockholder for $73,000. All rental income generated from the office building
was received and used by Radio One. The building was sold during fiscal year
1995. This transaction resulted in no gain or loss to the Company. In addition,
Radio One leases office space for $8,000 per month from a partnership in which
two of the partners are stockholders of Radio One (Note 4). Total rent paid to
the stockholders for fiscal years 1995, 1996 and 1997, was $134,000, $96,000 and
$96,000, respectively. Radio One also has a net receivable as of December 31,
1996 and 1997, of approximately $78,000 and $68,000, respectively, due from
Radio One of Atlanta, Inc. (ROA), of which an executive officer and stockholder
of Radio One holds voting control of the capital stock in ROA. Radio One also
charges ROA a management fee of approximately $100,000 per year.
8. PROFIT SHARING:
Radio One has a 401(k) profit sharing plan for its employees. Radio One can
contribute to the plan at the discretion of its Board of Directors. Radio One
made no contribution to the plan during fiscal year 1995, 1996 or 1997.
F-17
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
INDEX TO SCHEDULES
Page
----
Report of Independent Public Accountants............................... S-2
Schedule II - Valuation and Qualifying
Accounts............................................................... S-3
S-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Radio One, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated balance sheets and statements of operations, changes in
stockholders' deficit and cash flows of Radio One, Inc. and subsidiaries (the
Company) included in this Form 10-K registration statement and have issued our
report thereon dated February 19, 1998. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed in the accompanying index is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Baltimore, Maryland,
February 19, 1998
S-2
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO AT END
DESCRIPTION OF YEAR EXPENSE DEDUCTIONS OF YEAR
----------- ------- ------- ---------- -------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
1995.................................................... $ 468 $ 298 $ 97 $ 669
1996.................................................... 669 628 532 765
1997.................................................... 765 894 755 904
TAX VALUATION RESERVE:
1995.................................................... 739 328 -- 1,067
1996.................................................... 1,067 -- 1,067 --
1997.................................................... -- 2,058 -- 2,058
</TABLE>
S-3
CERTIFICATE OF AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
RADIO ONE, INC.
The undersigned, being the duly elected President and Chief Executive
Officer of Radio One, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware ("DGCL"), hereby declares and certifies the following:
1. That the Corporation filed its original Certificate of Incorporation
with the Secretary of State of the State of Delaware on July 15, 1996 (the
"Certificate of Incorporation").
2. That the present name of the Corporation is Radio One, Inc.
3. That the Board of Directors of the Corporation, pursuant to Sections
141, 242 and 245 of the DGCL, adopted resolutions authorizing the Corporation to
amend, integrate and restate the Certificate of Incorporation of the Corporation
in its entirety to read as set forth in Exhibit A attached hereto and made a
part hereof (the "Amended and Restated Certificate").
4. That the stockholders of the Corporation approved and adopted the
Amended and Restated Certificate in accordance with Sections 228, 242 and 245 of
the DGCL.
IN WITNESS WHEREOF, the undersigned has executed this certificate in the
name and on behalf of the Corporation as of this th day of March, 1998.
By:
--------------------------------------------
Name: Alfred C. Liggins
Title: President and Chief Executive Officer
CERTIFICATE OF AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
RADIO ONE LICENSES, INC.
The undersigned, being the duly elected President and Chief Executive
Officer of Radio One Licenses, Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware ("DGCL"), hereby declares and certifies the following:
1. That the Corporation filed its original Certificate of Incorporation
with the Secretary of State of the State of Delaware on March 27, 1997(the
"Certificate of Incorporation").
2. That the present name of the Corporation is Radio One, Inc.
3. That the Board of Directors of the Corporation, pursuant to Sections
141, 242 and 245 of the DGCL, adopted resolutions authorizing the Corporation to
amend, integrate and restate the Certificate of Incorporation of the Corporation
in its entirety to read as set forth in Exhibit A attached hereto and made a
part hereof (the "Amended and Restated Certificate").
4. That the stockholders of the Corporation approved and adopted the
Amended and Restated Certificate in accordance with Sections 228, 242 and 245 of
the DGCL.
IN WITNESS WHEREOF, the undersigned has executed this certificate in the
name and on behalf of the Corporation as of this 19th day of May, 1997.
By:
--------------------------------------------
Name: Alfred C. Liggins
Title: President and Chief Executive Officer
AMENDED AND RESTATED
BYLAWS
OF
RADIO ONE LICENSES, INC.
(AS OF MAY 19, 1997)
ARTICLE I - OFFICES
Section 1. Registered Office. The registered office in the State of
Delaware shall be at 9 East Loockerman Street, in the City of Dover, County of
Kent. The name of the corporation's registered agent at such address shall be
National Registered Agents, Inc. The registered office or registered agent of
the corporation may be changed from time to time by action of the board of
directors on the filing of a certificate or certificates as required by law.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II - MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year, beginning in the year 1998, prior to the
last day of April. At such meeting, the stockholders shall elect the directors
of the corporation and conduct such other business as may come before the
meeting. The time and place of the annual meeting shall be determined by the
board of directors. Special meetings of the stockholders for any other purpose
may be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof. Special meetings of the stockholders may be called by the
president or the chairman of the board for any purpose and shall be called by
the secretary if directed by the board of directors.
Section 2. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice of every annual or special
meeting of the stockholders, stating the place, date, time, and, in the case of
special meetings, the purpose or purposes, of such meeting, shall be given to
each stockholder entitled to vote at such meeting not less than l0 nor more than
60 days before the date of the meeting. All such notices shall be delivered,
either personally or by mail, by or at the direction of the board of directors,
the chairman of the board, the chief executive officer, the president or the
secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail with postage prepaid and addressed to the
stockholder at his or her address as it appears on the records of the
corporation.
Section 3. Stockholders List. The officer having charge of the stock ledger
of the corporation shall make, at least l0 days before every meeting of the
stockholders, a complete list
<PAGE>
arranged in alphabetical order of the stockholders entitled to vote at such
meeting, specifying the address of and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least l0 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 4. Quorum. The holders of a majority of the outstanding shares of
capital stock entitled to vote thereat, whether present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders, except
as otherwise provided by statute or by the certificate of incorporation. If a
quorum is not present, the holders of the shares present in person or
represented by proxy at the meeting and entitled to vote thereat shall have the
power, by the affirmative vote of the holders of a majority of such shares, to
adjourn the meeting to another time or place. Unless the adjournment is for more
than thirty days or unless a new record date is set for the adjourned meeting,
no notice of the adjourned meeting need be given to any stockholder, provided
that the time and place of the adjourned meeting were announced at the meeting
at which the adjournment was taken. At the adjourned meeting, the corporation
may transact any business which might have been transacted at the original
meeting.
Section 5. Vote Required. When a quorum is present or represented by proxy
at any meeting, the vote of the holders of a majority of the shares of capital
stock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter shall be the act of the stockholders, unless the
question is one upon which by express provisions of an applicable statute or of
the certificate of incorporation a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 6. Voting Rights. Except as otherwise provided by the Delaware
General Corporation Law or by the certificate of incorporation of the
corporation or any amendments thereto and subject to Section 3 of ARTICLE VI
hereof, each stockholder shall at every meeting of the stockholders be entitled
to one vote in person or by proxy for each share of capital stock held by such
stockholder.
Section 7. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 8. Action by Written Consent. Any action required to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares of
capital stock entitled to vote thereon were present and voted, and shall be
delivered to the corporation by delivery to its
2
<PAGE>
registered office in the State of Delaware or the corporation's principal place
of business or an officer or agent of the corporation having custody of the
books in which proceedings of meetings are recorded. All consents delivered in
accordance with this section shall be deemed to be recorded when so delivered.
No written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the earliest date on which any consent is
delivered to the corporation as required by this section, written consents
signed by the holders of a sufficient number of shares to take such corporate
action are recorded. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any action taken pursuant to
such written consent of the stockholders shall have the same force and effect as
if taken by the stockholders at a meeting thereof.
ARTICLE III - DIRECTORS
Section 1. Number, Election and Term of Office. The board of directors
shall be five (5) in number; provided, however, the number of members of the
board of directors shall be increased to nine (9) at the election of Investors
(as defined in the Preferred Stockholders' Agreement (the "PSA") dated as of May
14, 1997 among Radio One, Inc., Radio One Licenses, Inc., and the other parties
thereto and the Warrantholders' Agreement (the "WA") dated as of June 6, 1995
among Radio One, Inc., Radio One Licenses, Inc. and the other parties thereto,
as amended by the First Amendment to Warrantholders' Agreement dated as of the
Closing Date (as defined in the PSA), as applicable) in accordance with, and
subject to the terms and conditions of, Section 10 of the PSA or Article VI of
the WA, as applicable (an election to increase the size of the board of
directors is referred to herein as the "Special Election"). The directors shall
be elected at the annual meeting of stockholders, except as provided in Section
3 of this ARTICLE III, and each director elected shall hold office until the
next annual meeting of stockholders and until a successor is duly elected and
qualified or until his or her death, resignation or removal as hereinafter
provided.
Section 2. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares of stock of the corporation then entitled to vote at an
election of directors, except as otherwise provided by statute. Any director may
resign at any time upon written notice to the corporation.
Section 3. Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled only by
the holders of a majority of the shares of stock of the corporation then
entitled to vote at an election of directors at an annual or special meeting of
stockholders, and each director so chosen shall hold office until the next
annual meeting of stockholders and until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as
hereinafter provided; provided, however, that any vacancy created as a result of
the Special Election shall be filled in the manner provided for in Section 10 of
the PSA or Article VI of the WA, as applicable, and a director so elected shall
continue to serve as a director until the date on which the Special Election is
no longer in effect, at which time the number of directors constituting the
board of directors of the corporation shall decrease to such number as
constituted the whole board of directors of the corporation immediately prior to
the exercise of the Special Election.
3
<PAGE>
Section 4. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without other notice than this bylaw immediately
after, and at the same place as, the annual meeting of stockholders.
Section 5. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the chairman, the chief executive officer or the president on at
least 24 hours notice to each director, either personally, by telephone, by
mail, or by telegraph; in like manner and on like notice the secretary must call
a special meeting on the written request of a majority of directors; in like
manner on like notice, the secretary must call a special meeting on the written
request of Investors holding a majority of the outstanding Preferred Shares (as
defined in the PSA); provided that any such request made by such Investors must
be called in good faith for a reasonable business purpose.
Section 6. Quorum. A majority of the total number of directors shall
constitute a quorum for the transaction of business. The vote of a majority of
directors present at a meeting at which a quorum is present shall be the act of
the board of directors. If a quorum shall not be present at any meeting of the
board of directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 7. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees. Each committee
shall consist of one or more of the directors of the corporation, which, to the
extent provided in such resolution and not otherwise limited by statute, shall
have and may exercise the powers of the board of directors in the management and
affairs of the corporation including without limitation the power to declare a
dividend and to authorize the issuance of stock. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the directors
when required.
Section 8. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by the resolution of the board of
directors designating such committee, but in all cases the presence of at least
a majority of the members of such committee shall be necessary to constitute a
quorum. In the event that a member and that member's alternate, if alternates
are designated by the board of directors as provided in Section 7 of this
ARTICLE III, of such committee is/are absent or disqualified, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in place of any
such absent or disqualified member.
4
<PAGE>
Section 9. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 10. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the board of directors, or of any committee thereof,
may be taken without a meeting if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board of directors or committee.
ARTICLE IV - OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman of the board (if the board of
directors so deems advisable and elects), a president (who shall perform the
functions of the chairman of the board if none be elected), one or more
vice-presidents, a secretary, a treasurer, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors. Any
number of offices may be held by the same person. In its discretion, the board
of directors may choose not to fill any office for any period as it may deem
advisable, except the offices of president and secretary.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at the meeting of the board
of directors held after each annual meeting of stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Vacancies may be filled or new offices
created and filled at any meeting of the board of directors. Each officer shall
hold office until the next annual meeting of the board of directors and until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interest of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term by the board of directors
then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by the
board of directors, and no officer shall be prevented from receiving such
compensation by virtue of the fact that he or she is also a director of the
corporation.
5
TIME MANAGEMENT AND SERVICES AGREEMENT
Time Management and Services Agreement ("Agreement") effective as of 12:01
P.M. March 17, 1998 (the "Effective Date"), by and among Broadcast Holdings,
Inc., licensee of Radio Station WYCB(AM), Washington, D.C. ("Station"), WYCB
Acquisition Corporation ("Owner"), which is the parent company of Broadcast
Holdings, Inc., and Radio One, Inc. ("Manager").
WHEREAS, Manager is in the business of operating radio stations and
producing and transmitting news, sports, informational, public service and
entertainment programming and associated advertising on radio stations;
WHEREAS, Owner as parent company of the licensee is responsible for
selecting programs and managing the Station;
WHEREAS, Manager desires to provide programming to be transmitted on the
Station pursuant to the provisions hereof and pursuant to applicable regulations
of the Federal Communications Commission ("FCC") and to provide services to
Owner in the operation of the Station; and
WHEREAS, Owner desires to transmit programming supplied by Manager on the
Station and to contract for the services offered by Manager.
NOW, THEREFORE, in consideration of these premises and the mutual promises,
undertakings, covenants and agreements contained in this Agreement, the parties
hereto do hereby agree as follows:
WITNESSETH:
1. Facilities. Owner agrees to broadcast on the Station, or cause to be
broadcast, for up to twenty-four (24) hours per day, seven (7) days per week,
Manager's programs and advertisements ("Programs").
2. Programs. Manager shall furnish or cause to be furnished the artistic
personnel and material for the Programs as provided by this Agreement and all
Programs shall be in good taste and in accordance with Federal Communications
Commission ("FCC") requirements. All advertising spots and promotional material
or announcements shall comply with all applicable federal, state and local
regulations.
<PAGE>
3. Sale of Advertising Time. Manager is permitted to sell all advertising
for Programs and may sell such advertising in combination with the sale of
advertising on other stations owned by Manager. Manager will retain all revenues
from the sale of such advertising.
4. Management Services. Manager will provide all services necessary to the
operation and management of a radio station in a top 10 market.
5. Payments. Manager hereby agrees to pay to Owner the sum of $45,000 per
month, such sum to be paid on or before the 1st day of the month as full
compensation to Owner for the right to broadcast the Programs on the Station.
The monthly payments may be increased on an annual basis.
6. Handling of Public Comments. Manager shall be advised promptly by Owner
of any public or FCC complaint or inquiry concerning programs provided by
Manager.
7. Programming Standards. Manager agrees to abide by rules and regulations
regarding contests and lotteries, elections, sponsorship identification, and
obscenity and indecency with regard to the Programs provided to Owner.
8. Operation of Station. Notwithstanding anything to the contrary in this
Agreement, Owner shall have full authority and power over the operation of the
Station during the period of this Agreement. Owner shall retain the right to
decide whether to accept or reject any programming or advertisements, the right
to preempt or delay or delete any programs which Owner reasonably believes to be
unsatisfactory, unsuitable or contrary to the public interest or in order to
broadcast a program deemed to be by Owner to be of greater national, regional,
or local interest, and the right to take any other actions necessary for
compliance with the rules, regulations, and policies of the FCC.
9. Personnel. Manager shall employ and be responsible for the salaries,
taxes, insurance and related costs for all personnel used in the production of
its programming and for the personnel used in the sale of advertising time.
10. Force Majeure. Any failure or impairment of facilities or any delay or
interruption in broadcasting Programs, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, due to acts of God, strikes
or threats thereof or force majeure or due to causes beyond the control of
Owner, shall not constitute a breach of this Agreement and Owner will not be
liable to Manager.
11. Right to Use the Programs. The right to use the Programs provided by
Manager and to authorize their use in any manner and in any media whatsoever,
shall be and remain vested in Manager.
12. Payola. Manager agrees that Manager will not accept any compensation of
any kind or gift or gratuity of any kind whatsoever, regardless of its value or
form, including, but not limited to, a commission, discount, bonus, materials,
supplies or other merchandise, services or labor, whether or not pursuant to
written contracts or agreements between Manager and merchants or advertisers,
<PAGE>
unless the payer is identified in the program as having paid for or furnished
such consideration in accordance with FCC requirements.
13. Compliance with Laws. Manager agrees that throughout the term of this
Agreement Manager will comply in all material respects with all laws and
regulations applicable in the conduct of Owner's business. Owner will comply in
all material respects with all applicable FCC rules, regulations and policies,
including, but not limited to, political advertisements, sponsorship
identification, lottery and contest rules, and other local, state and federal
laws, rules, and regulations.
14. Events of Default. Manager's failure to pay on a timely basis the
consideration provided for in Paragraph 2 above shall constitute an Event of
Default only after Owner has provided Manager with written notice of the failure
to pay and Manager has failed to pay the amount(s) owed within fifteen (15)
business days of the date of the written notice.
15. Termination. Owner may terminate this Agreement if Manager has caused
an Event of Default to occur. In the event of termination, each party shall pay
to the other any fees due but unpaid as of the date of termination and Owner
shall cooperate with Manager to enable Manager to fulfill advertising or other
programming contracts then outstanding, in which event Owner shall receive as
compensation for the carriage of such advertising or programming that which
otherwise would have been paid to Manager thereunder.
16. Music Licenses. Owner and Manager represent that, as of the date that
this Agreement, they will each secure any music licenses from performers' rights
organizations including, but not limited to, ASCAP, BMI, and SESAC, that are
necessary for the legal operation of the Station as contemplated by this
Agreement and that both Owner and Manager will maintain their respective
licenses in good standing.
17. Modification and Waiver. No modification or waiver of any provision of
this Agreement shall in any event be effected unless the same shall be in
writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
18. Indulgences. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of either party at any time to require performance by
the other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (ii) no waiver by either party of any default by
the other shall be taken or held to be a waiver by such party of any other
preceding or subsequent default; and (iii) no extension of time granted by
either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
19. Construction. This Agreement shall be construed in accordance with the
laws of the State of Maryland, applicable to agreements entered into and wholly
to be performed therein, without regard to principles of conflicts of laws. The
rights and obligations of the parties hereto are subject to all federal, state
or municipal laws or regulations now or hereafter in force and the
<PAGE>
regulations of the FCC and all other governmental bodies or authorities
presently or hereafter to be constituted.
20. Successors and Assigns. Neither party may assign this Agreement without
the other party's express prior written consent, provided, however, Manager may
assign its rights and obligations pursuant to this Agreement without Owner's
consent to an entity which is a subsidiary or parent of Manager or to an entity
owned or controlled by Manager or its principals. Subject to the foregoing, this
Agreement shall be binding on, inure to the benefit of, and be enforceable by
the original parties hereto and their respective successors and permitted
assignees.
21. Entire Agreement. This Agreement embodies the entire agreement between
the parties with respect to the subject matter hereof and there are no other
agreements, representations, warranties, or understandings, oral or written,
between them with respect to the subject matter hereof. No alteration,
modification or change of this Agreement shall be valid unless by like written
instrument.
22. Savings Clause. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable, and
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable. This Agreement shall then be construed and
enforced as so modified.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BROADCAST HOLDINGS, INC.
By: __________________________
Alfred C. Liggins, III
President
WYCB ACQUISITION CORPORATION
By: __________________________
Alfred C. Liggins, III
President
RADIO ONE, INC.
By: __________________________
Alfred C. Liggins, III
President
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
by and among
THE SHAREHOLDERS OF BELL BROADCASTING COMPANY
and
RADIO ONE, INC.
Dated as of December 23, 1997
<PAGE>
TABLE OF CONTENTS
1. RULES OF CONSTRUCTION......................................................1
1.1. DEFINED TERMS..................................................1
1.2. OTHER DEFINITIONS..............................................7
1.3. NUMBER AND GENDER..............................................7
1.4. HEADINGS AND CROSS-REFERENCES..................................7
1.5. COMPUTATION OF TIME............................................8
2. FCC APPLICATION AND CLOSING................................................8
2.1. FCC APPLICATION................................................8
2.2. FINAL CLOSING DATE.............................................8
3. INITIAL ESCROW DEPOSIT. ...................................................9
4. PURCHASE PRICE AND METHOD OF PAYMENT.......................................9
4.1. CONSIDERATION..................................................9
4.2. PAYMENT AT CLOSING.............................................9
4.3. POST CLOSING ESCROW FUND......................................11
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS
REGARDING THE COMPANY.....................................................12
5.1. EXISTENCE, POWER AND IDENTITY.................................12
5.2. BINDING EFFECT................................................12
5.3. NO VIOLATION..................................................13
5.4. GOVERNMENTAL AUTHORIZATIONS...................................13
5.5. MATERIAL CONTRACTS............................................14
5.6. INSURANCE.....................................................14
5.7. FINANCIAL STATEMENTS..........................................14
5.8. EMPLOYEES.....................................................15
5.9. EMPLOYEE BENEFIT PLANS........................................16
5.10. COMPANY REAL PROPERTY.........................................18
5.11. SHAREHOLDER REAL PROPERTY.....................................20
5.12. ENVIRONMENTAL PROTECTION......................................21
5.13. COMPLIANCE WITH LAW...........................................23
5.14. LITIGATION....................................................24
5.15. INSOLVENCY PROCEEDINGS........................................25
5.16. SALES AGREEMENTS. ............................................25
5.17. LIABILITIES. .................................................25
5.18. SUFFICIENCY OF ASSETS.........................................25
5.19. CERTAIN INTERESTS AND RELATED PARTIES.........................25
5.20. TAXES.........................................................26
5.21. BROKER........................................................26
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5.22. SUBSIDIARIES..................................................26
5.23. STOCK.........................................................26
5.24. PROPERTY......................................................27
5.25. CORPORATE RECORDS.............................................27
5.26. DIVIDENDS AND OTHER DISTRIBUTIONS.............................27
5.27. PROMOTIONAL RIGHTS............................................27
5.28. INDEBTEDNESS..................................................28
5.29. TRADE BALANCE.................................................28
5.30. NO MISLEADING STATEMENTS......................................28
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS
REGARDING THE SHARES......................................................28
6.1. BINDING EFFECT................................................28
6.2. NO VIOLATION..................................................29
6.3. OWNERSHIP OF STOCK............................................29
6.4. COOPERATION...................................................29
7. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.........................30
7.1. EXISTENCE AND POWER...........................................30
7.2. BINDING EFFECT................................................30
7.3. NO VIOLATION..................................................30
7.4. LITIGATION....................................................30
7.5. LICENSEE QUALIFICATIONS.......................................31
7.6. HART-SCOTT-RODINO FILING......................................31
7.7. SUFFICIENT INFORMATION........................................31
7.8. SECTION 338 ELECTION..........................................31
8. COVENANTS WITH RESPECT TO CONDUCT OF THE COMPANY AND
SHAREHOLDERS..............................................................31
8.1. ACCESS........................................................31
8.2. MATERIAL ADVERSE CHANGES; FINANCIAL STATEMENTS................32
8.3. CONDUCT OF BUSINESS...........................................32
8.4. DAMAGE........................................................35
(A) RISK OF LOSS........................................35
(B) FAILURE OF BROADCAST TRANSMISSIONS..................36
(C) RESOLUTION OF DISAGREEMENTS.........................37
8.5. ADMINISTRATIVE VIOLATIONS.....................................37
8.6. CONTROL OF STATION. ..........................................37
8.7. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS.........37
8.8. CLOSING OBLIGATIONS...........................................38
8.9. ENVIRONMENTAL ASSESSMENT......................................38
8.10. CONSTRUCTION OF NEW FACILITIES................................38
8.11. PIRATE RADIO STATION. .......................................39
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9. CONDITIONS PRECEDENT......................................................39
9.1. MUTUAL CONDITIONS. ...........................................39
(A) APPROVAL OF TRANSFER OF CONTROL APPLICATION. .......39
(B) ABSENCE OF LITIGATION. .............................39
9.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION...................39
(A) REPRESENTATIONS AND WARRANTIES. ....................35
(B) COMPLIANCE WITH CONDITIONS. ........................35
(C) DISCHARGE OF LIENS. ................................35
(D) THIRD-PARTY CONSENTS. ..............................36
(E) ESTOPPEL CERTIFICATES. .............................36
(F) NO MATERIAL ADVERSE CHANGE..........................36
(G) FINANCIAL STATEMENTS. ..............................36
(H) CASH AND ACCOUNTS RECEIVABLE MINIMUMS...............37
(I) SALES AND CUSTOMER INFORMATION. ....................37
(J) OPINION OF COMPANY'S COUNSEL. ......................37
(K) FINAL ORDER.........................................37
(L) CLOSING DOCUMENTS. .................................37
(M) RESIGNATION OF DIRECTORS AND OFFICERS...............37
(N) STOCK CERTIFICATES..................................37
(O) CORPORATE RECORDS...................................37
(P) BANK ACCOUNTS/INSURANCE POLICIES....................38
(Q) ENVIRONMENTAL REMEDIATION...........................38
(R) TITLE INSURANCE.....................................38
(S) ACCOUNTS PAYABLE....................................38
(T) CONSTRUCTION PERMIT.................................38
(U) ZONING APPROVAL.....................................38
(V) AUDIT...............................................39
(W) ACCOUNTS RECEIVABLE.................................39
(X) TRADE BALANCE.......................................39
(Y) RADIOFREQUENCY RADIATION............................39
(Z) WJZZ (AM) LICENSE...................................39
(AA) KINGSFIELD PROPERTY.................................39
(BB) TAXES...............................................39
(CC) COMPENSATION........................................39
(DD) CERTIFICATES OF ARNOLD AND HALL.....................39
(EE) CONFIDENTIAL INFORMATION............................39
(FF) FM STUDIO LEASE.....................................40
(GG) CERTIFICATE RE MARY L. BELL SHAREHOLDER AGREEMENT...40
9.3. ADDITIONAL CONDITIONS TO SHAREHOLDERS' OBLIGATION.............40
(A) REPRESENTATIONS AND WARRANTIES. ....................40
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(B) COMPLIANCE WITH CONDITIONS. ........................40
(C) PAYMENT.............................................40
(D) CLOSING DOCUMENTS. .................................40
10. INDEMNIFICATION/POST-CLOSING OBLIGATIONS..................................41
10.1. OBLIGATIONS OF SHAREHOLDERS...................................41
10.2. OBLIGATIONS OF BUYER..........................................42
10.3. PROCEDURE FOR INDEMNIFICATION.................................42
10.4. REMEDIES CUMULATIVE...........................................43
10.5. NOTICE........................................................43
10.6. THRESHOLD CONCERNING SECTIONS 10.1 AND 10.2...................43
10.7. SURVIVAL OF REPRESENTATIONS...................................44
10.8. TAX RETURNS...................................................44
(A) PREPARATION AND FILING OF RETURNS FOR PRE-CLOSING
PERIODS.............................................44
(B) PREPARATION AND FILING OF RETURNS FOR
POST-CLOSING PERIODS................................44
10.9. ALLOCATION OF TAX LIABILITY...................................44
10.10.COOPERATION WITH RESPECT TO FINANCIAL AND TAX
MATTERS.......................................................45
10.11.NONDISCLOSURE AND CONFIDENTIALITY.............................46
11. DEFAULT AND REMEDIES......................................................46
11.1. OPPORTUNITY TO CURE...........................................46
11.2. SHAREHOLDERS' REMEDIES. ......................................46
11.3. BUYER'S REMEDIES. ............................................46
12. TERMINATION OF AGREEMENT..................................................47
12.1. TERMINATION OF AGREEMENT......................................47
(A) MUTUAL CONSENT......................................47
(B) CONDITIONS TO BUYER'S PERFORMANCE NOT MET..........47
(C) CONDITIONS TO SELLERS' PERFORMANCE NOT MET..........47
(D) MATERIAL BREACH.....................................47
(E) BANKRUPTCY; RECEIVERSHIP............................47
(F) FCC APPROVAL........................................48
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<PAGE>
TABLE OF EXHIBITS
EXHIBIT 1 INITIAL ESCROW AGREEMENT
EXHIBIT 2 POST CLOSING ESCROW AGREEMENT
EXHIBIT 3 OPINION OF COUNSEL TO SELLER
EXHIBIT 4 OPINION OF COUNSEL TO BUYER
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<PAGE>
TABLE OF SCHEDULES
SCHEDULE 4.2 OWNERSHIP OF SHARES
SCHEDULE 5.1 COMPANY DOCUMENTS
SCHEDULE 5.3 NO VIOLATION
SCHEDULE 5.4 GOVERNMENTAL AUTHORIZATIONS
SCHEDULE 5.5 MATERIAL CONTRACTS
SCHEDULE 5.6 INSURANCE
SCHEDULE 5.7(a) FINANCIAL STATEMENTS
SCHEDULE 5.7(b) BALANCE SHEET - June 30, 1997
SCHEDULE 5.7(c) BANK ACCOUNTS
SCHEDULE 5.8 EMPLOYEES
SCHEDULE 5.9 EMPLOYEE BENEFIT PLANS
SCHEDULE 5.10(a) REAL PROPERTY OWNED BY COMPANY
SCHEDULE 5.10(b) REAL PROPERTY LEASED BY COMPANY
SCHEDULE 5.11(a) COX/BELL REAL PROPERTY
SCHEDULE 5.11(b) COX/BASS REAL PROPERTY
SCHEDULE 5.12 ENVIRONMENTAL MATTERS
SCHEDULE 5.13 COMPLIANCE WITH LAWS
SCHEDULE 5.14 LITIGATION
SCHEDULE 5.16 SALES AGREEMENTS
SCHEDULE 5.18 CERTAIN INTERESTS AND RELATED PARTIES
SCHEDULE 5.23(a) TANGIBLE PERSONAL PROPERTY
SCHEDULE 5.23(b) SHAREHOLDER PROPERTY
SCHEDULE 5.25 INTELLECTUAL PROPERTY
SCHEDULE 5.26 PERMITTED ENCUMBRANCES AND INDEBTEDNESS
vi
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is entered into as of this 23rd day of
December, 1997, by and among E. Harold Munn, Jr., NBD Bank, N.A., Janice L.
Hall, Arthur Middlebrooks all as Trustees of the Mary L. Bell Trust Agreement;
Janice L. Hall; Dr. Wendell F. Cox; Estate of Iris Bell Cox; Wendell H. Cox;
William E. Fisher, Trustee for Mariel Cox; William E. Fisher, Trustee for
Benjamin Cox; William E. Fisher, Trustee for Sonam Bass; William E. Fisher,
Trustee for Julian Bass; Eric Bell Bass; Treva Bell Bass; Robert Bell Bass; Mary
L. Bell, Trust; Wendell T. Arnold; William E. Fisher, Trustee for Brianna Bass
(hereinafter referred to as the "Sellers" or the "Shareholders"); and Radio One,
Inc., a Delaware corporation (the "Buyer").
RECITALS
WHEREAS, Sellers are all of the shareholders of Bell Broadcasting Company,
a Michigan Corporation ("Company").
WHEREAS, Company is the licensee of Station WCHB(AM), Taylor, Michigan
operating on a frequency of 1200 kHz, Station WCHB-FM, Detroit, Michigan
operating on a frequency of 105.9 MHz and Station WJZZ(AM), Frankenmuth,
Michigan, which is licensed to operate on the frequency 1210 kHz but is
presently silent and for which the Commission has issued a construction permit
to change station location from Frankenmuth to Kingsley, Michigan, which
construction permit also contemplates operation on the frequency 1210 kHz (the
"Stations").
WHEREAS, Buyer desires to obtain, and the Sellers desire to sell to Buyer
all of the issued and outstanding shares of the capital stock of the Company.
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and, intending to be legally bound hereby, the parties agree as
follows:
1. RULES OF CONSTRUCTION.
1.1. DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
1
<PAGE>
"ACCOUNTS RECEIVABLE" means the cash accounts receivable of Company arising
from Company's operation of the Stations prior to Closing.
"ACCOUNTS PAYABLE" means the liabilities of the Company for services
received or goods acquired arising from the Company?s operation of the Stations
in the normal course of business prior to Closing for which the Company has
received a bill, which is not yet thirty (30) days past due. For purposes of
this definition, a bill becomes due when it is actually received by the Company.
"ADMINISTRATIVE VIOLATION" means those violations described in Section 8.5
hereof.
"BUSINESS" means the business of Company consisting primarily of the
operation of the Stations.
"BUYER" means Radio One, Inc., a Delaware corporation.
"BUYER DOCUMENTS" means those documents, agreements and instruments to
be executed and delivered by Buyer in connection with this Agreement as
described in Section 7.2.
"CLOSING" means the consummation of the Transaction (as hereinafter
defined).
"CLOSING DATE" means the date on which the Closing takes place, as
determined pursuant to Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"COMMISSION" means the Federal Communications Commission.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as amended.
"COMPANY" means Bell Broadcasting Company, a Michigan corporation.
"COMPANY DOCUMENTS" means those documents, agreements and instruments to be
executed and delivered by Company in connection with this Agreement as described
in Section 5.2.
2
<PAGE>
"COMPANY REAL PROPERTY" means that certain real property owned or leased by
the Company and used in the operation of the Stations as described in Section
5.10.
"DEED" means the deed(s) delivered by the Company or Dr. Wendell F. Cox and
the Estate of Mary L. Bell or Dr. Wendell F. Cox and Eric Bass to Buyer at the
Closing which shall be sufficient to transfer to Buyer title to the Shareholder
Real Property and Improvements thereon, and used in the operations of the
Stations.
"ENCUMBRANCE" means any claim, charge, easement, encumbrance, security
interest, lien, option or pledge imposed by agreement or law, except for any
restrictions on transfer generally arising under any applicable federal or state
securities law.
"ENVIRONMENTAL LAW" means any law, rule, order, decree or regulation of any
Governmental Authority relating to pollution or protection of human health and
the environment, including any law or regulation relating to emissions,
discharges, releases or threatened releases of Hazardous Substances (as
hereinafter defined) into ambient air, surface water, groundwater, land or other
environmental media, and including without limitation all laws, regulations,
orders, and rules pertaining to occupational health and safety.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"EXCESS TRADE BALANCE" means that amount which exceeds a $30,000 negative
Trade Balance.
"FCC LICENSES" means all licenses, pending applications, permits and other
authorizations issued by the Commission for the operation of the Stations listed
on Schedule 5.4.
"FINAL ORDER" means any action that shall have been taken by the Commission
(including action duly taken by the Commission's staff, pursuant to delegated
authority) which shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended; with respect to which no timely request for stay,
petition for rehearing, appeal or certiorari or sua sponte action of the
Commission with comparable effect shall be pending; and as to which the time for
filing any such request, petition, appeal, certiorari or for the taking of any
such sua sponte action by the Commission shall have expired or otherwise
terminated.
3
<PAGE>
"FINANCIAL STATEMENTS" means Company's audited and unaudited financial
statements, income statements, and balance sheets as described in Section 5.7.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, court or other entity that
exercises executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" means any hazardous, dangerous or toxic waste,
substance or material, as those or similar terms are defined in or for purposes
of any applicable federal, state or local Environmental Law, and including
without limitation any asbestos or asbestos-related products, petroleum, oils or
petroleum-derived compounds, CFCS, or PCBs.
"IMPROVEMENTS" means all buildings, structures, fixtures, and other
improvements now or hereafter actually or constructively attached to the Company
Real Property and the Shareholder Real Property, and all modifications,
additions, restorations, or replacements of the whole or any part thereof.
"INDEBTEDNESS" means any debt or indebtedness, whether evidenced by a note
or otherwise, whether secured or unsecured, in each case for borrowed money.
"INDEMNIFICATION BASKET" means the amount described in Section 10.6.
"INITIAL ESCROW AGENT" means the Wilmington Trust Company.
"INITIAL ESCROW AGREEMENT" means the escrow agreement described in Section
3, the form of which is attached as Exhibit 1.
"INITIAL ESCROW DEPOSIT" means the monies deposited with the Initial Escrow
Agent described in Section 3.
"KNOWLEDGE OF BUYER" means the actual knowledge, after reasonable inquiry
of Buyer's President.
"KNOWLEDGE OF COMPANY" means the actual knowledge, after reasonable inquiry
of the President of the Company, and the actual knowledge without inquiry of the
Shareholders.
4
<PAGE>
"LAW" means any constitutional provision, statute or other law, rule,
regulation, or interpretation thereof by any Governmental Authority and any
order, including any order of any Governmental Authority.
"LOSS" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
reasonable legal, accounting and other professional fees and expenses incurred
in the investigation, collection, prosecution and defense of claims and amounts
paid in settlement, that may be imposed on or otherwise incurred or suffered by
the specified person.
"MATERIAL CONTRACTS" means those leases, contracts and agreements
specifically described in Schedule 5.5 as being "Material Contracts," which are
material to the operation of the Station in the manner in which it is currently
operating.
"PERMITTED ENCUMBRANCES" means those liens or encumbrances of Company set
forth on Schedule 5.26, which Buyer has agreed to assume.
"PERMITTED INDEBTEDNESS" means those obligations shown on Schedule 5.26,
which Buyer has agreed to assume.
"POST CLOSING ESCROW ACCOUNT" shall mean the account specified in Section
4.3 created pursuant to the Post Closing Escrow Agreement.
"POST CLOSING ESCROW AGENT" means Wilmington Trust Company.
"POST CLOSING ESCROW AGREEMENT" shall mean the agreement specified in
Section 4.3 by and among Shareholders, Buyer and the Post Closing Escrow Agent,
dated as of the Closing Date, substantially in the form of Exhibit 2 hereto.
"POST CLOSING ESCROW FUND" shall mean $1,500,000, which will be deposited
in the Post Closing Escrow Account by Buyer from the Purchase Price in
accordance with the Post Closing Escrow Agreement and the terms hereof.
"POST CLOSING ESCROW TERMINATION DATE" shall have the meaning specified in
Section 4.3.
5
<PAGE>
"PURCHASE PRICE" shall mean the total consideration for the Shares, as
described in Section 4.1.
"SALES AGREEMENTS" means agreements entered into by Company for the sale of
time on the Stations for cash, as described in Section 5.16.
"SHAREHOLDERS" means these individuals named in the preamble to this
Agreement and also referred to herein as Sellers.
"SHAREHOLDER REAL PROPERTY" means that certain real property owned by Dr.
Wendell F. Cox and the Estate of Mary L. Bell or owned by Dr. Wendell F. Cox and
Eric Bass as described in Section 5.11.
"SHARES" means all the issued Class A Common and Class B Common shares of
capital stock of Company.
"SPECIFIED EVENT" means those broadcast transmission failures described in
Section 8.4(b).
"STUDIO SITE" means the real estate located at 2994 East Grand Boulevard,
Detroit, Michigan that is currently used as Station WCHB-FM's studio and office
facilities.
"TANGIBLE PERSONAL PROPERTY" means all tangible personal property and
fixtures owned or leased by the Company and used or useful in the operation of
the Business, including the property and assets listed or described in Schedule
5.23(a), together with supplies, inventory, spare parts and replacements thereof
and improvements and additions thereto made between the date hereof and the
Closing Date.
"TRADE AGREEMENTS" means agreements entered into by Company for the sale of
time on the Stations in exchange for merchandise or services.
"TRADE BALANCE" means the difference between the aggregate value of time
owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, as computed in
accordance with the Stations' customary bookkeeping practices. The Trade Balance
is "negative" if the value of time owed exceeds the value of goods and services
to be received. The Trade Balance is "positive" if the value of time owed is
less than the value of goods and services to be received.
6
<PAGE>
"TRANSACTION" means the sale and purchase and assignments and assumptions
contemplated by this Agreement and the respective obligations of Shareholders
and Buyer set forth herein.
"TRANSFER OF CONTROL APPLICATION" means the application on FCC Form 315
that Shareholders, Company and Buyer shall join in and file with the Commission
requesting its consent to the transfer of control of Company to Buyer.
"WCHB(AM) TRANSMITTER SITE" means the real estate located at King Road,
Huron Township, Michigan, that is currently used as Station WCHB(AM)'s
transmitter site.
"WCHB-FM TRANSMITTER SITE" means the real estate located at Greenfield
Road, Oak Park, Michigan that is currently used as Station WCHB-FM?s transmitter
site.
"WJZZ(AM) TRANSMITTER SITE" means the real estate located in Mayfield
Township, Michigan, that is the transmitter site specified in the construction
permit held by the Company which authorizes a change in location of Station
WJZZ(AM), from Frankenmuth to Kingsley, Michigan.
1.2. OTHER DEFINITIONS. Other capitalized terms used in this Agreement
shall have the meanings ascribed to them herein.
1.3. NUMBER AND GENDER. Whenever the context so requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be construed to mean or include any other gender or
genders.
1.4. HEADINGS AND CROSS-REFERENCES. The headings of the Sections and
Paragraphs hereof, the Table of Contents, the Table of Exhibits, and the Table
of Schedules have been included for convenience of reference only, and shall in
no way limit or affect the meaning or interpretation of the specific provisions
of this Agreement. All cross-references to Sections or Paragraphs herein shall
mean the Sections or Paragraphs of this Agreement unless otherwise stated or
clearly required by the context. All references to Schedules herein shall mean
the Schedules to this Agreement. Words such as "herein" and "hereof" shall be
deemed to refer to this Agreement as a whole and not to any particular provision
of this Agreement unless otherwise stated or clearly required by the context.
The term "including" means "including without limitation."
7
<PAGE>
1.5. COMPUTATION OF TIME. Whenever any time period provided for in this
Agreement is measured in "business days" there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the Commission's offices are closed and are not reopened
prior to 5:30 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
2. FCC APPLICATION AND CLOSING.
2.1. FCC APPLICATION. Within ten (10) business days after execution of this
Agreement, Shareholders and Buyer will join in filing the Transfer of Control
Application and Shareholders will cause the Company to join such application.
Each of the parties diligently shall take or cooperate in the taking of all
steps which are reasonably necessary or appropriate to expedite the prosecution
and grant of the Application. No party by commission or omission shall put in
jeopardy its qualifications as a Commission licensee, or impair the routine
processing of the Transfer of Control Application. Shareholders will cause the
Company to use its best efforts and otherwise cooperate with Buyer, and
Shareholders shall likewise use their best efforts and otherwise cooperate with
Buyer in responding to any information requested by the FCC related to the
Transfer of Control Application and in defending against any petition, complaint
or objection which may be filed against the Transfer of Control Application,
provided, however, that neither the Shareholders nor the Company on the one hand
or the Buyer on the other hand shall be required to expend on their own behalf a
sum of more than One Hundred Thousand Dollars ($100,000) in the aggregate in
defending against any such petition, complaint or objection. Notwithstanding the
foregoing, Buyer shall be permitted, at its option, to expend such funds on
behalf of Shareholders in excess of $100,000 in order to defend a petition,
complaint or objection. In the event the Transfer of Control Application as
tendered is rejected for any reason, the party liable for the rejection shall
take all reasonable steps to cure the basis for rejection and Shareholders and
Buyer shall jointly resubmit and Shareholders will cause the Company to resubmit
the Transfer of Control Application. Shareholders will cause the Company to
share equally with Buyer in the amount of any Commission filing fees.
2.2. FINAL CLOSING DATE. Closing of the purchase of the Shares under this
Agreement shall take place at the offices of Davis Wright Tremaine LLP,
Washington, D.C. on a mutually agreeable date and time which is no more than
thirty (30) days after the FCC's approval of the Transfer of Control Application
becomes a
8
<PAGE>
Final Order. Buyer, however at its sole option, may purchase up to four (4)
additional thirty (30) day extensions of time in which to close by paying the
sum of One Hundred Fifty Thousand Dollars ($150,000) in advance for each such
extension, such monies to be deducted from the Initial Escrow Deposit and paid
directly to the Company, but not to be credited against the Purchase Price to be
paid Shareholders at the Closing.
3. INITIAL ESCROW DEPOSIT. Buyer deposited the sum of Thirty Five Thousand
Dollars ($35,000) with Sellers when it executed a letter of intent. Upon
execution of this Agreement, Sellers shall return the $35,000 deposit and Buyer
shall deposit with Wilmington Trust Company ("Initial Escrow Agent"), a cash
deposit of Two Million Dollars ($2,000,000) (the "Initial Escrow Deposit"). The
Initial Escrow Deposit shall be held in an interest-bearing account with a
federally insured financial institution and disbursed by Initial Escrow Agent
pursuant to the terms of an escrow agreement in the form attached hereto as
Exhibit 1 (the "Initial Escrow Agreement"), which Initial Escrow Agreement has
been entered into by Shareholders, Buyer and Initial Escrow Agent simultaneously
herewith. The fees, if any, of the Initial Escrow Agent shall be borne equally
between the Shareholders on the one hand, and the Buyer on the other hand,
except that in the event of a dispute involving any part or all of the Initial
Escrow Deposit the fees of the Initial Escrow Agent and the costs, including
reasonable attorney's fees of the prevailing party, shall be borne by the
non-prevailing party.
4. PURCHASE PRICE AND METHOD OF PAYMENT.
4.1. CONSIDERATION. The total consideration for the Shares shall be Thirty
Four Million Dollars ($34,000,000) (the "Purchase Price"), payable as set forth
in this Section 4.
4.2. PAYMENT AT CLOSING. At Closing, in consideration for exchange of
the Shares held by the Shareholders which are fully paid for and nonassessable
and for which each certificate representing such Shares will be duly endorsed to
Buyer by the respective Shareholder holding those shares, Buyer shall pay:
(a) Thirty Two Million Five Hundred Thousand Dollars ($32,500,000) to
Shareholders by check or wire transfer of same day funds pursuant to wire
transfer instructions which shall be delivered by Shareholders to Buyer at least
five (5) business days prior to Closing, of which Two Million Dollars
($2,000,000) shall come from the Initial Escrow Deposit. The Purchase Price
shall be distributed to each Shareholder in an amount equal to the
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percentage assigned to each Shareholder as set forth on Schedule 4.2., which
shall be revised as of the Closing Date to account for any shares issued to
Wendell T. Arnold and Janice Hall between now and Closing.
(b) One Million Five Hundred Thousand Dollars ($1,500,000) to the Post
Closing Escrow Fund described in Section 4.3.
(c) The parties acknowledge that the Purchase Price has been
calculated on the basis of the Company having at Closing (i) bona fide Accounts
Receivable on its books in the amount of at least Five Hundred Thousand Dollars
($500,000); and (ii) a cash balance of at least Three Hundred Thousand Dollars
($300,000) in cash in U.S. Dollars. The parties agree to proceed to Closing
based on an estimate of Accounts Receivable and cash balance contained in the
pre-closing balance sheet prepared by Company and delivered to Buyer pursuant to
Section 9.2(h); provided, however, that the parties recognize that no such
determination shall constitute a waiver of any rights of Buyer under this
Agreement, including without limitation, the representations and warranties set
forth in Section 5.7. Within thirty (30) days of Closing, Buyer will deliver a
post-closing balance sheet as of the Closing Date. If Shareholders do not
contest the calculations contained in the post-closing balance sheet, then the
post-closing balance sheet shall be considered final. Shareholders shall notify
Buyer in writing within thirty (30) days of receiving the post-closing balance
sheet if they contest the calculations contained in the post-closing balance
sheet. If Shareholders and Buyer cannot reach an agreement within twenty (20)
days of receiving Shareholders? notice, the parties agree to retain the
independent accounting firm of Coopers & Lybrand, or its successor, within
twenty (20) days thereafter or in the event that Coopers & Lybrand, or its
successor, is unavailable to serve as such then to retain the accounting firm of
Ernst & Young LLP, or its successor (whichever of such accounting firms is
applicable, the ("Accountants")). Buyer and Shareholders shall each assist and
cooperate fully in the prompt determination of the correct values and
Shareholders shall promptly provide the Accountants and the Buyer with full
access to such books and records as Buyer or the Accountants may request to make
such determination. All fees of the Accountants under this Agreement shall be
paid equally by the Buyer and the Shareholders and any determination of the
Accountants provided by this Agreement shall be binding and conclusive on the
parties. The Accountants shall make all determinations under this Agreement as
promptly as practicable and in any event within 20 days following receipt by the
Accountants of all relevant work
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papers. The Sellers' obligation is limited to the requirement that there be at
least Five Hundred Thousand Dollars ($500,000) in bona fide Accounts Receivable
and Three Hundred Thousand Dollars ($300,000) in cash in U.S. Dollars on hand at
the Closing. Sellers do not warrant the collectibility of the Accounts
Receivable.
4.3. POST CLOSING ESCROW FUND.
(a) At the Closing, Buyer, Shareholders and Post Closing Escrow Agent
shall enter into the Post Closing Escrow Agreement in substantially the form of
Exhibit 2 into which Buyer shall deposit One Million Five Hundred Thousand
Dollars ($1,500,000) of the Purchase Price (the "Post Closing Escrow Fund") in
an account (the "Post Closing Escrow Account") constituting a portion of the
Purchase Price being reserved to meet certain obligations of Shareholders. The
Post Closing Escrow Fund shall be held and invested in accordance with the terms
of the Post Closing Escrow Agreement which provides for One Million Dollars
($1,000,000), less any claims which have been paid or are still in dispute, to
be released twelve (12) months after Closing and Five Hundred Thousand Dollars
($500,000), less any claims which have been paid or are still in dispute, to be
released eighteen (18) months after Closing (the "Post Closing Escrow
Termination Date").
(b) Disbursements from the Post Closing Escrow Account may be made
from time to time pursuant to the terms of the Post Closing Escrow Agreement
with respect to indemnification obligations pursuant to Section 10.1 and amounts
due pursuant to Section 4.2 after submission to the Post Closing Escrow Agent by
Buyer of a payment notice (the "Buyer's Notice") substantially in the form
attached to the Post Closing Escrow Agreement.
(c) All interest earned on the Post Closing Escrow Fund and any
principal amount remaining in the Post Closing Escrow Account following the Post
Closing Escrow Termination Date shall be paid to Shareholders according to the
percentages set forth on Schedule 4.2, as revised in accordance with Section
4.2(a).
(d) The fees, if any, of the Post Closing Escrow Agent shall be borne
equally between the Shareholders on the one hand, and the Buyer on the other
hand, except that in the event of a dispute involving any part or all of the
Post Closing Escrow Deposit the fees of the Post Closing Escrow Agent and the
costs, including reasonable attorney's fees of the prevailing party, shall be
borne by the non-prevailing party.
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5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS REGARDING THE
COMPANY.
The Shareholders hereby jointly and severally make to and for the benefit
of Buyer, the following representations, warranties and covenants:
5.1. EXISTENCE, POWER AND IDENTITY. The Company is a corporation duly
organized and validly existing under the laws of the State of Michigan with full
corporate power and authority (a) to own, lease and use its properties and
assets, (b) to conduct the business and operation of the Stations as currently
conducted and (c) to execute and deliver this Agreement and each other document,
agreement and instrument to be executed and delivered by Company in connection
with this Agreement (collectively, the "Company Documents"), and to perform and
comply with all of the terms, obligations and covenants to be performed and
complied with by Company hereunder and thereunder. True and correct copies of
the Company?s Articles of Incorporation and Bylaws are attached to Schedule 5.1.
The addresses of Company's operating locations and all of Company's additional
places of business, and of all places where any of the tangible personal
property of Company is now located, or has been located during the past 180
days, are correctly listed in Schedule 5.1. Except as set forth in Schedule 5.1,
during the past five years, Company has not been known by or used, nor, to the
best of the Knowledge of Company has any prior owner of the Stations been known
by or used, any corporate, partnership, fictitious or other name in the conduct
of the Stations' business or in connection with the ownership, use or operation
of the Stations.
5.2. BINDING EFFECT. The execution, delivery and performance by Company of
the Company Documents will be duly authorized by all necessary corporate action,
and copies of those authorizing resolutions, certified by Company's Secretary
shall be delivered to Buyer at Closing. No other corporate action by Company is
required for Company's execution, delivery and performance of this Agreement or
any of Company Documents. The Company Documents will be duly and validly
executed and delivered by Company to Buyer and will constitute a legal, valid
and binding obligation of Company, enforceable against Company in accordance
with its terms, subject to bankruptcy, reorganization, fraudulent conveyance,
insolvency, moratorium and similar laws relating to or affecting creditors, and
other obligees' rights generally and the exercise of judicial discretion in
accordance with general equitable principles.
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5.3. NO VIOLATION. Except as set forth on Schedule 5.3, none of (i) the
execution, delivery and performance by Company of the Company's Documents or;
(ii) the consummation of the Transaction will, with or without the giving of
notice or the lapse of time or both, conflict with, breach the terms or
conditions of, constitute a default under, or violate (a) Company's articles of
incorporation or bylaws, (b) any judgment, decree, order, consent, agreement,
lease or other instrument (including any Material Contract, Sales Agreement or
Trade Agreement) to which Company is a party or by which Company or its Business
may be legally bound or affected, or (c) any law, rule, regulation or ordinance
of any Governmental Authority applicable to Company or its Business or the
operation of the Stations.
5.4. GOVERNMENTAL AUTHORIZATIONS. Except for the FCC Licenses listed on
Schedule 5.4, no licenses, permits, or authorizations from any Governmental
Authority are required to own, use or operate the Stations or to conduct the
Business as currently operated and conducted by Company. The FCC Licenses are
all the Commission authorizations held by Company with respect to the Stations,
and are all the Commission authorizations used in or necessary for the lawful
operation of the Stations as currently operated by Company. The FCC Licenses are
in full force and effect, are subject to no conditions or restrictions other
than those which appear on their face and are unimpaired by any acts or
omissions of Company, Company's officers, employees or agents. Company has
delivered true and complete copies of all FCC Licenses to Buyer. There is not
pending or, to the Knowledge of Company, threatened, any action by or before the
Commission or any other Governmental Authority to revoke, cancel, rescind or
modify any of the FCC Licenses (other than proceedings to amend Commission rules
of general applicability or otherwise affecting the broadcast industry
generally), and there is not now issued, outstanding or pending or, to the
Knowledge of Company, threatened, by or before the Commission or any other
Governmental Authority, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against Company or
otherwise with respect to the Stations. The Stations are operating in material
compliance with all FCC Licenses, the Communications Act of 1934, as amended
(the "Communications Act"), and the current rules, regulations, policies and
practices of the Commission. The Commission's most recent renewals of the FCC
Licenses were not challenged by any petition to deny or any competing
application. To the Knowledge of Company there are no facts relating to it that,
under the Communications Act or the current rules, regulations, policies and
practices of the Commission may
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cause the Commission to deny Commission renewal of the FCC Licenses or deny
Commission consent to the Transaction.
5.5. MATERIAL CONTRACTS. Schedule 5.5 lists all Material Contracts on
behalf of Company. Shareholders have provided Buyer access to all such Material
Contracts. The Material Contracts so furnished to Buyer have not been amended or
terminated and are in full force and effect. Except for the Material Contracts
listed on Schedule 5.5, as of the date hereof, Company is not a party to nor
bound by any Material Contract.
5.6. INSURANCE. Schedule 5.6 lists all insurance policies held by Company
with respect to the Business and operation of the Stations. Such insurance
policies are in full force and effect, all premiums with respect thereto are
currently paid and Company is in compliance with the terms thereof. Company has
not received any notice from any issuer of any such policies of its intention to
cancel, terminate, or refuse to renew any policy issued by it. Company will
maintain the insurance policies listed on Schedule 5.6 in full force and effect
through the Closing Date.
5.7 FINANCIAL STATEMENTS.
(a) Shareholders have furnished Buyer with the audited Financial
Statements for the calendar years 1993, 1994, 1995 and 1996, copies of which are
attached to Schedule 5.7(a). The Financial Statements: (i) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved and as compared with prior periods; and
(ii) fairly present in all material respects Company's financial position,
income, expenses, assets, liabilities, Shareholders' equity and the results of
operations of the Company as of the dates and for the periods indicated. Since
June 30, 1997, there has been no material adverse change in the business,
assets, properties or condition (financial or otherwise) of the Stations since
the preparation of the most recent annual Financial Statement. No event has
occurred that would make such Financial Statements misleading in any material
respect.
(b) Except as reflected in the balance sheets as of June 30, 1997, a
copy of which is attached to Schedule 5.7(b), including the notes thereto or
otherwise disclosed in this Agreement or the Schedules hereto, and except for
the current liabilities and obligations incurred in the ordinary course of
business of the Stations (not including for this purpose any tort-like
liabilities or breach of contract), and except for attorneys' and other fees and
expenses incurred in connection with the negotiation and
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consummation of the transactions contemplated hereby, since June 30, 1997, there
exist no liabilities or obligations of Company, contingent or absolute, matured
or unmatured, known or unknown, other than possible liability for Taxes due.
Since June 30, 1997, (i) Company has not made any contract, agreement or
commitment or incurred any obligation or liability (contingent or otherwise),
except in the ordinary course of business and consistent with past business
practices; (ii) there has not been any discharge or satisfaction of any
obligation or liability owed by Company, which is not in the ordinary course of
business or which is inconsistent with past business practices; (iii) there has
not occurred any sale of or loss or material injury to the Business, or any
adverse material change in the Business or in the condition (financial or
otherwise) of the Stations; and (iv) Company has operated the Business in the
ordinary course of business, except (w) as contemplated by the Letter of Intent,
including negotiations and actions relative to this Agreement and the
Transaction, (x) negotiations relative to certain potential business
combinations with Salem Communications and Crawford Broadcasting Company which
occurred prior to the execution and delivery of the Letter of Intent, (y) the
sale of certain assets relative to WKOX-AM, Frankenmuth, Michigan, and (z)
Company Real Property described as Item 3 on Schedule 5.10(a). The monthly
balance sheets (i) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved and as compared with prior periods; and (ii) fairly present Company's
financial position, income, expenses, assets, liabilities, Shareholders' equity
and the results of operations of the Stations as of the dates and for the
periods indicated, subject to year end adjustments which do not materially
affect the operations of the Company.
(c) Company maintains only the bank accounts as shown in Schedule 5.7
(c) and no other bank accounts of any kind. Buyer has been provided with bank
statements, dated as indicated on Schedule 5.7(c), related to such accounts (the
?Bank Statements?). Except as shown on such Bank Statements or on Schedule
5.7(c), and, with respect to items which have not cleared as of the last Bank
Statements, as shown on the Company?s cash receipts and disbursements journal,
there have been no material receipts or disbursements, whether by cash or check,
by the Company of any kind. Since the date of the last of the Bank Statements
furnished to Buyer by the Company, no checks have been issued for any purpose
other than in the ordinary course of business.
5.8. EMPLOYEES. Except as otherwise listed in Schedule 5.8, (i) no employee
of Company is represented by a union or other
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collective bargaining unit, no application for recognition as a collective
bargaining unit has been filed with the National Labor Relations Board, and, to
the Knowledge of Company, there has been no concerted effort to unionize any of
Company's employees; and (ii) Company has no other written or oral employment
agreement or arrangement, plan or policy with any Company employee, and no
written or oral agreement concerning bonus, sick pay, termination,
hospitalization, vacation pay, severance pay, or retiree medical coverage. As of
this date there is not and at the time of Closing there will not be any
consideration of whatever nature due and owing by Company or the Shareholders to
any employee or former employee of the Company, except as otherwise listed in
Schedule 5.8 and except for salaries, benefits and other compensation payable in
the ordinary course of business consistent with past practices. Included in
Schedule 5.8 is a list of all persons currently employed at Company together
with an accurate description of the terms and conditions of their respective
employment as of the date of this Agreement. Shareholders will cause the Company
to promptly advise Buyer of any significant changes that occur prior to Closing
with respect to such information.
5.9. EMPLOYEE BENEFIT PLANS.
(a) Except as described in Schedule 5.9, neither Company nor any
Affiliates (as defined below) have at any time established, sponsored,
maintained, or made any contributions to, or been parties to any contract or
other arrangement or been subject to any statute or rule requiring them to
establish, maintain, sponsor, or make any contribution to, (i) any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, and regulations thereunder ("ERISA"))
("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) ("Welfare Plan"); or (iii) any deferred compensation,
severance pay, fringe benefit, retiree medical, bonus, stock option, stock
purchase, or other "employee benefit plan" within the meaning of ERISA Section
3(3), agreement, commitment, policy or arrangement whether oral or written, and
whether provided through the purchase of insurance or otherwise ("Other Plan")
for the benefit of any present or former officers, employees, agents, directors,
or independent contractors of Company. Shareholders have delivered to Buyer true
and complete copies of (1) each Pension Plan, Welfare Plan, and Other Plan (or,
in the case of unwritten Other Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Pension Plan, Welfare Plan, and Other Plan, including all schedules
thereto and financial statements with attached opinions of independent
accountants (if
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required by applicable law), (3) summary plan descriptions with respect to such
plans, (4) each trust agreement and insurance or annuity contract relating to
any Pension Plan, Welfare Plan, or Other Plan, (5) the most recent determination
letter applicable to any such plan (if applicable). Except as set forth in
Schedule 5.9, there are no negotiations, demands, or proposals that are pending
or have been made which concern matters now covered, or that would be covered by
plans, agreements, or agreements of the type discussed in this Section. Company
and the Affiliates have no obligations or liabilities (whether accrued,
absolute, contingent, or unliquidated, whether or not known, and whether due or
to become due) with respect to any Pension Plan, Welfare Plan or Other Plan that
is not listed in Schedule 5.9. There are no actions (other than routine claims
for benefits) pending or, to the best of the Knowledge of Company, threatened
against such plans or their assets, or arising out of such plans, agreements or
arrangements, and to the best of the Knowledge of Company, no facts exist which
could give rise to any such actions. There are no investigations or audits by
any Governmental Authority (including, but not limited to, the Internal Revenue
Service or the Department of Labor) involving any Pension Plan, Benefit Plan, or
Other Plan. No employee, officer or director of Company shall be entitled to any
additional benefits (under a Pension Plan, Welfare Plan, or Other Plan) or any
acceleration of the time of the payment or vesting of any Pension Plan as a
result of the transactions contemplated by this Agreement. For purposes of this
Section 5.9, the term "Affiliate" shall include all persons under common control
with Company within the meaning of Sections 4001(a)(14) or (b)(1) of ERISA or
any regulations promulgated thereunder, or Sections 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended (the "Code").
(b) Each plan or arrangement listed in Schedule 5.9 (and any related
trust or insurance contract pursuant to which benefits under such plans or
arrangements are funded or paid) has been administered in all respects in
compliance with its terms and in both form and operation is in compliance with
applicable provisions of ERISA, the Code, the Consolidated Omnibus Budget
Reconciliation Act of 1986 and regulations thereunder, and other applicable law.
Each Pension Plan listed in Schedule 5.9 intended to be a tax-qualified plan has
been determined by the Internal Revenue Service to be qualified under Section
401(a) and Section 501(a) of the Code, and nothing has occurred or been omitted
since the date of the last such determination that resulted or could result in
the revocation of such determination, and nothing has occurred that resulted or
could result in such Pension Plan's being subject to the tax under Section 511
of the Code. Company and the Affiliates
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have made all required contributions or payments to or under each plan or
arrangement listed in Schedule 5.9 on a timely basis and have made adequate
provision for reserves to meet contributions and payments under such plans or
arrangements that have not been made because they are not yet due.
(c) The consummation of this Agreement (and the employment by Buyer of
former employees of Company or any employees of an Affiliate) will not result in
any carryover liability to Buyer for taxes, penalties, interest or any other
claims resulting from any employee benefit plan (as defined in Section 3(3) of
ERISA) or Other Plan. With respect to any Pension Plan, Welfare Plan, or Other
Plan that is a "plan" within the meaning of Section 4975(e)(1) of the Code or an
"employee benefit plan" within the meaning of Section 3(3) of ERISA, no
"prohibited transaction" (within the meaning of Section 4975(c)(1) of the Code
or Section 406 of ERISA) has occurred. In addition, Company and each Affiliate
make the following representations as to all of their Pension Plans: (A) neither
Company nor any Affiliate has become liable to the PBGC under ERISA under which
a lien could attach to the assets of Company or an Affiliate; (B) Company and
each Affiliate has not ceased operations at a facility so as to become subject
to the provisions of Section 4062(e) of ERISA; (C) neither Company nor any
Affiliate has made or will make prior to Closing a complete or partial
withdrawal from a multiemployer plan (as defined in Section 3(37) of ERISA) so
as to incur withdrawal liability as defined in Section 4201, of ERISA, and (D)
no Pension Plan of Company constitutes a "multiemployer plan," as defined in
Section 3(37) of ERISA, and (E) no Pension Plan is subject to Title IV of ERISA,
Section 302 of the ERISA, or Section 412 of the Code. All group health plans
maintained by Company and each Affiliate have been operated in compliance with
Section 4980B(f) of the Code. As of the Closing, no employee or qualified
beneficiary of Company or Affiliate is receiving or is eligible to receive COBRA
group health plan coverage under Section 4980B of the Code. Except to the extent
required under Section 4980B of the Code and, pursuant to collective bargaining
agreements, with respect to employees subject thereto who have retired, Company
has no written health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employees of Company. Company has made no
written agreements, covenants or commitments to provide retiree medical
benefits, other than pursuant to collective bargaining agreement, that cannot be
terminated at the discretion of the employer. To the best of the Knowledge of
Company, there has been no act or omission by Company that has given rise to or
may give rise to fines, penalties, taxes, or related charges under
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Section 502(c),(i), or (1) or Section 4071 of ERISA or Chapter 43 of the
Code.
5.10. COMPANY REAL PROPERTY.
(a) Company has good, valid and marketable fee simple title to the
Company real property as described in Schedule 5.10(a) and all Improvements on
the real property free and clear of all mortgages, liens, claims, encumbrances,
leases, title exceptions and rights of others, except as set forth in Schedule
5.10(a). Except as listed on Schedule 5.10(a), to the Knowledge of Company all
of the Improvements, and all heating and air conditioning equipment, plumbing,
electrical and other mechanical facilities, and the roof, walls and other
structural components which are part of, or located in, such Improvements, are
in good operating condition and repair, comply in all material respects with
applicable zoning laws and do not require any repairs other than normal routine
maintenance to maintain them in good condition and repair. To the Knowledge of
Company, none of the Improvements have any structural defects. No portion of the
real property is the subject of any condemnation or eminent domain proceedings
currently instituted or pending, and, to the Knowledge of Company, no such
proceedings are threatened. Except as set forth in Schedule 5.10(a), the real
property is not subject to any covenant or other restriction preventing or
limiting the Company?s right to convey the Company?s right, title and interest
in the owned real property or to use the real property for any lawful purpose.
To the Knowledge of the Company, there are no condemnation, zoning or other land
use regulations proceedings instituted or, to the Knowledge of Company, planned
to be instituted, which would materially affect the use and operations of the
real property for its intended purpose, and Company has not received notice of
any special assessment proceedings materially affecting the real property. To
the Knowledge of the Company, the real property has direct and unobstructed
access to all public utilities necessary for the uses to which the real property
is currently devoted by Company. The boundaries of the building which houses the
studio for WCHB(AM) is located on the real property described on Schedule
5.10(a) and to the Knowledge of the Company does not encroach upon any real
property not owned by the Company.
(b) Company, as tenant, leases the real property described in Schedule
5.10(b). Except as listed on Schedule 5.10(b), all of the Improvements, and all
heating and air conditioning equipment, plumbing, electrical and other
mechanical facilities, and the roof, walls and other structural components which
are part of, or located in, such Improvements, are in good
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operating condition and repair, comply in all material respects with applicable
zoning laws and do not require any repairs other than normal routine maintenance
to maintain them in good condition and repair. To the Knowledge of Company, none
of the Improvements have any structural defects. To the Knowledge of the
Company, no portion of the real property described in Schedule 5.10(b) is the
subject of any condemnation or eminent domain proceedings currently instituted
or pending, and, to the Knowledge of Company, no such proceedings are
threatened. To the Knowledge of the Company, there are no condemnation, zoning
or other land use regulations proceedings instituted or, to the Knowledge of
Company, planned to be instituted, which would materially affect the use and
operations of the real property for any lawful purpose, and Company has not
received notice of any special assessment proceedings materially affecting the
real property. To the Knowledge of the Company, the real property has direct and
unobstructed access to all public utilities necessary for the uses to which the
real property is currently devoted by Company.
5.11. SHAREHOLDER REAL PROPERTY.
(a) Dr. Wendell F. Cox and the Estate of Mary L. Bell (?Cox/Bell?)
have good, valid and marketable fee simple title to the real property and all
Improvements described in Schedule 5.11(a) free and clear of all mortgages,
liens, claims encumbrances, leases, title exceptions and rights of others,
except as set forth in Schedule 5.11(a). Except as listed on Schedule 5.11(a),
to the Knowledge of Company, all of the Improvements, and all heating and air
conditioning equipment, plumbing, electrical and other mechanical facilities,
and the roof, walls and other structural components which are part of, or
located in, such Improvements, are in good operating condition and repair,
comply in all material respects with applicable zoning laws and do not require
any repairs other than normal routine maintenance to maintain them in good
condition and repair. None of the Improvements have any structural defects. To
the Knowledge of the Company, no portion of the real property described in
Schedule 5.11(a) is the subject of any condemnation or eminent domain
proceedings currently instituted or pending, and, to the Knowledge of Company,
no such proceedings are threatened. Except as set forth in Schedule 5.11(a), the
real property is not subject to any covenant or other restriction preventing or
limiting Cox/Bell right to convey its right, title and interest in the owned
real property or to use the real property for any lawful purpose. There are no
condemnation, zoning or other land use regulations proceedings instituted or, to
the Knowledge of Company, planned to be instituted, which would materially
affect the use and operations of
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the real property for its intended purpose, and Company has not received notice
of any special assessment proceedings materially affecting the real property. To
the Knowledge of the Company, the real property has direct and unobstructed
access to all public utilities necessary for the uses to which the real property
is currently devoted by Cox/Bell.
(b) Studio Site (i) Dr. Wendell F. Cox and Eric Bass (?Cox/Bass?) have
good, valid and marketable fee simple title to the real property and all
Improvements described in Schedule 5.11(b), which is used as the Studio Site,
free and clear of all mortgages, liens, claims encumbrances, leases, title
exceptions and rights of others, except as set forth in Schedule 5.11(b). Except
as listed on Schedule 5.11(b), to the Knowledge of Company all of the
Improvements, and all heating and air conditioning equipment, plumbing,
electrical and other mechanical facilities, and the roof, walls and other
structural components which are part of, or located in, such Improvements, are
in good operating condition and repair, comply in all material respects with
applicable zoning laws and do not require any repairs other than normal routine
maintenance to maintain them in good condition and repair. To the Knowledge of
Company none of the Improvements have any structural defects. To the Knowledge
of the Company, no portion of the real property described in Schedule 5.11(b) is
the subject of any condemnation or eminent domain proceedings currently
instituted or pending, and, to the Knowledge of Company, no such proceedings are
threatened. Except as set forth in Schedule 5.11(b), the real property is not
subject to any covenant or other restriction preventing or limiting Cox/Bass
right to convey its right, title and interest in the owned real property or to
use the real property for any lawful purpose. To the Knowledge of the Company,
there are no condemnation, zoning or other land use regulations proceedings
instituted or, to the Knowledge of Company, planned to be instituted, which
would materially affect the use and operations of the real property for its
intended purpose, and Company has not received notice of any special assessment
proceedings materially affecting the real property. To the Knowledge of the
Company, the real property has direct and unobstructed access to all public
utilities necessary for the uses to which the real property is currently devoted
by Cox/Bass.
(ii) Cox/Bass hereby grant an option to Buyer to purchase the real
property described in Schedule 5.11 (b) for Two Hundred Thousand Dollars
($200,000). The option is exercisable on or before the Closing Date and the
closing on the acquisition of the real property shall occur simultaneously with
the closing of the Transaction contemplated by this Agreement. In the event that
the
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Buyer does not exercise its option to purchase the aforesaid real estate,
Cox/Bass will lease the aforesaid real property to the Buyer at a monthly rental
of $1,500.00. The lease will be executed at the Closing and will be binding upon
the parties thereto for a period of one year. The lease will be a so-called
"net, net, net lease", and the tenant will be responsible for taxes, utilities,
insurance and maintenance.
5.12. ENVIRONMENTAL PROTECTION. Except as disclosed in Schedule 5.12:
(a) There are no pending or, to the Knowledge of Company, threatened
actions, suits, claims, legal proceedings or any other proceedings, arising from
Company?s or Shareholders' activities at or operation, occupation or ownership
of the Company Real Property or Shareholder Real Property, based on or relating
to Hazardous Substances or Environmental Law, or asserting any liabilities under
Environmental Law against Company or the Stations.
(b) All of the current operations and activities at the Stations and
at or from the Company Real Property and Shareholder Real Property ("Real
Property") comply with all applicable Environmental Law, and to the Knowledge of
Company, there are no conditions which could reasonably give rise to claims,
expenses, losses, liabilities, or governmental action against Buyer in
connection with any Hazardous Substances present at or disposed of at or from
the Real Property, including without limitation the following conditions arising
out of, relating to, resulting from, or attributable to, the assets, business,
or operations of Company at the Real Property: (i) the presence of any Hazardous
Substances on the Real Property, the release or threatened release of any
Hazardous Substances into the environment at or from the Real Property; (ii) the
off-site disposal of Hazardous Substances originating on or from the Real
Property in connection with the Business or operations of Company; (iii) the
release or threatened release of any Hazardous Substances into any storm drain,
sewer, septic system or publicly owned treatment works from the Real Property;
or (iv) any noncompliance by the Company with federal, state or local
requirements governing occupational safety and health, or presence or release in
the air and water supply systems of the Real Property of any substances that
pose a hazard to human health or an impediment to working conditions.
(c) To the Knowledge of the Company, neither polychlorinated biphenyls
nor asbestos-containing material are present on or in the Real Property.
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(d) The Real Property (exclusive of the Shareholder Real Property
described in Section 5.11(b)) contains no aboveground or underground storage
tanks, or aboveground or underground piping associated with tanks.
(e) The Real Property does not contain any Hazardous Substances in,
on, over, under or at it at levels that would give rise to liability under
Environmental Law as they apply to the present use of the Real Property. The
Company is not under any obligation, is not liable for, and, to the Knowledge of
Company, has not been threatened with any obligation or liability under
Environmental Law for any investigation, corrective action, remediation or
monitoring of Hazardous Substances in, on, over under or at the Real Property.
None of the Real Property is listed or proposed for listing on the National
Priorities List pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act (?CERCLA?), 42 U.S.C.?9601 et seq., or any
similar inventory of sites requiring investigation or remediation maintained by
any state. Company has not received any notice, whether oral or written, from
any Governmental Authority or third party of any actual or threatened
liabilities under Environmental Law with respect to the Real Property, the
Stations, or the conduct of Company?s business.
(f) To the Knowledge of the Company, there are no conditions existing
at the Real Property that require remedial or corrective action, removal or
closure pursuant to Environmental Law.
(g) Company has all the material permits, authorizations and approvals
necessary for the conduct of its Business and for the operations on, in or at
the Real Property which are required under applicable Environmental Law and is
in compliance in all material respects with the terms and conditions of all such
permits, authorizations and approvals, and to the Knowledge of Company, Company
is capable of continued operation in compliance with Environmental Law.
(h) Company has provided to Buyer all environmental reports,
assessments, audits, studies, investigations, data and other written
environmental information in its custody, possession or control concerning the
Real Property.
(i) The operation of the Stations does not cause or result in exposure
of workers or the general public to levels of
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radio frequency radiation in excess of the standards adopted by the FCC in 1996
and explained in OET Bulletin 65, Edition 97-01.
5.13. COMPLIANCE WITH LAW. Except as disclosed in Schedule 5.13 and except
for matters pertaining to Environmental Law, which are addressed in Section
5.12, there is no outstanding complaint, citation, or notice issued by any
Governmental Authority asserting that Company is in violation of any law,
regulation, rule, ordinance, order, decree or other material requirement of any
Governmental Authority (including any applicable statutes, ordinances or codes
relating to zoning and land use, occupational safety and the use of electric
power) affecting the Business or operations of the Stations, and Company is in
material compliance with all such laws, regulations, rules, ordinances, decrees,
orders and requirements. Without limiting the foregoing:
(a) The Stations' transmitting and studio equipment is in material
respects operating in accordance with the terms and conditions of the FCC
Licenses, all underlying construction permits, and the rules, regulations,
practices and policies of the Commission, including all requirements concerning
equipment authorization and human exposure to radio frequency radiation.
(b) Company has, in the conduct of the Business, materially complied
with all applicable laws, rules and regulations relating to the employment of
labor, including those concerning wages, hours, equal employment opportunity,
collective bargaining, pension and welfare benefit plans, and the payment of
social security and similar taxes, and Company is not liable for any arrears of
wages or any tax penalties due to any failure to comply with any of the
foregoing.
(c) All ownership reports, employment reports, and other material
documents required to be filed by Company with the Commission or other
Governmental Authority have been filed; such reports and filings are accurate
and complete in all material respects; such items as are required to be placed
in the Stations' local public inspection files have been placed in such files;
all proofs of performance and measurements that are required to be made by
Company with respect to the Stations' transmission facilities have been
completed and filed at the Stations; and all information contained in the
foregoing documents is true, complete and accurate.
(d) Company has paid to the Commission the regulatory fees due for the
Stations for the years 1994-97.
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5.14. LITIGATION. Except for proceedings affecting radio broadcasters
generally and except as set forth on Schedule 5.14, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Company, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the Business or the operations of the Stations. Except as set forth on Schedule
5.14, there is no other litigation, action, suit, complaint, claim,
investigation or proceeding pending, or to the Knowledge of Company, threatened
that may give rise to any claim against the Business or Shares or adversely
affect Shareholder's ability to consummate the Transaction as provided herein.
Company is not aware of any facts that could reasonably result in any such
proceedings.
5.15. INSOLVENCY PROCEEDINGS. No insolvency proceedings of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors, voluntary or involuntary, are pending or, to the Knowledge of
Company, threatened against the Company. Company has not made an assignment for
the benefit of creditors.
5.16. SALES AGREEMENTS. Except as set forth in Schedule 5.16, the Sales
Agreements in existence on the date hereof have been entered into in the
ordinary course of the Business, at rates consistent with Company's usual past
practices and each Sales Agreement is for a term no longer than 10 weeks or, if
longer, is terminable by the Company upon not more than 15 days notice.
5.17. SUFFICIENCY OF ASSETS. The assets of the Business are and, on the
Closing Date will be, sufficient to conduct the operation and business of the
Stations in the manner in which they have been conducted and are being conducted
as of the date of this Agreement.
5.18. CERTAIN INTERESTS AND RELATED PARTIES. Except as set forth in
Schedule 5.18, (i) no Shareholder has any material interest in any assets used
in or pertaining to the Business, nor is indebted or otherwise obligated to
Company; (ii) Company is not indebted or otherwise obligated to any Shareholder
or others except for amounts due under normal arrangements as to salary or
reimbursement of ordinary business expenses not unusual in amount or
significance; (iii) neither Company nor any Shareholder, officer or director of
Company has any interest whatsoever in any corporation, firm, partnership or
other business enterprise which has had any business transactions with Company
relating to the Business or the Stations; and (iv) no Shareholder of Company has
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entered into any transaction with Company relating to the Business or the
Stations. The consummation of the transactions contemplated by this Agreement
will not (either alone, or with the occurrence of any termination or
constructive termination of any arrangement, or with the lapse of time, or both)
result in any benefit or payment (severance or other) arising or becoming due
from Company to Shareholders.
5.19. TAXES. Except as disclosed on Schedule 5.19, Company is not a party
to any pending action or proceeding and, to the Knowledge of Company, there is
no action or proceeding threatened by any Governmental Authority against Company
for assessment or collection of any Taxes, and no unresolved claim for
assessment or collection of any Taxes has been asserted against Company.
5.20. BROKER. There is no broker or finder or other person other than John
Pierce of Force Communications, Inc. who would have any valid claim against the
Company or the Shareholders for a commission or brokerage fee or payment in
connection with this Agreement or the transactions contemplated hereby as a
result of any agreement of or action taken by Company. Sellers will pay Pierce's
fees from the Purchase Price.
5.21. SUBSIDIARIES. The Company does not have any subsidiaries, does not
hold title to the stock of any other corporation, is not a party to any joint
venture agreement and does not have an interest in any general or limited
partnership or any other entity.
5.22. STOCK. The authorized capital stock of Company consists of 800 shares
of Class A Common Stock and 24,000 shares of Class B Common Stock. There are 800
shares of issued and outstanding Class A Common Stock and 20,070.55 shares of
issued and outstanding Class B Common Stock of the Company, all of which are
owned by Shareholders. And, except as described herein, there are no other
shares of capital stock of the Company either authorized or issued. Each
Shareholder has good and marketable title to and complete ownership of the
Shares as set forth in Schedule 4.2, free and clear of any Encumbrance. Except
with respect to this Agreement among Company, Shareholders and Buyer and except
for certain shares which may be issued to Wendell T. Arnold and certain shares
which may be issued to Janice Hall between now and Closing, there are no
outstanding stock options or stock appreciation rights granted by Company
exercisable now or in the future. The Company has no outstanding subscriptions,
warrants, calls, commitments or agreements to issue or to repurchase any shares
of its stock or other securities, including any right of conversion or exchange
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under any outstanding security or other instrument. There are no unsatisfied
preemptive rights in respect of the Shares.
5.23. PROPERTY. Schedule 5.23(a) lists the material tangible personal
property of the Company. The Company has and will have at the Closing good,
marketable and indefeasible title to all such property, free and clear of all
Encumbrances of any nature, whatsoever, except for (i) Encumbrances disclosed on
Schedule 5.23(a) which will be discharged on or before the Closing Date, (ii)
Permitted Encumbrances, and (iii) those permitted by agreement between the
parties. Shareholders make no representations concerning the condition of the
property, except that with the exception of normal wear and tear the property
will be in as good condition on the Closing Date as of the date of this
Agreement. Certain personal items may be withdrawn from the Company by the
Shareholders prior to the Closing. These items are fully described in Schedule
5.23(b), attached.
5.24. CORPORATE RECORDS. The corporate records of Company have been made
available to Buyer, and so far as such materials are material and relevant to
Buyer, accurately represent the status of Company.
5.25. PROMOTIONAL RIGHTS. The Intellectual Property set forth on Schedule
5.25 includes all call signs and trademarks that Company holds title to and that
are used to promote or identify the Stations. Except as set forth on Schedule
5.25, to the Knowledge of Company there is no infringement or unlawful or
unauthorized use of those promotional rights, including the use of any call
sign, slogan or logo by any broadcast or cable stations in the metropolitan
Detroit area that may be confusingly similar to those currently used by the
Stations. Except as set forth on Schedule 5.25, to the Knowledge of Company, the
operations of the Stations do not infringe, and no one has asserted to Company
that such operations infringe, any copyright, trademark, trade name, service
mark or other similar right of any other party.
5.26. INDEBTEDNESS. Subject to using a portion of the Purchase Price to
satisfy Indebtedness of the Company, as of Closing, and except as disclosed in
Schedule 5.26, the Company will have no Indebtedness and there will be no
Encumbrances on its assets, except for Permitted Encumbrances and except for
Encumbrances caused by the Buyer.
5.27. TRADE BALANCE. The Trade Balance, if negative, will not exceed Thirty
Thousand Dollars ($30,000), at Closing.
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5.28. NO MISLEADING STATEMENTS. No provision of this Agreement (including
the Schedules, Exhibits and Company Documents) contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact required to be stated in order to make the statement, in light of the
circumstances in which it is made, not misleading. All Exhibits and Schedules
attached hereto which have been prepared and delivered by the Shareholders are
materially accurate and complete as of the date hereof. No person has been
authorized by the Shareholders or Company to make any representation or warranty
relating to the Shareholders, Company, the Business, the Stations or otherwise
in connection with this Agreement or the Transaction except as set forth in this
Section 5 and, if made, any such representation or warranty must not be relied
upon as having been authorized by the Shareholders or Company. Notwithstanding
anything to the contrary contained in this Agreement or in any of the Exhibits,
or Schedules, any information disclosed in one Exhibit or Schedule shall be
deemed to be disclosed in this Agreement and in all Exhibits and Schedules.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS REGARDING THE
SHARES. Shareholders hereby jointly and severally make to and for the benefit of
Buyer, the following representations, warranties and covenants:
6.1. BINDING EFFECT. This Agreement has been duly and validly executed and
delivered by each Shareholder to Buyer, each Shareholder has the authority to
enter into and to execute this Agreement without further action or approval of
any party or Governmental Authority and it constitutes a legal, valid and
binding obligation of each Shareholder, enforceable against each of them in
accordance with its terms, subject to bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium and similar laws relating to or affecting
creditors, and other obligees' rights generally and the exercise of judicial
discretion in accordance with general equitable principles. Each trustee and
executor representing a Shareholder is duly and lawfully appointed to act on
behalf of the Shareholder and to execute and perform this Agreement.
6.2. NO VIOLATION. None of (i) the execution, delivery and performance by
any Shareholder of this Agreement or any of Company Documents; (ii) the
consummation of the Transaction; or (iii) Shareholder's compliance with the
terms or conditions hereof will, with or without the giving of notice or the
lapse of time or both, conflict with, breach the terms or conditions of,
constitute a default under, or violate (a) organizational documents governing
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any Shareholder, (b) any judgment, decree, order, consent, agreement, lease or
other instrument to which any Shareholder is a party or by which any Shareholder
may be legally bound or affected, or (c) any law, rule, regulation or ordinance
of any Governmental Authority applicable to any Shareholder.
6.3. OWNERSHIP OF STOCK. Shareholders hold title to 800 shares of Class A
Common Stock and 20,070.55 shares of Class B Common Stock as set forth on
Schedule 4.2. Such Shares, which represent all issued and outstanding shares,
are owned free and clear of any Encumbrances. The Shares are validly issued,
fully paid and nonassessable. There are no outstanding stock options or stock
appreciation rights granted by any Shareholder to any person or entity
exercisable now or in the future except for certain shares which may be issued
to Wendell T. Arnold and certain shares which may be issued to Janice Hall
between now and Closing. All shares owned by Shareholders, including those to be
issued to Wendell T. Arnold and Janice Hall, shall be delivered to Buyer at
Closing duly endorsed in blank. No Shareholder has any outstanding
subscriptions, warrants, calls, commitments or agreements to issue or to
repurchase any shares of his stock or other securities, including any right of
conversion or exchange under any outstanding security or other instrument. There
are no unsatisfied preemptive rights to which any Shareholder is entitled and
any preemptive rights accorded any Shareholder pursuant to the Articles of
Incorporation or any other corporate document is hereby forever waived by
Shareholders for purposes of this Agreement.
6.4. COOPERATION. Shareholders acknowledge that this Agreement requires
that the Company take or refrain from taking certain actions. Shareholders agree
to take those steps which are necessary to cause the Company to take or refrain
from taking those actions.
7. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby makes to and
for the benefit of Company and Shareholders, the following representations,
warranties and covenants:
7.1. EXISTENCE AND POWER. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority (a) to own, lease and use its properties and
assets, (b) to conduct its business and operations as currently conducted, and
(c) to execute and deliver this Agreement and each other document, agreement and
instrument to be executed and delivered by Buyer in connection with this
Agreement (collectively, the "Buyer Documents"), and to perform and comply with
all of the terms and obligations hereunder
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<PAGE>
and thereunder. There is no pending or, to the Knowledge of Buyer, threatened
proceeding for the dissolution, liquidation, insolvency of Buyer.
7.2. BINDING EFFECT. The execution, delivery and performance by Buyer of
this Agreement, and each other document, agreement and instrument to be executed
and delivered by Buyer in connection with this Agreement (collectively, the
"Buyer Documents") has been or will be duly authorized by all necessary
corporate action, and copies of those authorizing resolutions, certified by
Buyer's Secretary shall be delivered to Shareholders at Closing and no other
corporate action by Buyer is required for Buyer's execution, delivery and
performance of this Agreement or any of the Buyer Documents. This Agreement has
been, and each of the Buyer Documents will be, duly and validly executed and
delivered by Buyer to Shareholders and constitute a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms, subject to
bankruptcy, reorganization, fraudulent conveyance, insolvency, moratorium and
similar laws relating to or affecting creditors' and other obligees' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles.
7.3. NO VIOLATION. None of (i) the execution, delivery and performance by
Buyer of this Agreement or any of the Buyer Documents; (ii) the consummation of
the Transaction; or (iii) Buyer's compliance with the terms and conditions
hereof or of the Buyer Documents will, (a) contravene any provision of the
Certificate or Articles of Incorporation or Bylaws of Buyer, (b) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment, ruling or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon, or enforceable
against Buyer, (c) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any material contract which is
applicable to, binding upon or enforceable against Buyer, or (d) to the
Knowledge of Buyer require consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other person, except pursuant to the Communications Act and the
Hart-Scott-Rodino Act.
7.4. LITIGATION. There is no litigation, action, suit, complaint,
proceeding or investigation, pending or, to the Knowledge of Buyer, threatened
that may adversely affect Buyer's
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ability to consummate the Transaction as provided herein. Buyer is not aware of
any facts that could reasonably result in any such proceedings.
7.5. LICENSEE QUALIFICATIONS. To the Knowledge of Buyer there is no fact
that would, under the rules and regulations of the Commission, disqualify Buyer
from being the transferee of the Shares or the owner and operator of the
Stations. Should Buyer become aware of any such fact, it will so inform Company,
and Buyer will use commercially reasonable efforts to remove any such
disqualification. Buyer will not take any action that Buyer knows, or has reason
to believe, would result in such disqualification.
7.6. HART-SCOTT-RODINO FILING. Buyer is solely responsible for all costs of
any kind, whatsoever, related to any filing which may be required under the
Hart-Scott-Rodino Act.
7.7. SUFFICIENT INFORMATION. Buyer has received sufficient information to
assess the merits and risks of the Transaction. However, no such receipt of
information or assessment shall relieve Shareholders of any obligation with
respect to any representation, warranty or covenant in this Agreement or waive
any condition to Buyer's obligations under this Agreement.
7.8. SECTION 338 ELECTION. Buyer agrees that on and after the Closing Date
it shall not make any election under Section 338 of the Code with respect to the
transactions contemplated hereby.
7.9 NO COMMISSIONS. Buyer has not incurred any obligation for any finder's
or broker's or agent's fees or commissions or similar compensation in connection
with the Transaction contemplated hereby for which Company or the Shareholders
may have any liability or obligation.
7.10 FINANCIAL INFORMATION. Buyer has delivered to Sellers the financial
statements of Buyer as of and for the periods ended December 31, 1996 and
September 30, 1997 (collectively, the "Buyer's Financial Statements"). The
Buyer's Financial Statements fairly present in all material respects the
financial position of Buyer at each of the balance sheet dates and the results
of operations for the periods covered thereby, and have been prepared in
accordance with GAAP (except, as noted therein) consistently applied throughout
the periods indicated (subject, in the case of unaudited statements, to normal
audit adjustments and lack of footnotes and other presentation items).
7.11 NO MISLEADING STATEMENTS. No provision of this Agreement relating to
Buyer or Buyer Documents contains or will contain any
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untrue statement of a material fact or omits or will omit to state a material
fact required to be stated in order to make the statement, in light of the
circumstances in which it is made, not misleading.
8. COVENANTS WITH RESPECT TO CONDUCT OF THE COMPANY AND SHAREHOLDERS.
8.1. ACCESS. Between the date hereof and the Closing Date, Company shall
give Buyer and representatives of Buyer reasonable access to the Business, the
Stations, the employees of Company and the books and records of Company relating
to the Business and the operation of the Stations. It is expressly understood
that, pursuant to this Section, Buyer, at its expense, shall be entitled to
conduct such engineering inspections of the Stations, surveys of the Studio Site
and the WCHB(AM), WCHB-FM and WJZZ(AM) Transmitter Sites and such reviews of
Company's financial records as Buyer may desire, so long as the same do not
unreasonably interfere with Company's operation of the Business. No inspection
or investigation made by or on behalf of Buyer, or Buyer's failure to make any
inspection or investigation, shall affect Shareholders' representations,
warranties and covenants hereunder or be deemed to constitute a waiver of any of
those representations, warranties and covenants. Notwithstanding anything in the
foregoing which may appear to the contrary, no inspection shall take place,
except with the prior consent of the President of the Company and on the
reasonable terms and conditions set by the President of the Company.
8.2. MATERIAL ADVERSE CHANGES; FINANCIAL STATEMENTS. Through the Closing
Date:
(a) Shareholders or Company shall promptly notify Buyer of any event
of which they obtain knowledge which has caused or is likely to cause a material
adverse change to the Business.
(b) Shareholders or Company shall furnish to Buyer (i) within 30 days
of the end of each month, such income statements and balance sheets routinely
prepared for Company each month; and (ii) such other reports that may be
prepared for and relating to the Company as Buyer may reasonably request. Each
of the financial statements delivered pursuant to this Section 8.2(b) shall be
prepared in accordance with GAAP consistently applied during the periods covered
(except as disclosed therein).
(c) Shareholders or Company shall promptly furnish to Buyer all Tax
Returns or excerpts thereof filed with any Governmental Authority relating to
Company.
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8.3. CONDUCT OF BUSINESS. Between the date that this Agreement is
executed and the Closing Date, Shareholders and Company covenant and agree that
neither Company nor Shareholders shall without the prior written consent of
Buyer, such consent not to be unreasonably withheld:
(a) conduct the Business in any manner except in the ordinary course
consistent with past practices;
(b) issue, sell, assign, deliver, transfer, split, reclassify, combine
or otherwise adjust, or pledge any stock, bonds or other securities of which
Company is the issuer (whether authorized and unissued or held in treasury), or
grant or issue any options, warrants or other rights (including convertible
securities) calling for the issue thereof, except for (i) those shares to be
issued to Wendell T. Arnold and Janice Hall between now and the Closing, or (ii)
shares to be assigned or transferred by Dr. Wendell F. Cox solely for estate
planning purposes or for the purpose of making charitable gifts provided that:
(w) such assignment or transfer does not cause any tax liability to Buyer and
(x) such assignment or transfer does not impair Buyer's right pursuant to the
terms of this Agreement to acquire 100% of the outstanding and issued Shares of
the Company free and clear of all Encumbrances at Closing for the Purchase Price
and (y) no such assignment or transfer releases Dr. Cox of responsibility for
the representations, warranties and covenants contained in this Agreement and
(z) contemporaneous with such assignment or transfer the assignee or transferee
executes an agreement making representations contained in Sections 6.1, 6.3 and
6.4 of this Agreement and agreeing to be bound by this Agreement as a
Shareholder (hereinafter a "Joinder Agreement").
(c) borrow any funds or incur, assume or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability
(absolute or contingent), except with respect to trade payables arising in the
ordinary course of business and consistent with past amounts and practice and to
amounts permitted by the construction described in Sections 8.10(b) and (c) as
further described in Schedule 5.26 and to Indebtedness incurred in the ordinary
course of business and paid in full at Closing pursuant to Section 9.2(c);
(d) except for Permitted Encumbrances mortgage or pledge any of
Company?s assets, tangible or intangible unless such mortgage or pledge is
discharged in full at Closing pursuant to Section 9.2(c);
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(e) except in the ordinary course of business, sell, lease, exchange
or otherwise transfer, or agree to sell, lease, exchange or otherwise transfer,
any of Company?s assets, property or rights or cancel any debts or claims;
(f) grant any right of first refusal, option or similar contract to
purchase any of the assets, property or rights used in the Business or held by
Company;
(g) except in the ordinary course of business or as required by Law,
make or agree to any material amendment to or termination of any FCC License
relating to the Business or to which Company is a party;
(h) except as required by Law, adopt any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, severance or other
employee benefit plan, payment or arrangement or enter into any employment,
consulting or management contract inconsistent with Section 8.3(p)(iii);
(i) grant any increase in salary, compensation or bonuses to any
employees of the Stations other than (a) salary, compensation, payments or
bonuses to Wendell T. Arnold and/or Janice Hall under the Arnold Employment
Agreement and the Arnold and Hall Incentive Stock Agreements previously
disclosed to Buyer or (b) salary, bonuses or other compensation which are
payable on or prior to the Closing Date and which do not include any contractual
obligations of the Company after the Closing Date (except as otherwise disclosed
in Schedule 5.8 with respect to existing employment agreements).
(j) merge or consolidate with any other corporation, acquire control
of any other corporation or business entity, or take any steps incident to, or
in furtherance of, any of such actions, whether by entering into an agreement
providing therefore or otherwise;
(k) make any tax election inconsistent with past practice or Buyer's
interests, or except as required by Law or GAAP, make any material alteration in
the manner of keeping its books, accounts or records, or in the accounting
practices therein reflected;
(l) solicit, either directly or indirectly, initiate, encourage or
accept any offer for the purchase or acquisition of the Business, Company or any
of their respective assets by any party other than Buyer;
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(m) set aside or pay any dividend which would impair the Seller's
obligation to have at least Three Hundred Thousand Dollars ($300,000) in cash in
the Company's accounts on the day of Closing or purchase or otherwise acquire
any of Company?s capital stock or otherwise acquire any rights or options to
acquire the capital stock;
(n) amend or alter the Certificate of Incorporation or Bylaws or other
charter documents of Company;
(o) enter into, extend (except as required by the terms thereof) or
amend any Material Contract, other than with respect to contracts for the
purchase, production, distribution or licensing of programming in the ordinary
course of business and consistent with prior practice;
(p) enter into any other transactions involving liabilities or
obligations of more than $17,500.00 on the part of Company other than
obligations arising in connection with: (i) construction of Station WJZZ (AM) at
Kingsley or (ii) construction of the improvements at WCHB (AM) consistent with
budgets reviewed and approved by Buyer or (iii) the employment of an employee
whose annual salary does not exceed $50,000, except that the Company shall be
permitted to enter into a transaction involving employment of an employee whose
annual salary exceeds $50,000 if the Shareholders agree to be responsible for
all amounts due the employee after the Closing Date.
(q) terminate without comparable replacement or fail to renew any
insurance coverage applicable to the assets or properties of Company where such
failure could have a material adverse effect on the Business;
(r) compromise or settle any claims or rights for or having a value,
in excess of $50,000.00 without the written consent of Buyer, such consent not
to be unreasonably withheld;
(s) take any action or fail to take any action that would cause the
Shareholders to breach the representations, warranties and covenants contained
in this Agreement;
(t) disburse in any manner any of the proceeds of the sale of the
Company's assets including, but not limited to, the sale of real property at
Inkster, Michigan or the sale of Station WJZZ (AM), or count any of the proceeds
of the sale of the Company's assets toward the $300,000 in cash that the
Company's accounts must contain at Closing pursuant to Section 9.2(h);
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(u) with respect to WJZZ (AM): (i) enter into an agreement with any
party for the sale of the station without the written consent of Buyer, such
consent not to be unreasonably withheld or (ii) commence construction of the
modified facility of the station at Kingsley in a manner inconsistent with
Section 8.10(c);
(v) create any Accounts Receivable that are not bona fide or settle or
compromise any Accounts Receivable except in the ordinary course of business and
consistent with past practice;
(w) enter into any transaction which would constitute an Accounts
Payable except in the ordinary course of business and consistent with past
practice; or
(x) dismiss or modify in a material adverse manner the construction
permit for Station WCHB(AM) which authorizes nighttime facilities operating at
15 kw.
8.4. DAMAGE.
(a) RISK OF LOSS. The risk of loss or damage, confiscation or
condemnation of the Business, the Stations and all associated assets shall be
borne by Shareholders at all times prior to Closing. In the event of material
loss or damage, Shareholders shall promptly notify Buyer thereof and
Shareholders will cause the Company to use its best efforts to repair, replace
or restore the lost or damaged property to its former condition as soon as
possible. If the cost of repairing, replacing or restoring any lost or damaged
property is Ten Thousand Dollars ($10,000) or less, and Company has not
repaired, replaced or restored such property prior to the Closing Date, Closing
shall occur as scheduled and Buyer may deduct from the Purchase Price paid at
Closing the amount necessary to restore the lost or damaged property to its
former condition. If the cost to repair, replace, or restore the lost or damaged
property exceeds Ten Thousand Dollars ($10,000), and Company has not repaired,
replaced or restored such property prior to the Closing Date to the reasonable
satisfaction of Buyer, Buyer may, at its option:
(1) elect to consummate the Closing in which event Buyer may deduct
from the Purchase Price paid at Closing the amount necessary to restore the lost
or damaged property to its former condition in which event Shareholders shall be
entitled to all proceeds under any applicable insurance policies with respect to
such claim; or
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(2) elect to postpone the Closing, with prior consent of the
Commission if necessary, for such reasonable period of time (not to exceed
ninety (90) days) as is necessary for Company to repair, replace or restore the
lost or damaged property to its former condition.
If, after the expiration of such extension period the lost or
damaged property has not been fully repaired, replaced or restored to Buyer's
satisfaction, Buyer may terminate this Agreement, in which event the Initial
Escrow Deposit and all interest earned thereon shall be returned to Buyer and
the parties shall be released and discharged from any further obligation
hereunder.
(b) FAILURE OF BROADCAST TRANSMISSIONS. Shareholders shall give prompt
written notice to Buyer if any of the following (a "Specified Event") shall
occur and continue for a period of more than eight (8) hours: (i) the
transmission of the regular broadcast programming of any Station other than WJZZ
(AM) in the normal and usual manner is interrupted or discontinued; or (ii) any
Station is operated at less than its licensed antenna height above average
terrain or at less than eighty percent (80%) of its licensed effective radiated
power. If, prior to Closing, any Station has not operated at its licensed power
and or height (other than pursuant to variances allowed by the FCC's rules,
authorizations for use of auxiliary transmitting facilities and/or
authorizations connected with the construction of WJZZ (AM) and the improvements
at WCHB (AM)) for more than thirty-six (36) hours (or, in the event of force
majeure or utility failure affecting generally the market served by the Station,
ninety-six (96) hours), whether or not consecutive, during any period of thirty
(30) consecutive days, or if there are three (3) or more Specified Events each
lasting more than eight (8) consecutive hours, then Buyer may, at its option:
(i) terminate this Agreement; or (ii) proceed in the manner set forth in Section
8.4(a)(1) or 8.4(a)(2). In the event of termination of this Agreement by Buyer
pursuant to this Section, the Initial Escrow Deposit together with all interest
accrued thereon shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
(c) RESOLUTION OF DISAGREEMENTS. If the parties are unable to agree
upon the extent of any loss or damage, the cost to repair, replace or restore
any lost or damaged property, the adequacy of any repair, replacement, or
restoration of any lost or damaged property, or any other matter arising under
this Section, the disagreement shall be referred promptly to a qualified
consulting communications engineer mutually acceptable to Shareholders and
Buyer, whose decision shall be final, and whose
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fees and expenses shall be paid one-half each by Company, or by Shareholders if
such resolution is initiated after the Closing, and Buyer.
8.5. ADMINISTRATIVE VIOLATIONS. If Company receives any finding, order,
complaint, citation or notice prior to Closing which states that any aspect of
the Business' operation violates or may violate any rule, regulation or order of
the Commission or of any other Governmental Authority (an "Administrative
Violation"), including, any rule, regulation or order concerning environmental
protection, the employment of labor or equal employment opportunity,
Shareholders will cause the Company to promptly notify Buyer of the
Administrative Violation and to use its best efforts to remove or correct the
Administrative Violation, and be responsible prior to Closing for the payment of
all costs associated therewith, including any fines or back pay that may be
assessed.
8.6. CONTROL OF STATION. The Transaction shall not be consummated until
after the Commission has given its written consent thereto and between the date
of this Agreement and the Closing Date, Shareholders shall control, supervise
and direct the operation of the Stations.
8.7. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. Between the
date hereof and the Closing Date, Sellers shall cause the Company, at its own
expense, to cause Deloitte & Touche to prepare the audited Financial Statement
for 1997. Buyer shall be permitted to disclose the audited Financial Statements
for 1994, 1995, 1996 and 1997, including disclosure in any reports filed by the
Buyer with any Governmental Authority, but only for the purpose of obtaining
financing for this Transaction, receiving approval from the FCC or approval
under the Hart-Scott-Rodino Act, or satisfying any reporting requirements to
comply with Federal or State securities' laws. Buyer shall use commercially
reasonable efforts not to otherwise make public disclosures of the Financial
Statements.
8.8. CLOSING OBLIGATIONS. Company, Shareholders and Buyer shall make
commercially reasonable efforts to satisfy the conditions precedent to Closing.
8.9. ENVIRONMENTAL ASSESSMENT. Within sixty (60) days after filing the
Transfer of Control Application, Buyer may engage, at its expense, an
environmental assessment firm to perform a Phase I and Phase II Environmental
Assessment of the Company Real Property and Shareholder Real Property. Company
and Shareholders agree to cooperate and Company agrees to cooperate with Buyer
and
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such firm in performing such Environmental Assessment. Buyer shall provide a
copy of such Environmental Assessment to Company and Shareholders but such
delivery shall not relieve Shareholders of any obligation with respect to any
representation, warranty or covenant in this Agreement or waive any condition to
Buyer?s obligations under this Agreement.
8.10. CONSTRUCTION OF NEW FACILITIES.
(a) Company and Shareholders shall cooperate in permitting Buyer, its
representatives and agents, access to the facilities being constructed to
operate Station WCHB(AM) at 50 kw daytime and 15 kw nighttime, and to operate
Station WJZZ(AM) at Kingsley, including but not limited to, information
concerning the proposed construction equipment, cost estimates and timetable
consistent with Schedule 5.26.
(b) All costs associated with the construction of modified facilities
for Station WCHB(AM) will be paid for by Buyer and, to that end, the Company
will pay all such costs and the Purchase Price will be increased dollar for
dollar to take into account such payments. During the first one hundred thirty
five days (135) following the date of this Agreement, Shareholders and Buyer
will consult with each other and reach mutual agreement before incurring costs
related to the construction of the aforesaid facilities. If, however, the
transactions contemplated by this Agreement are not consummated within one
hundred thirty five (135) days after the date of this Agreement, the Company
shall be free to go forward with construction in a reasonable and prudent
manner, using its own best judgment. Buyer and Sellers agree that E. Harold
Munn, Jr. & Associates, Inc. (an entity with which Mr. Munn is no longer
affiliated), will be the contractor for the construction of the facilities
described in this Section.
(c) All costs associated with the construction of the facilities for
Station WJZZ(AM) at Kingsley will be paid for by Buyer and, to that end, the
Company will pay all such costs and the Purchase Price will be increased dollar
for dollar to take into account such payments. During the first one hundred
thirty five days (135) following the date of this Agreement, Shareholders and
Buyer will consult with each other and reach mutual agreement before incurring
costs related to the construction of the aforesaid facilities. If, however, the
transactions contemplated by this Agreement are not consummated within one
hundred thirty five (135) days after the date of this Agreement, the Company
shall be free to go forward with construction in a reasonable and prudent
manner, using its own best judgment. Buyer and Sellers agree that E. Harold
Munn, Jr. & Associates, Inc. (an entity with which Mr. Munn
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is no longer affiliated), will be the contractor for the construction of the
facilities described in this Section.
8.11. PIRATE RADIO STATION. Shareholders shall cause Company to use its
best commercially reasonable efforts to cause the pirate radio station
broadcasting on 106.3 MHz, which is causing interference to Station WCHB-FM, to
cease operations or reduce power sufficiently to eliminate the interference.
9. CONDITIONS PRECEDENT.
9.1. MUTUAL CONDITIONS. The respective obligations of Buyer, Shareholders
and Company to consummate the Transaction are subject to the satisfaction of
each of the following conditions:
(a) APPROVAL OF TRANSFER OF CONTROL APPLICATION. The Commission shall
have granted the Transfer of Control Application, and such grant shall be in
full force and effect on the Closing Date.
(b) ABSENCE OF LITIGATION. As of the Closing Date, no litigation,
action, suit or proceeding enjoining, restraining or prohibiting the
consummation of the Transaction shall be pending before any court, the
Commission or any other Governmental Authority or arbitrator; provided, however,
that this Paragraph may not be invoked by a party if any such litigation,
action, suit or proceeding was solicited or encouraged by, or instituted as a
result of any act or omission of, such party.
9.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION.
In addition to the satisfaction of the mutual conditions contained in
Section 9.1, the obligation of Buyer to consummate the Transaction is subject,
at Buyer's option, to the satisfaction or waiver by Buyer of each of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Shareholders to Buyer shall be true, complete, and correct in all material
respects as of the Closing Date with the same force and effect as if then made,
except to the extent that any representation or warranty is made as of a
specified date, in which case, such representation and warranty shall be true in
all material respects as of such date; provided that breach of the
representation and warranties set forth in Section 5.27 shall not constitute a
failure to satisfy the conditions of this Section 9.2, but rather shall result
in a reduction of the Purchase Price on a dollar-for-dollar basis as provided
for in Section 9.2(w) and provided further that a breach of any representation
or warranty
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shall not constitute a failure of the condition contained in this Section 9.2(a)
if such breach, either alone, or in conjunction with all other breaches, has not
had, and would not reasonably be expected to have, a material adverse effect
and, to the extent there is no material adverse effect, the Shareholders shall
indemnify the Buyer for any such breach pursuant to Section 10.1(a).
(B) COMPLIANCE WITH CONDITIONS. Except for any breach of the
obligations regarding cash and Accounts Receivable under Section 4.2(c), which
is addressed in Section 9.2(h), all of the material terms, conditions and
covenants to be complied with or performed by Shareholders or performed by the
Company at the request of the Shareholders on or before the Closing Date under
this Agreement and Company Documents shall have been duly complied with and
performed in all material respects.
(C) DISCHARGE OF LIENS.
(1) Company shall have obtained and delivered to Buyer, at Company's
expense, at least 10 days prior to Closing, a report prepared by C.T.
Corporation System (or similar firm reasonably acceptable to Buyer) showing the
results of searches of lien, tax, judgment and litigation records in the State
of Michigan and Bay, Oakland, Saginaw, Traverse and Wayne Counties,
demonstrating that the Company, Real Property, Shares and Business are free and
clear of all liens, security interests and encumbrances except for Permitted
Encumbrances and except for liens and Indebtedness which shall be discharged at
Closing by Shareholders using the proceeds from the Purchase Price and that
there are no judgments or pending litigation. The record searches described in
the report shall have taken place no more than 15 days prior to the Closing
Date.
(2) Subject to using a portion of the Purchase Price for payment of
all Indebtedness of the Company, Company shall have no Indebtedness except for
the Permitted Encumbrances and Permitted Indebtedness and shall have received a
certificate, dated the Closing Date, and signed by the President of Company to
the effect that Company has no such Indebtedness. Buyer shall also have received
such releases and UCC termination statements as it may reasonably request in
connection with the discharge of any such Indebtedness.
(D) THIRD-PARTY CONSENTS. Shareholders shall have obtained any
requisite third-party consents and approvals which may be necessary for
Shareholders to consummate the Transaction.
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(E) ESTOPPEL CERTIFICATES. At Closing, Company shall deliver to Buyer
a certificate executed by the other party to each Material Contract, including
the landlord under the leases of the Studio Site and WCHB-FM Transmitter Site
dated no more than 15 days prior to the Closing Date, stating (i) that such
Material Contract is in full force and effect and has not been amended or
modified; (ii) the date to which all rent and/or other payments due thereunder
have been paid; (iii) that Company is not in breach or default under such
Material Contract, and that no event has occurred that, with notice or the
passage of time or both, would constitute a breach or default thereunder by
Company.
(F) NO MATERIAL ADVERSE CHANGE. Neither the Stations nor the Business
shall have suffered a material adverse change since the date of this Agreement,
and there shall have been no changes since the date of this Agreement in the
business, operations, condition (financial or otherwise), properties, assets or
liabilities of Company, except changes specifically required by this Agreement
and changes which are not (either individually or in the aggregate) materially
adverse to Company, the Business or the Stations.
(G) FINANCIAL STATEMENTS. The financial information set forth in the
Station's Financial Statements for the year ending December 31, 1997, and for
the period ending thirty (30) days prior to the Closing Date fairly and
accurately reflect the financial performance and results of operation of the
Business and the Stations for those periods.
(H) CASH AND ACCOUNTS RECEIVABLE MINIMUMS. Company shall have
delivered to Buyer at least five (5) days prior to Closing, (i) a pre-closing
balance sheet as of the date which is five (5) days before the Closing Date and
(ii) a good faith estimate calculated in accordance with the Company?s normal
and customary practice of the Company?s Accounts Receivable and cash balance as
of the Closing Date. In the event that the Company fails to have bona fide
Accounts Receivable in the sum of at least Five Hundred Thousand Dollars
($500,000.00) and a cash balance in U.S. Dollars of at least Three Hundred
Thousand Dollars ($300,000.00), as required by Section 4.2(c), Buyer shall still
be required to close, but the Purchase Price will be reduced dollar for dollar
by the amount of the deficiency.
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(I) OPINION OF COMPANY'S COUNSEL. At Closing, Shareholders shall
deliver to Buyer the written opinion or opinions of Company's FCC and corporate
counsel dated the Closing Date, substantially in the form attached hereto as
Exhibit 3.
(J) FINAL ORDER. The Commission's action granting the Transfer of
Control Application shall have become a Final Order.
(K) CLOSING DOCUMENTS. At the Closing, Company and each Shareholder
shall deliver to Buyer (i) such instruments of conveyance as are reasonably
necessary pursuant to law to vest in Buyer title to the Shares, all of which
documents shall be dated as of the Closing Date, duly executed by Company and/or
Shareholders and in form acceptable to Buyer; (ii) such Deeds and other
instruments of conveyance as are reasonably necessary pursuant to law to vest in
Buyer title to the Shareholder Real Property; (iii) a certificate, dated the
Closing Date, executed by Company's President certifying as to those matters set
forth in Section 9.2(a).
(L) RESIGNATION OF DIRECTORS AND OFFICERS. All the directors and
officers of Company identified in an Incumbency Certificate executed by the
President shall have submitted their resignations in writing to Company. Such
resignations shall be effective as of the Closing Date.
(M) STOCK CERTIFICATES. Buyer shall receive at Closing duly executed
stock certificates duly endorsed in blank documenting transfer of the Shares to
Buyer, including stock certificates evidencing the shares to be issued to
Wendell T. Arnold and Janice Hall between now and the Closing, free of any
Encumbrances.
(N) CORPORATE RECORDS. Buyer shall receive at Closing the original
corporate records of Company, original copies of the Stations' Records, and
original documents evidencing the security interest held by Company in assets
acquired by Frankenmuth Broadcasting and used in the operation of Station
WKNX(AM), Bay City, Michigan.
(O) CASH. The Company shall have at Closing the cash received by the
Company from the sale of assets, including cash received from the sale of assets
described in Section 8.3(t) and cash received by Dr. Wendell F. Cox and the
Estate of Mary L. Bell for the sale to Great Lakes Radio, Inc. of portions of
the real property described in Section 5.11(a), such cash to be in addition to
the $300,000 in cash described in Section 4.2(c).
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(P) ENVIRONMENTAL REMEDIATION.Company shall have cured, to Buyer's
satisfaction, any deficiency identified in the Environmental Assessment,
provided that in no event shall Company or Shareholders be required to affect
any cure except to the extent any Hazardous Substances would give rise to
liability under Environmental Law as they apply to the present use of the Real
Property, and provided further that Shareholders shall not be required to expend
more than One Hundred Thousand Dollars ($100,000) to cure such deficiency.
(Q) TITLE INSURANCE. Buyer shall have obtained, at Sellers' expense,
ALTA extended form title insurance policies insuring Buyer's fee simple absolute
interest in the Company Real Property and Shareholder Real Property, excluding
the real property owned by Cox/Bass and described in Schedule 5.11(b), subject
only to: (i) those exceptions expressly accepted by Buyer in writing within
thirty (30) days of its receipt of a preliminary commitment of title insurance
therefor and (ii) the exception disclosed in Schedule 5.26. Subject to the
exceptions described in the preceding sentence, such Title Insurance shall not
reveal any defects in title or any encroachments upon the real property by any
buildings, structures, or Improvements located on adjoining real estate or any
encroachments by the Improvements (including without limitation any guy wires or
guy anchors) constructed on the real property onto property not owned by the
Company or Shareholders which would have a material adverse effect on Buyer?s
use, occupancy and ownership of such real property and shall show that such
buildings, structures and Improvements are constructed in conformity with all
?setback? lines, easements, and other restrictions, or rights of record, or that
have been established by any applicable building or safety code or zoning
ordinance.
(R) ACCOUNTS PAYABLE. Shareholders shall deliver a document stating
that there are no amounts to be paid to vendors whether or not within the normal
course of business other than the Accounts Payable, and shall list each amount
to be paid, to whom it shall be paid and the date due.
(S) CONSTRUCTION PERMIT. The construction permit authorizing Station
WCHB(AM) to operate at 50 kw daytime and 15 kw nighttime shall be in full force.
(T) ZONING APPROVAL. Company will have obtained all zoning approvals
necessary to construct in accordance with the construction permit described in
Section 9.2(s) on the Real Property described in Section 5.10(a).
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(U) AUDIT. Company shall have delivered an audited Financial
Statement, balance sheets and income statements for the fiscal year ending
December 31, 1997 prepared by an independent accounting firm.
(V) ACCOUNTS RECEIVABLE. As of the Closing Date, Company shall have
mailed in the ordinary of business and consistent with past practice all bills,
statements or invoices for the Accounts Receivable.
(W) TRADE BALANCE. In the event that the negative Trade Balance
exceeds $30,000 ("Excess Trade Balance"), Buyer shall still be required to
close, but the Purchase Price will be reduced dollar for dollar by the amount to
which the negative Trade Balance exceeds the Excess Trade Balance.
(X) RADIOFREQUENCY RADIATION. The operation of the Stations does not
cause or result in exposure of workers or the general public to levels of radio
frequency radiation in excess of the standards adopted by the FCC in 1996 and
explained in OET Bulletin 65, Edition 97-01.
(Y) WJZZ (AM) LICENSE. Shareholders shall use their best efforts to
preserve the license for Station WJZZ(AM) and shall similarly use their best
efforts to see to it that construction of Station WJZZ (AM) is complete and that
the Station resumes operations or shall cause the Company to request authority
from the FCC either in accordance with the outstanding construction permit or
under temporary authority in an effort to resume operations on or before
February 3, 1998.
(Z) KINGSLEY PROPERTY. Company shall own the real property described
in Section 5.10(c).
(AA) TAXES. Company shall have delivered to Buyer ten (10) days prior
to Closing a certificate signed by the President of the Company stating that to
the Knowledge of the Company, except as disclosed in the certificate, all Tax
Returns for the Company that would be due before the Closing Date without filing
for an extension have been filed and all Taxes due (except for Taxes being
contested in good faith and by appropriate proceedings and for which adequate
reserves have been established and are being maintained), plus any interest and
penalties that have been assessed, have been paid in full.
(BB) COMPENSATION. Company shall have satisfied all amounts due
employees for compensation, other than payroll that has accrued but is not yet
due to be paid at the time of Closing,
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whether pursuant to the terms of a written agreement or otherwise, including
bonuses and reimbursement of expenses, that have accrued as of the Closing.
(CC) CERTIFICATES OF ARNOLD AND HALL. A certificate executed by
Wendell T. Arnold and Janice Hall acknowledging that, (i) the Company has
satisfied all amounts due under any Employment Agreement between Mr. Arnold and
the Company and Ms. Hall and the Company; and (ii) all obligations under the
Incentive Stock Agreements between Mr. Arnold and the Company and Ms. Hall and
the Company to purchase or receive shares in the Company have been satisfied,
and (iii) the Shareholder Agreements between Mr. Arnold and the Company and Ms.
Hall and the Company have been terminated.
(DD) CONFIDENTIAL INFORMATION. Shareholders will deliver to Buyer all
documents or papers (including diskettes or other medium for electronic storage
of information) relating to trade secrets or other confidential information
relative to the business or any proprietary rights of the Company that are in
their possession or under their control without making copies or summaries of
any such material.
(EE) FM STUDIO LEASE. The then owners of the Cox/Bass Real Property
shall have entered into a written lease for one year for the real property
described in Section 5.11(b) for a monthly rental rate of $1,500 if Buyer does
not exercise its option to purchase the real property pursuant to Section
5.11(b)(ii).
(FF) CERTIFICATE RE MARY L. BELL SHAREHOLDER AGREEMENT. A certificate
executed by E. Harold Munn, Jr., acknowledging that the Shareholder Agreement
between the Company and Mary L. Bell has been terminated.
(GG) RELEASE. Each Shareholder shall deliver a release executed by
such shareholder stating that he or she has no claims against the Company except
for any claims for compensation as an employee accrued by the Company prior to
the Closing Date pursuant to Section 9.2(bb) and which is not otherwise
expressly prohibited by this Agreement.
9.3. ADDITIONAL CONDITIONS TO SHAREHOLDERS' OBLIGATION. In addition to
satisfaction of the mutual conditions contained in Section 9.1 the obligation of
Shareholders to consummate the Transaction is subject, at Shareholders' option,
to the satisfaction or waiver by Shareholders of each of the following
conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer to Shareholders shall be true, complete and
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correct in all material respects as of the Closing Date with the same force and
effect as if then made, except to the extent that any representation or warranty
is made as of a specified date, in which case, such representation and warranty
shall be true in all material respects as of such date; provided that a breach
of any representation or warranty shall not constitute a failure of the
condition contained in this Section 9.3(a) if such breach, either alone, or in
conjunction with all other breaches, has not had, and would not reasonably be
expected to have a material adverse effect and, to the extent there is no
material adverse effect, the Buyer shall indemnify the Shareholders for any such
breach pursuant to Section 10.2(a).
(B) COMPLIANCE WITH CONDITIONS. All of the material terms, conditions
and covenants to be complied with or performed by Buyer on or before the Closing
Date under this Agreement shall have been duly complied with and performed in
all material respects.
(C) PAYMENT. Buyer shall pay (i) Shareholders the Purchase Price due
at Closing, as provided in Section 4.2, minus (x) any deficiency in the cash and
Accounts Receivable as described in Section 9.2(h) and (y) the Excess Trade
Balance; (ii) the sum of Two Hundred Thousand Dollars ($200,000) to Dr. Wendell
F. Cox and the Estate of Mary L. Bell in exchange for title to the real property
described in Section 5.11(a), (iii) the sum of Two Hundred Thousand Dollars
($200,000) to the then owners of the Cox/Bass Real Property in exchange for the
real property described in Section 5.11 (b), but only if Buyer exercises its
option to purchase said property, and (iv) that amount to Shareholders as
reimbursement for the costs incurred consistent with Section 8.10 in
constructing the facilities described in Sections 9.2(s) and 9.2(y) less any
indebtedness incurred consistent with Schedule 5.26.
(D) CLOSING DOCUMENTS. Buyer shall deliver to Shareholders at the
Closing (i) copies of Buyer's corporate resolutions authorizing the Transaction
certified as to accuracy and completeness by Buyer's Secretary; and (ii) a
certificate, dated the Closing Date, executed by Buyer's President certifying as
to those matters set forth in Section 9.3(a) and (b).
(E) OPINION OF BUYER'S COUNSEL. At Closing, Buyer shall deliver to
Shareholders the written opinion of Buyer's counsel dated the Closing Date,
substantially in the form attached hereto as Exhibit 4.
(F) FINAL ORDER. The Commission's action granting the Transfer of
Control Application shall have become a Final Order.
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10. INDEMNIFICATION/POST-CLOSING OBLIGATIONS.
10.1. OBLIGATIONS OF SHAREHOLDERS. Subject to the limitations of this
Section 10, Shareholders agree to and shall jointly and severally indemnify and
hold harmless (after the Closing) Buyer, and its respective directors, officers,
employees, affiliates, agents and assigns from and against any and all Loss of
Buyer or Company including, without limitation, all reasonable costs associated
with investigating, removing, disposing of or remediating Hazardous Substances),
directly or indirectly, resulting from, based upon or arising out of:
(a) any inaccuracy in or breach of any of the representations or
warranties, as such representations or warranties are qualified by matters
specifically disclosed in the Schedules hereto, made by Company or Shareholders
in or pursuant to this Agreement or the Joinder Agreement; or
(b) the failure to perform any covenant of this Agreement or the
Company Documents; or
(c) any liability (i) for any Indebtedness of the Company incurred
prior to and not paid as of the Closing Date, and (ii) arising from the failure
of the Company or the Shareholders to timely file any Tax Returns due prior to
the Closing Date or to timely pay any Taxes due for periods prior to the Closing
Date (except for any Taxes being contested in good faith and by appropriate
proceedings (and for which adequate reserves have been established and are being
maintained)), as well as any interest or penalties arising as a result
therefrom, provided that the Shareholders shall have no liability for the
underlying Taxes in the event the Company paid such Taxes on or prior to the
Closing Date (in which case the Shareholders? liability hereunder shall be
limited to the interest and penalties related thereto), and provided further
that the Buyer shall promptly notify the Shareholders after its discovery of any
such delinquent Tax Returns and/or Taxes (as well as any such interest or
penalties related thereto). As used in this Agreement, (x) the term ?Tax
Returns? means all tax returns and tax reports required to be filed by the
Company with all appropriate Governmental Authorities (including all federal,
state, commonwealth, foreign, local, and other tax or information returns and
tax reports) with respect to, among other things, all income tax, unemployment
compensation, social security, payroll, sales and use, profit, excise,
privilege, occupation, property, ad valorem, franchise, license, school and any
other tax under the laws of the United States or of any state or any municipal
entity or of any political subdivision with valid taxing authority), and (y) the
term ATaxes= means all federal, state,
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commonwealth, foreign, local and other governmental taxes and estimated taxes,
but not interest or penalties, in connection with the foregoing which have
become due pursuant to the Tax Returns; or
(d) uninsured third party claims resulting from the actions of
Shareholders or Company in the conduct of the Business prior to the Closing
except for the matter described in Schedule 5.14; or
(e) any and all violations of or liabilities under Environmental Law
that (i) relate to the real property or the Company and arise on or before the
Closing; or (ii) arise from or relate to conditions, actions, activities or
operations, whether conducted by, caused by or attributable to the Company, the
Shareholders or any entity acting on behalf of the Company, on or before
Closing; or
(f) any damages, penalties and taxes arising from any breach of ERISA
fiduciary duty or ERISA prohibited transaction occurring before the Closing; or
(g) all compensation, benefits, and claims arising out of the
termination of employment by employees of Company before Closing.
10.2. OBLIGATIONS OF BUYER. Buyer agrees to indemnify and hold harmless
(after the Closing) Shareholders from and against any and all Loss of
Shareholders, directly or indirectly, resulting from, based upon or arising out
of:
(a) any inaccuracy in or breach of any of the representations, or
warranties, made by Buyer in this Agreement; or
(b) the failure by Buyer to perform any covenant of this Agreement or
the Buyer Documents; or
(c) except as to matters as to which Buyer is indemnified under the
terms of Section 10.1, third party claims (in contract, tort or otherwise)
resulting from the actions of Buyer and its conduct of the Business after
Closing; or
(d) any liability for Taxes or Indebtedness of Company incurred after
the Closing.
10.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
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(a) The party claiming indemnification (the "Claimant") shall give
written notice to the party from which indemnification is sought (the
"Indemnitor") promptly after the Claimant learns of any claim or proceeding
covered by the foregoing agreements to indemnify and hold harmless and failure
to provide prompt notice shall not be deemed to jeopardize Claimant?s right to
demand indemnification, provided, that, Indemnitor is not prejudiced by the
delay in receiving notice.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have 15 days to make
any investigation of the claim that the Indemnitor deems necessary or desirable,
or such lesser time if a 15-day period would jeopardize any rights of Claimant
to oppose or protest the claim. For the purpose of this investigation, the
Claimant agrees to make available to the Indemnitor and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within the 15-day period, or lesser period if required by
this Section (or any mutually agreed upon extension hereof) the Claimant may
seek appropriate legal remedies.
(c) The Indemnitor shall have the right to undertake, by counsel or
other representatives of its own choosing, the defense of such claim, provided,
that, Indemnitor acknowledges in writing to Claimant that Indemnitor would
assume responsibility for and demonstrates its financial ability to satisfy the
claim should the party asserting the claim prevail. In the event that the
Indemnitor shall not satisfy the requirements of the preceding sentence or shall
elect not to undertake such defense, or within 15-days after notice of such
claim from the Claimant shall fail to defend, the Claimant shall have the right
to undertake the defense, compromise or settlement of such claim, by counsel or
other representatives of its own choosing, on behalf of and for the account and
risk of the Indemnitor. Anything in this Section 10.3 to the contrary
notwithstanding, (i) if there is a reasonable probability that a claim may
materially and adversely affect the Claimant, the Claimant shall have the right,
at its own cost and expense, to participate in the defense, compromise or
settlement of the claim; (ii) the Indemnitor shall not, without the Claimant?s
written consent, settle or compromise any claim or consent to entry of any
judgment which does not include as an unconditional term thereof the giving by
the plaintiff to the Claimant of a release from all liability in respect of such
claim; and (iii) in the event that the Indemnitor undertakes defense of any
claim consistent with this Section, the Claimant, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the
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right to consult with the Indemnitor and its counsel or other representatives
concerning such claim and the Indemnitor and the Claimant and their respective
counsel or other representatives shall cooperate with respect to such claim.
(d) If any payment is made pursuant to this Section, the Indemnitor
shall be subrogated to the extent of such payment to all of the rights of
recovery of Claimant, and Claimant shall assign to Indemnitor, for its use and
benefit, any and all claims, causes of actions, and demands of whatever kind and
nature that Claimant may have against the person, firm, corporation or entity
giving rise to the loss for which payment was made. Claimant agrees to
reasonably cooperate in any efforts by Indemnitor to recover such loss from any
person, firm, corporation or entity.
10.4. EXCLUSIVE REMEDIES. Except as otherwise specifically provided in this
Agreement, the sole and exclusive remedy of the Buyer and the Shareholders
hereunder shall be restricted to the indemnification rights set forth in this
Section 10, provided that this limitation shall not apply to any actions or
claims arising out of fraud.
10.5. NOTICE. Each party agrees to notify the other of any liabilities,
claims or misrepresentations, breaches or other matters covered by this Section
10 upon discovery or receipt of notice thereof.
10.6. THRESHOLD CONCERNING SECTIONS 10.1 AND 10.2. Notwithstanding anything
to the contrary in Sections 10.1 and 10.2, the parties shall not be entitled to
indemnity under Sections 10.1 and 10.2 unless the aggregate Loss indemnified
against thereunder exceeds Two Hundred Thousand Dollars ($200,000.00
("Indemnification Basket") (in which case, the Claimant shall be entitled to
recovery from the Indemnitor of the full amount of the Loss), provided that any
Loss arising from the following shall not be subject to the Indemnification
Basket and, in any such case, the Indemnified Party shall be entitled to
indemnification from the first dollar of the Loss incurred for: (i) any monies
paid by the Buyer as a result of the failure to accurately reflect on the
document to be delivered to the Buyer pursuant to Section 9.2(r) all of the
Accounts Payable of the Company as of the Closing Date; (ii) the indemnification
obligations arising under Section 10.1(c)(ii); (iii) any obligations of the
Shareholders arising under the last sentence of Section 9.2(h); and (iv) any
actions or claims brought by the Shareholders against the Company for claims
arising under Sections 10.2(b) or 10.2(d).
10.7. SURVIVAL OF REPRESENTATIONS: MAXIMUM CONCERNING SHAREHOLDERS'
DAMAGES. The representations and warranties of the parties set forth in this
Agreement or in any certificate, document
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or instrument delivered in connection herewith shall survive the execution and
delivery of this Agreement and the Closing hereunder for a period of eighteen
(18) months after the Closing Date. Notwithstanding any other provision in this
Agreement to the contrary, the aggregate amount of damages recoverable from or
against the Shareholders pursuant to the provisions of this Agreement or the
Company Documents by the Buyer shall be limited in the aggregate to the Post
Closing Escrow Fund, i.e., initially, the principal amount of $1,500,000),
provided that there shall be no such limitation for actions or claims arising
from fraud. In the event of any claim (including any tax-related claims) against
the Shareholders or Company arising out of the Company's operations after the
Closing Date, the Shareholders shall cooperate with Buyer by responding to
reasonable requests by Buyer for information (including any documentation which
may be in the Shareholders' possession) which may be pertinent to the defense of
such claim. In the event of any claim (including any tax-related claims) against
the Shareholders arising out of the Company's operations prior to the Closing
Date, the Buyer shall cooperate with Shareholders by responding to reasonable
requests by Shareholders for information (including any documentation which may
be in the Buyer's possession) which may be pertinent to the defense of such
claim.
10.8. TAX RETURNS.
(A) PREPARATION AND FILING OF RETURNS FOR PRE-CLOSING PERIODS.
Shareholders shall be responsible for causing an independent accountant to
initially prepare all Federal, State, commonwealth, foreign and local income tax
returns of the Company for taxable periods actually ending on or before the
Closing Date. Buyer shall have the right, directly and through its designated
representatives, to review at its expense any such returns that pertain to the
Company at least 30 days prior to the due date of the return. Shareholders agree
not to take, or cause the Company to take, any position or make any election on
any such return inconsistent with prior reporting practices without the prior
written consent of Buyer, if the effect of any such election or position may be
to increase the Taxes of the Company thereof from taxable periods (or portions
thereof) beginning after the Closing Date or to file an extension on the due
date for any tax return or to file an amended return without first obtaining
Buyer?s consent.
(B) PREPARATION AND FILING OF RETURNS FOR POST-CLOSING PERIODS. Buyer
shall cause to be prepared, and filed, all income tax returns of the Company for
all such returns due after the Closing.
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10.9. ALLOCATION OF TAX LIABILITY.
(a) To the extent permitted by applicable law, the parties hereto
agree to cause federal, state and local tax periods of the Company to be closed
at the close of business on the Closing Date. In the event applicable law does
not permit the closing of any such period, the allocation of tax liability shall
be made in accordance with Section 10.9(b).
(b) In the case of a tax return for the taxable period beginning
before and ending after the Closing Date ("Overlap Period") based upon income or
gross receipts, the amount of taxes attributable to any Pre-Closing Period or
Post-Closing Period included in the Overlap Period shall be determined by
closing the books of the Company as of the close of business on the Closing Date
and by treating each of such Pre-Closing Period and Post-Closing Period as a
separate taxable year, except that exemptions, allowances or deductions that are
calculated on an annual basis shall be apportioned on a per diem basis. If the
liability for the Taxes for an Overlap Period is determined on a basis other
than income or gross receipts, the amount of Taxes attributable to any
Pre-Closing Period included in the Overlap Period shall be equal to the amount
of Taxes for the Overlap Period multiplied by a fraction, the numerator of which
is the number of days in the Pre-Closing Period included in the Overlap Period
and the denominator of which is the total number of days in the Overlap Period,
and the amount of such Taxes attributable to any Post-Closing Period included in
an Overlap Period shall be the excess of the amount of Taxes for the Overlap
Period over the amount of Taxes attributable to the Pre-Closing Period.
Shareholders shall be responsible for Taxes due for the Pre-Closing Period and
Buyer shall be responsible for Taxes due for the Post-Closing Period.
10.10. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. From the date
of Closing and for a period of three (3) years thereafter, Shareholders and
Buyer shall provide to each other such cooperation and information as each shall
reasonably request in the: (i) filing of any tax return, amended return or claim
or refund; (ii) determining a liability for taxes or a right to a refund of
taxes; (iii) participating in or conducting any audit or proceeding in respect
of taxes; (iv) analysis and review of the Financial Statements; or (v)
preparation of documentation to fulfill any reporting requirements of Buyer
including reports that may be filed with the Securities and Exchange Commission.
Such cooperation and information shall include providing copies of relevant tax
returns or portions thereof, together with the accompanying schedules and
related work papers and documents
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relating to rulings or other determinations by tax authorities. Shareholders'
Representatives and Buyer shall make themselves available at no charge to each
other and shall request that the Company's independent accounting firm(s) make
available to each other the information relied upon by that firm(s), including
its opinions and Financial Statements for the Company, to provide explanations
of any documents or information provided hereunder and to permit disclosure by
Buyer, including disclosure to any Governmental Authority.
10.11. NONDISCLOSURE AND CONFIDENTIALITY. Shareholders agree that they will
not after Closing use or disclose to others any trade secrets or other
confidential information about the business or any proprietary rights of the
Company; provided, however, that such agreement shall not apply to trade secrets
or other confidential information that the Shareholders are obligated to
disclose by a court of competent jurisdiction, or which lawfully becomes
available to the public other than as a result of a disclosure by Shareholders.
11. DEFAULT AND REMEDIES.
11.1. OPPORTUNITY TO CURE. If any party believes the other to be in breach
hereunder, the former party shall provide the other with written notice
specifying in reasonable detail the nature of such breach. If the breach has not
been cured by the earlier of: (i) the Closing Date; or (ii) within thirty (30)
days after delivery of that notice (or such additional reasonable time as the
circumstances may warrant provided the party in breach undertakes diligent, good
faith efforts to cure the breach within such thirty (30) day period and
continues such efforts thereafter), then the party giving such notice may
consider the other party to be in default and exercise the remedies available to
such party pursuant to this Section, subject to the right of the other party to
contest the alleged default through appropriate proceedings.
11.2. SHAREHOLDERS' REMEDIES. Buyer recognizes that if the Transaction is
not consummated as a result of Buyer's default, Shareholders would be entitled
to compensation, the extent of which is extremely difficult and impractical to
ascertain. To avoid this problem, the parties agree that if the Transaction is
not consummated within the later to occur of (i) thirty (30) days after the
FCC's approval of the Transfer of Control Application becomes a Final Order, or
(ii) in the event Buyer has purchased any extension of the Closing Date pursuant
to Section 2.2, the expiration of any such extension, Shareholders shall be
entitled to the Initial Escrow Deposit of $2,000,000, minus any amounts that
have previously been deducted for extensions of the Closing Date as
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permitted by Section 2.2, plus interest earned thereon provided that the
Shareholders are not in material default under this Agreement. The parties agree
that this sum shall constitute liquidated damages and shall be in lieu of any
other relief to which Shareholders might otherwise be entitled due to Buyer's
failure to consummate the Transaction as a result of a default by Buyer.
11.3. BUYER'S REMEDIES. Shareholders agree that the Shares represent an
interest in unique property that cannot be readily obtained on the open market
and that Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall have the right specifically to enforce
Shareholders' performance under this Agreement, and Shareholders agree (i) to
waive the defense in any such suit that Buyer has an adequate remedy at law; and
(ii) to interpose no opposition, legal or otherwise, as to the propriety of
specific performance as a remedy. If Buyer elects to terminate this Agreement as
a result of Shareholders' default instead of seeking specific performance, Buyer
shall be entitled to the return of the Initial Escrow Deposit together with all
interest earned thereon, and in addition thereto, Buyer shall be entitled to sue
for damages due to Shareholders' failure to consummate the Transaction as a
result of a default by Shareholders, provided that in no event shall Buyer be
entitled to recover damages arising under this Section 11.3 in an amount in
excess of $1.5 million in the aggregate provided further that this limitation
shall not apply to actions or claims arising from fraud.
12. TERMINATION OF AGREEMENT.
12.1. TERMINATION OF AGREEMENT. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated by this
Agreement may terminate at any time before the Closing in the event any of the
following shall occur:
(A) MUTUAL CONSENT. By mutual consent in writing by Buyer and Sellers.
(B) CONDITIONS TO BUYER'S PERFORMANCE NOT MET. By Buyer upon written
notice to Sellers if any event occurs or condition exists which would render
impossible the satisfaction of one or more conditions to the obligations of
Buyer to consummate the transactions contemplated by this Agreement as set forth
in Section 9.1 or 9.2.
(C) CONDITIONS TO SELLERS' PERFORMANCE NOT MET. By Sellers upon
written notice to Buyer if any event occurs or condition exists which would
render impossible the satisfaction of
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one or more conditions to the obligation of Sellers to consummate the
transactions contemplated by this Agreement as set forth in Section 9.1 or 9.3.
(D) MATERIAL BREACH. By Buyer or Sellers, provided such party is not
in material breach of this Agreement, if there has been a material breach by the
other party of any representation, warranty or covenant set forth herein;
provided, however, that the non-breaching party shall not be excused from its
obligations under this Agreement (i) if such breach is susceptible to cure and
the breaching party cures such breach by the earlier of the Closing Date or
within 30 days after receipt of notice of such breach from the other party or
provides assurances reasonably satisfactory to the other party that the breach
will be cured prior to Closing; or (ii) if such breach gives rise solely to
money damages that can readily be ascertained or estimated with reasonable
accuracy and the breaching party tenders such amount to the other party within
30 days after receipt of notice of such breach.
(E) BANKRUPTCY; RECEIVERSHIP. By Buyer, if any of the following events
shall have occurred with respect to Company or Sellers, if any of the following
events shall have occurred with respect to Buyer: (i) it has been adjudicated a
bankrupt or insolvent or has admitted in writing its inability to pay its debts
as they mature or has made an assignment for the benefit of creditors, or has
applied for or consented to the appointment of a trustee or receiver for it or
for the major part of its property; (ii) a trustee or receiver has been
appointed for it or for any part of its property without its consent; or (iii)
bankruptcy, reorganization, arrangement or insolvency proceedings, or other
proceedings for relief under any bankruptcy or similar law or laws for the
relief of creditors, have been instituted by or against it and remain
undismissed for 10 days or longer.
(F) FCC APPROVAL. By either Buyer or Sellers, provided such party is
not otherwise in default, if a Final Order granting the Transfer of Control
Application is not obtained within 270 days after the FCC has accepted the
Transfer of Control Application for filing.
(G) ENVIRONMENTAL REMEDIATION. By either Buyer or Shareholders if the
Environmental Assessment shows the presence of conditions that must be cured or
removed under the terms of Section 9.2(p) and such remediation will cost in
excess of One Hundred Thousand Dollars ($100,000) ("Threshold Amount") and
Shareholders decline to pay for remediation in excess of the Threshold Amount,
provided that neither Buyer nor Shareholders will be entitled to terminate this
Agreement pursuant to this Section 12.1(g) if Buyer
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elects to pay for remediation in excess of the Threshold Amount and such payment
does not reduce the Purchase Price.
12.2. REMEDIES. In the event of termination by Shareholders due to a
material breach by Buyer, Shareholders shall be entitled to the remedies
described in Section 11.2. In the event of termination by Buyer due to a
material breach by Shareholders, Buyer shall be entitled to the remedies
described in Section 11.3.
13. GENERAL PROVISIONS.
13.1. FEES. All recording costs, transfer taxes, sales tax, document stamps
and other similar charges shall be paid by Shareholders from the Purchase Price
or otherwise at Closing. Except as otherwise provided herein, all other expenses
incurred in connection with this Agreement or the Transaction shall be paid by
the party incurring those expenses whether or not the Transaction is
consummated.
13.2. NOTICES. All notices, requests, demands and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when (i) delivered personally (which shall include delivery by Federal Express
or other recognized overnight courier service that issues a receipt or other
confirmation of delivery) to the party for whom such communication is intended;
(ii) delivered by facsimile transmission; or (iii) three business days after the
date mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to Company or Shareholders:
Wendell T. Arnold
Bell Broadcasting Company
2466 Ethel
Detroit, MI 48217
And to:
E. Harold Munn, Jr.
8865 McCain Road
Parma, MI 49269-5543
Fax: (517) 531-5543
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with a copy (which shall not constitute notice) to:
Lauren A. Colby, Esq.
10 East Fourth Street
P.O. Box 113
Frederick, MD 21705
Fax: (301) 695-8734
and to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Attn: J. Michael Bernard, Esq.
Fax: 313-568-6832
and to:
Lawrence S. Jackier, Esq.
Jackier, Gould, Bean, Upfal, Eizelman & Goldman
1533 N. Woodward Avenue, Suite 250
Bloomfield Hills, Michigan 48304
and to:
Randall S. Wangen, Esq.
Fildew Hinks, PLLC
645 Griswold Street, Suite 3600
Detroit, Michigan 48226
(b) If to Buyer:
Radio One, Inc.
c/o Alfred C. Liggins, III
5900 Princess Garden Parkway, 8th Floor
Lanham, MD 20706
Fax: (301) 306-9694
with a copy (which shall not constitute notice) to:
Linda J. Eckard, Esq.
Davis Wright Tremaine LLP
1155 Connecticut Avenue, N.W.
Suite 700
Washington, D.C. 20036
Fax: (202) 508-6699
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Any party may change its address for notices by written notice to the other
given pursuant to this Section. Any notice purportedly given by a means other
than as set forth in this Section shall be deemed ineffective.
13.3. ASSIGNMENT. No party may assign its rights or obligations under this
Agreement without the express prior written consent of the other parties,
provided that Shareholders' consent shall not be unreasonably withheld if Buyer
assigns its rights and obligations pursuant to this Agreement to (i) an entity
which is a subsidiary or parent of Buyer or to an entity at least 50% of whose
voting securities are owned by Buyer or its principals Catherine Hughes and
Alfred Liggins, and the purpose for such assignment is to facilitate the
financing of the Transaction; or (ii) to Buyer's or its permitted assignee?s
lenders as collateral for any indebtedness incurred and Shareholders agree not
to unreasonably withhold their consent to such an assignment and provided
further that Dr. Wendell F. Cox may assign or transfer his stock as described in
Section 8.3(b). However, any assignment made pursuant to this section will not
be effective until the assignee executes and delivers to all parties to this
Agreement a document in which such assignee acknowledges that it is subject to
this Agreement, and that this Agreement governs the rights and obligations of
such assignee. Subject to the foregoing, this Agreement shall be binding on,
inure to the benefit of, and be enforceable by the original parties hereto and
their respective successors and permitted assignees.
13.4. EXCLUSIVE DEALINGS. For so long as this Agreement remains in effect,
neither Company nor any Shareholder nor any person acting on either party?s
behalf shall, directly or indirectly, solicit or initiate any offer from, or
conduct any negotiations with, any person or entity concerning the acquisition
of all or any interest in the Shares or in the assets of the Business, other
than Buyer or Buyer's permitted assignees.
13.5. THIRD PARTIES. Nothing in this Agreement, whether express or implied,
is intended to: (i) confer any rights or remedies on any person other than
Shareholders, Buyer and their respective successors and permitted assignees;
(ii) relieve or discharge the obligations or liability of any third party; or
(iii) give any third party any right of subrogation or action against either
Shareholders or Buyer.
13.6. INDULGENCES. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of any party at any time to require performance by
another party of any provision of this Agreement shall not affect such party's
right thereafter to enforce
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the same; (ii) no waiver by any party of any default by another party shall be
taken or held to be a waiver by such party of any other preceding or subsequent
default; and (iii) no extension of time granted by any party for the performance
of any obligation or act by any party shall be deemed to be an extension of time
for the performance of any other obligation or act hereunder.
13.7. PRIOR NEGOTIATIONS. This Agreement supersedes in all respects all
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All of
such prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
13.8. EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto or
referred to herein are a material part of this Agreement, as if set forth in
full herein.
13.9. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits and
Schedules to this Agreement set forth the entire understanding between the
parties in connection with the Transaction, and there are no terms, conditions,
warranties or representations other than those contained, referred to or
provided for herein and therein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an instrument
in writing signed by each of the parties hereto.
13.10. COUNSEL/INTERPRETATION. Each party has been represented by its own
counsel in connection with the negotiation and preparation of this Agreement.
This Agreement shall be fairly interpreted in accordance with its terms and, in
the event of any ambiguities, no inferences shall be drawn against either party.
13.11. GOVERNING LAW, JURISDICTION. This Agreement shall be governed by,
and construed and enforced in accordance with the laws of the State of Michigan
without regard to the choice of law rules utilized in that jurisdiction. Each of
the parties hereto executing this Agreement hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the States of Michigan or Maryland or the courts of the United States of
America located in the States of Michigan or Maryland for any actions, suits or
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby or thereby and agrees not to commence any action, suit or
proceeding relating hereto or thereto except in such courts, and further agrees
that service of any process, summons, notice or document by United States
registered or certified mail (at the address(es) set forth in Section 13.2)
shall be effective service of process for any
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action, suit or proceeding brought in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to personal
jurisdiction and the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby or thereby, in the
courts of the States of Michigan or Maryland, or the courts of United States of
America located in the States of Michigan or Maryland, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of Buyer and Shareholders agree
that its submission to jurisdiction and its consent to service of process by
certified mail is made for the express benefit of the other parties hereto.
Final judgment against Buyer or Shareholders in any such action, suit or
proceeding may be enforced in other jurisdictions by suit, action or proceeding
on the judgment, or in any other manner provided by or pursuant to the laws of
such other jurisdiction; provided, however, that any party may at its option
bring suit, or institute other judicial proceedings, in any state or federal
court of the United States or of any country or place where the other party or
its assets, may be found.
13.12. SEVERABILITY. If any term of this Agreement is illegal or
unenforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of applicable law and such term, as so modified, and
the balance of this Agreement shall then be fully enforceable.
13.13. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument. Each fully executed set of counterparts shall be
deemed to be an original, and all of the signed counterparts together shall be
deemed to be one and the same instrument.
13.14. FURTHER ASSURANCES. Shareholders shall at any time and from time to
time after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may request to vest and
confirm in Buyer (or its assignee) the title and rights to and in all the Shares
and/or assets of the Business to be and intended to be transferred, assigned and
conveyed hereunder.
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13.15. SHAREHOLDERS' REPRESENTATIVE.
(A) APPOINTMENT AND AUTHORITY. The Shareholders, for themselves and
their personal representatives and other successors, hereby constitute and
appoint E. Harold Munn, Jr. and Wendell T. Arnold (the "Shareholders'
Representatives"), with full power and authority (including power of
substitution), except as otherwise expressly provided in this Agreement, in the
name of and for and on behalf of the Shareholders or in his own name as
Shareholders' Representatives, to take all actions required or permitted to be
taken by the Shareholders, or any of them, under this Agreement (including the
giving and receiving of all reports, notices and consents, execution of the
Transfer of Control Application, as well as the execution and delivery of
documents to be delivered by the Shareholders at the Closing, except for
documents affecting title to the Shares or Shareholder Real Property). The
authority conferred under this Section 13.15 is an agency coupled with an
interest, and all authority conferred hereby is irrevocable and not subject to
termination by the Shareholders or by any of them, or by operation of law,
whether by the death or incapacity of any Shareholder, the termination of any
trust or estate or the occurrence of any other event. If any Shareholder should
die or become incapacitated, if any trust or estate should terminate or if any
other such event should occur, any action taken by the Shareholders'
Representatives pursuant to this Section 13.15 shall be as valid as if such
death or incapacity, termination or other event had not occurred, regardless of
whether or not the Shareholders' Representatives or the Buyer shall have
received notice of such death, incapacity, termination or other event. Any
notice given to the Shareholders' Representatives pursuant to Section 13.2 shall
constitute effective notice to all Shareholders and the Buyer or any other
person may rely on any notice, consent, election or other communication received
from the Shareholders' Representatives as if it had been received from all
Shareholders on whose behalf it was given.
(B) SUCCESSORS. A Shareholders' Representative may resign upon 20 days
prior written notice to Buyer and each other Shareholder. Upon the death,
resignation, removal or incapacity of a Shareholders' Representatives, the
Shareholders shall appoint a successor Shareholders' Representatives, by written
consent of the Required Majority of Shareholders, and any successor
Shareholders' Representatives so appointed shall, with the surviving
Shareholders' Representatives, constitute the Shareholders' Representatives to
the same effect as if originally named in this Section 13.15. Required Majority
Shareholders as used in this section means those Shareholders who currently hold
Class A Common
62
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Stock as described in Schedule 4.2 acting by the affirmative vote of the
majority of such Shareholders with each such Shareholder entitled to one vote.
The Shareholders may remove one or both of the Shareholders' Representatives at
any time, by written consent of the Required Majority of Shareholders. The
Shareholders shall give the Buyer written notice of the appointment or removal
of any Shareholders' Representative pursuant to this Section 13.15, including a
copy of the written consent of the Required Majority of Shareholders relating
thereto, as soon as practicable after any such appointment or removal, and such
appointment or removal shall not be effective as against the Buyer until such
notice shall have been given, unless the Buyer shall have actual knowledge of
such appointment or removal.
63
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IN WITNESS WHEREOF, and to evidence their assent to the foregoing,
Shareholders and Buyer have executed this Stock Purchase Agreement under seal as
of the date first written above.
SELLERS:
BY: __________________________________
E. Harold Munn, Jr., NBD Bank, N.A.,
Trustee of the Mary L. Bell Trust
Agreement
BY: __________________________________
Janice L. Hall, Trustee of the
Mary L. Bell Trust Agreement
BY: __________________________________
Arthur Middlebrooks, Trustee of
the Mary L. Bell Trust Agreement
BY: __________________________________
Janice L. Hall
BY: __________________________________
Dr. Wendell F. Cox
BY: __________________________________
Estate of Iris Bell Cox
BY: __________________________________
Wendell H. Cox
BY: __________________________________
William E. Fisher, Trustee for
Mariel Cox
64
<PAGE>
BY: __________________________________
William E. Fisher, Trustee for
Benjamin Cox
BY: __________________________________
William E. Fisher, Trustee for
Sonam Bass
BY: __________________________________
William E. Fisher, Trustee for
Julian Bass
BY: __________________________________
Eric Bell Bass
BY: __________________________________
Treva Bell Bass
BY: __________________________________
Robert Bell Bass
BY: __________________________________
Mary L. Bell, Trust
BY: __________________________________
Wendell T. Arnold
BY: __________________________________
William E. Fisher, Trustee for
Brianna Bass
65
<PAGE>
BUYER:
RADIO ONE, INC.
BY: __________________________________
Alfred C. Liggins, III
President
66
------------------------------------------------------------------------
OPTION AND STOCK PURCHASE AGREEMENT
------------------------------------------------------------------------
by and among
BROADCAST HOLDINGS, INC.
G. CABELL WILLIAMS, III
ALLIED CAPITAL FINANCIAL CORPORATION
and
WYCB ACQUISITION CORP.
for the sale and purchase of
Station WYCB(AM)
Washington, D.C.
Dated as of November 19, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
1. RULES OF CONSTRUCTION.......................................................1
1.1. Defined Terms..................................................1
1.2. Other Definitions..............................................5
1.3. Number and Gender..............................................5
1.4. Headings and Cross-References..................................5
1.5. Computation of Time............................................5
2. ASSIGNMENT AND EXERCISE OF THE OPTION.......................................6
2.1. Assignment of Option Agreement.................................6
2.2. Exercise of the Option Agreement...............................6
3. PURCHASE PRICE AND METHOD OF PAYMENT........................................6
3.1. Consideration. ................................................6
3.2. Payment at Closing. ...........................................6
3.3. Security for the Promissory Note...............................6
4. FCC APPLICATION AND CLOSING.................................................7
4.1. FCC Application................................................7
4.2. Final Closing Date. ...........................................7
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY........................7
5.1. Existence, Power and Identity..................................7
5.2. Binding Effect.................................................8
5.3. No Violation...................................................8
5.4. Governmental Authorizations....................................8
5.5. Contracts......................................................9
5.6. Insurance......................................................9
5.7. Income Statements..............................................9
5.8. Employees. ...................................................10
5.9. Employee Benefit Plans........................................10
5.10. Environmental Protection......................................11
5.11. Compliance with Law...........................................11
5.12. Litigation....................................................12
5.13. Insolvency Proceedings........................................12
5.14. Sales Agreements..............................................12
5.15. Liabilities. .................................................13
5.16. Sufficiency of Assets.........................................13
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5.17. Certain Interests and Related Parties.........................13
5.18. Taxes.........................................................13
5.19. No Misleading Statements......................................14
5.20. Broker........................................................14
5.21. Subsidiaries/Affiliates.......................................14
5.22. Stock.........................................................14
5.23. Property......................................................14
5.24. Corporate Records.............................................15
5.25. Dividends and Other Distributions.............................15
5.26. Names; Principal Place of Business. .........................15
6. REPRESENTATIONS WARRANTIES AND COVENANTS OF SHAREHOLDER....................15
6.1. Binding Effect................................................15
6.2. Ownership of Stock............................................15
6.3. Validity of Option Agreement. ...............................16
7. BUYER'S REPRESENTATIONS WARRANTIES AND COVENANTS...........................16
7.1. Existence and Power. .........................................16
7.2. Binding Effect. ..............................................16
7.3. No Violation. ................................................16
7.4. Litigation. ..................................................16
7.5. Licensee Qualifications. .....................................16
7.6. Financial Qualifications......................................17
7.7. Subsidiary Status.............................................17
8. COVENANTS WITH RESPECT TO CONDUCT OF THE COMPANY...........................17
8.1. Access. .....................................................17
8.2. Material Adverse Changes; Financial Statements................17
8.3. Conduct of Business...........................................17
8.4. Damage........................................................19
(a) Risk of Loss. ......................................19
(b) Failure of Broadcast Transmissions..................20
(c) Resolution of Disagreements.........................20
(d) Administrative Violations...........................20
8.5. Control of Station. ..........................................20
8.6. Cooperation with Respect to Financial and Tax Matters.........21
8.7. Bank Accounts.................................................21
8.8. Closing Obligations...........................................21
8.9. Time Brokerage and Operating Agreement........................21
9. CONDITIONS PRECEDENT.......................................................22
9.1. Mutual Conditions.............................................22
(a) Approval of Transfer of Control Application. .......22
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(b) Absence of Litigation. .............................22
9.2. Additional Conditions to Buyer's Obligation...................22
(a) Representations and Warranties. ....................22
(b) Compliance with Conditions. ........................22
(c) Discharge of Liens. ................................22
(d) Third-Party Consents................................23
(e) Financial Statements. ..............................23
(f) Sales and Customer Information......................23
(g) Opinion of Company's Counsel. ......................23
(h) Final Order.........................................25
(i) Closing Documents. .................................25
(j) Resignation of Directors and Officers...............25
(k) Stock Certificates..................................25
(l) Records.............................................25
(m) Insurance Policies..................................25
(n) Brokerage Fee. .....................................25
(o) Accounts Payable....................................25
(p) Trade and Barter....................................25
(q) Allied Indebtedness.................................25
9.3. Additional Conditions to Company's Shareholder's and Allied's
Obligation....................................................26
(a) Representations and Warranties. ....................26
(b) Compliance with Conditions. ........................26
(c) Opinion of Buyer's Counsel. ........................26
(d) Payment. ...........................................27
(e) Closing Documents. .................................27
(f) Accounts Receivable. ...............................27
10. INDEMNIFICATION...........................................................27
10.1. Obligations of Allied.........................................27
10.2. Obligations of Buyer..........................................28
10.3. Procedure.....................................................28
(a) Notice. ............................................28
(b) Defense. ...........................................28
10.4. Remedies Cumulative...........................................29
10.5. Notice........................................................29
10.6. Threshold Concerning Section 10.1. ..........................29
10.7. Survival of Representations...................................29
10.8. Tax Returns...................................................29
(a) Preparation and Filing of Returns for Pre-Closing
Periods.............................................29
(b) Preparation and Filing of Returns for Post-Closing
Periods.............................................30
10.9. Allocation of Tax Liability...................................30
10.10. Accounts Payable..............................................30
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11. DEFAULT AND REMEDIES......................................................30
11.1. Opportunity to Cure...........................................30
11.2. Company's, Shareholder's and Allied's Remedies. ..............31
11.3. Buyer's Remedies..............................................31
12. CANCELLATION OF AGREEMENT.................................................31
12.1. Termination of Agreement......................................31
(a) Damage to Station...................................31
(b) Mutual Consent......................................31
(c) Material Breach.....................................31
(d) Bankruptcy; Receivership............................32
(e) FCC Approval........................................32
13. GENERAL PROVISIONS........................................................32
13.1. Fees..........................................................32
13.2. Notices.......................................................32
13.3. Assignment....................................................34
13.4. Exclusive Dealings............................................34
13.5. Third Parties.................................................34
13.6. Indulgences...................................................34
13.7. Prior Negotiations. ..........................................34
13.8. Schedules. ...................................................34
13.9. Entire Agreement; Amendment. .................................35
13.10. Counsel.......................................................35
13.11. Governing Law, Jurisdiction...................................35
13.12. Severability..................................................35
13.13. Counterparts..................................................35
13.14. Further Assurances............................................35
iv
<PAGE>
TABLE OF SCHEDULES
SCHEDULE 3.2 Promissory Note
SCHEDULE 3.3 (i) Stock Pledge Agreement
SCHEDULE 3.3 (ii) Guaranty and Security Agreement
SCHEDULE 3.3 (iii) Warrant
SCHEDULE 5.1 Articles/Bylaws
SCHEDULE 5.4 FCC Licenses
SCHEDULE 5.5 Contracts
SCHEDULE 5.6 Insurance Policies
SCHEDULE 5.7 Bank Accounts
SCHEDULE 5.8 Employees
SCHEDULE 5.9 Employee Benefit Plans
SCHEDULE 5.10 Environmental Issues
SCHEDULE 5.12 Litigation
SCHEDULE 5.16 Condition of Assets
SCHEDULE 5.17 Certain Interests and Related Parties
SCHEDULE 5.23.1 Tangible Personal Property
SCHEDULE 5.23.2 Real Property
SCHEDULE 5.26 Company's Places of Business
SCHEDULE 9.2 Sales and Customer Information
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<PAGE>
OPTION AND STOCK PURCHASE AGREEMENT
This OPTION AND STOCK PURCHASE AGREEMENT is entered into as of this 19th
day of November, 1997, by and among Broadcast Holdings, Inc., a District of
Columbia corporation (the "Company"); G. Cabell Williams, III, an individual who
resides at 5422 Albia Road, Bethesda, Maryland (the "Shareholder"); and Allied
Capital Financial Corporation ("Allied"); and WYCB Acquisition Corp., a Delaware
corporation (the "Buyer").
RECITALS
WHEREAS, Shareholder is the sole stockholder of the Company;
WHEREAS, the Company is the licensee of Station WYCB(AM), Washington, D.C.
(the "Station");
WHEREAS, Shareholder granted Allied and certain of its affiliates
("Affiliates") an option dated March 13, 1990, to purchase all of the shares of
stock of the Company owned by Shareholder and the Affiliates have assigned all
right, title and interest in the option to Allied;
WHEREAS, Allied wishes to assign the option to Buyer subject to the terms
of this Agreement;
WHEREAS, Buyer wishes to exercise the option subject to the terms of this
Agreement;
WHEREAS, Shareholder consents to the assignment of the option from Allied
to Buyer, and the exercise thereof, subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and, intending to be legally bound hereby, the parties agree as
follows:
1. RULES OF CONSTRUCTION.
1.1. DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ACCOUNTS PAYABLE" means the liabilities of the Company for services
received or goods acquired arising from the Company's operation of the Station
prior to Closing whether or not the Company has issued, prior to Closing, an
invoice, bill or other statement reflecting the amount owed.
"ACCOUNTS RECEIVABLE" means the cash accounts receivable of Company arising
from Company's operation of the Station prior to Closing whether or not the
Company has issued, prior
<PAGE>
to Closing, an invoice, bill or other statement reflecting the amount owed.
After the Closing, Accounts Receivable shall mean cash accounts receivable of
the Company generated by the Company after the Closing subject to a security
interest as further set forth in the Guaranty and Security Agreement.
"ADMINISTRATIVE VIOLATION" means those violations described in Section 8.4
hereof.
"ALLIED" means Allied Capital Financial Corporation.
AALLIED INDEBTEDNESS" means the amount, secured or unsecured, that the
Company owes to Allied as of the Closing Date.
"BUSINESS" means the business of Company consisting primarily of the
operation of Radio Station WYCB(AM), Washington, D.C.
"BUYER" means WYCB Acquisition Corp., a Delaware corporation, and a
wholly-owned subsidiary of Radio One, Inc.
"BUYER DOCUMENTS" means those documents, agreements and instruments to be
executed and delivered by Buyer in connection with this Agreement as described
in Section 7.2.
"CASH FLOW" means cash received less cash operating expenses, shown as
?broadcast cash flow on the Company's Statements.
"CLOSING" means the consummation of the Transaction (as hereinafter
defined).
"CLOSING DATE" means the date on which the Closing takes place, as
determined pursuant to Section 4.2.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"COMMISSION" means the Federal Communications Commission.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as amended.
"COMPANY" means Broadcast Holdings, Inc., a District of Columbia
corporation.
"COMPANY DOCUMENTS" means those documents, agreements and instruments to be
executed and delivered by Company in connection with this Agreement as described
in Section 5.1.
"CONTRACTS" means those contracts, leases and other agreements listed or
described in Schedule 5.5 which are in effect on the date hereof as are entered
into on or before the Closing Date
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<PAGE>
consistent with the provisions of Section 8.3 (n) hereof, but not including
Sales Agreements and Trade Agreements (as hereinafter defined).
"ENCUMBRANCE" means any claim, charge, easement, encumbrance, security
interest, lien, option or pledge imposed by agreement or law, except for any
restrictions on transfer generally arising under any applicable federal or state
securities law.
"ENVIRONMENTAL LAW" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.,
the Toxic Substances Control Act, as amended, 15 U.S.C. ss. 2601 et seq., the
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. ss. 6901
et seq., the Clean Water Act, as amended, 42 U.S.C. ss. 1251 et seq., the Clean
Air Act, as amended, 42 U.S.C. ss. 7401 et seq., or any regulations or policies
adopted pursuant to such laws.
"FCC LICENSES" means all licenses, pending applications, permits and other
authorizations issued by the Commission for the operation of the Station listed
on Schedule 5.4.
"FINAL ORDER" means any action that shall have been taken by the Commission
(including action duly taken by the Commission's staff, pursuant to delegated
authority) which shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended; with respect to which no timely request for stay,
petition for rehearing, appeal or certiorari or sua sponte action of the
Commission with comparable effect shall be pending; and as to which the time for
filing any such request, petition, appeal, certiorari or for the taking of any
such sua sponte action by the Commission shall have expired or otherwise
terminated.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, court or other entity that
exercises executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" means any hazardous or toxic waste, substance or
material or pollutant as defined under Environmental Laws.
"INDEBTEDNESS" means any note, loan or other debt, whether secured or
unsecured, for borrowed money.
"LOSS" means any action, cost, damage, disbursement, expense, liability,
loss, deficiency, diminution in value, obligation, penalty or settlement of any
kind or nature, whether foreseeable or unforeseeable, including but not limited
to, interest or other carrying costs, penalties, reasonable legal, accounting
and other professional fees and expenses incurred in the investigation,
collection, prosecution and defense of claims and amounts paid in settlement,
that may be imposed on or otherwise incurred or suffered by the specified
person.
3
<PAGE>
"LAW" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any governmental entity and any order,
including any order of any governmental agency.
"MATERIAL CONTRACTS" means those leases, contracts and agreements
specifically designated in Schedule 5.5 as being "Material Contracts."
"OPTION AGREEMENT" means the option granted March 13, 1990, by Shareholder
to Allied Investment Corporation and Allied Financial Services Corporation to
purchase all of the issued and outstanding shares of the Company for the sum of
Ten Dollars ($10.00).
"PROMISSORY NOTE" means the note described in Section 3.2.
"PURCHASE PRICE" shall mean the total consideration paid by Buyer to
acquire the Option Agreement and to satisfy certain Indebtedness, pursuant to
Section 3.
"RADIO ONE, INC." means a Delaware corporation which is the parent of
Buyer.
"SALES AGREEMENTS" means agreements entered into by Company for the sale of
time on the Station for cash, as described in Section 5.14.
"GUARANTY AND SECURITY AGREEMENT" means the agreement described in Section
3.3.
"SHARES" means all the issued and outstanding shares of capital stock of
Company.
"SPECIFIED EVENT" means those broadcast transmission failures described in
Section 8.4(b).
"STATION RECORDS" means those documents that have been maintained in the
Station's public file pursuant to the rules of the FCC, the operating and
maintenance logs of the Station, any program logs and the books of account of
the operation of the Station.
"STOCK PLEDGE AGREEMENT" means the agreement for the pledge of stock of the
Company described in Section 3.3.
"STUDIO SITE" means the real estate located at 1025 Vermont Avenue,
Washington, D.C. that is currently used as the Station's studio and office
facilities.
"TANGIBLE PERSONAL PROPERTY" means all tangible personal property and
fixtures used or useful in the operation of the Business, including the property
and assets listed or described in Schedule 5.23.1, together with supplies,
inventory, spare parts and replacements thereof and improvements and additions
thereto made between the date hereof and the Closing Date.
4
<PAGE>
"TRADE AGREEMENTS" means agreements entered into by Company for the sale of
time on the Station in exchange for merchandise or services.
"TRADE BALANCE" means the difference between the aggregate value of time
owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, as computed in
accordance with the Station's customary bookkeeping practices. The Trade Balance
is "negative" if the value of time owed exceeds the value of goods and services
to be received. The Trade Balance is "positive" if the value of time owed is
less than the value of goods and services to be received.
"TRANSACTION" means the assignment of the Option Agreement to Buyer and
acquisition of the Shares by Buyer as contemplated by this Agreement and the
respective obligations of Company, Shareholder, Allied, and Buyer set forth
herein.
"TRANSFER OF CONTROL APPLICATION" means the application on FCC Form 315
that Shareholder, Company and Buyer shall join in and file with the Commission
requesting its consent to the transfer of control of Company to Buyer.
"TRANSMITTER SITE" means the real estate located at Walker Mill Road,
District Heights, Maryland that is currently used as the Station's transmitter
site.
"WARRANT" means the contingent warrant issued by Radio One, Inc. described
in Section 3.3.
1.2. OTHER DEFINITIONS. Other capitalized terms used in this Agreement
shall have the meanings ascribed to them herein.
1.3. NUMBER AND GENDER. Whenever the context so requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be construed to mean or include any other gender or
genders.
1.4. HEADINGS AND CROSS-REFERENCES. The headings of the Sections and
Paragraphs hereof, the Table of Contents, and the Table of Schedules, have been
included for convenience of reference only, and shall in no way limit or affect
the meaning or interpretation of the specific provisions of this Agreement. All
cross-references to Sections or Paragraphs herein shall mean the Sections or
Paragraphs of this Agreement unless otherwise stated or clearly required by the
context. All references to Schedules herein shall mean the Schedules to this
Agreement. Words such as "herein" and "hereof" shall be deemed to refer to this
Agreement as a whole and not to any particular provision of this Agreement
unless otherwise stated or clearly required by the context. The term "including"
means "including without limitation."
1.5. COMPUTATION OF TIME. Whenever any time period provided for in this
Agreement is measured in "business days" there shall be excluded from such time
period each day that is a
5
<PAGE>
Saturday, Sunday, recognized federal legal holiday, or other day on which the
Commission's offices are closed and are not reopened prior to 5:30 p.m.
Washington, D.C. time. In all other cases all days shall be counted.
2. ASSIGNMENT AND EXERCISE OF THE OPTION.
2.1. ASSIGNMENT OF OPTION AGREEMENT.
(a) Allied hereby irrevocably assigns the Option Agreement to Buyer on
the terms and conditions described herein and contingent on receipt of the
Promissory Note described in Section 3.2.
(b) Shareholder consents to the assignment of the Option Agreement
from Allied to Buyer on the terms and conditions described herein.
2.2. EXERCISE OF THE OPTION AGREEMENT.
(a) Buyer hereby exercises the option to purchase the Shares from
Shareholder with the concurrent payment of Ten Dollars ($10.00) and by executing
this Agreement Shareholder acknowledges that the notice requirement in paragraph
two of the Option Agreement is satisfied.
(b) Shareholder consents to Buyer's exercise of the option on the
terms and conditions described herein.
3. PURCHASE PRICE AND METHOD OF PAYMENT.
3.1. CONSIDERATION. The Purchase Price for the Option Agreement and
Acquisition of the Shares shall be Three Million Seven Hundred Fifty Thousand
Dollars ($3,750,000) payable as set forth in this Section 3.
3.2. PAYMENT AT CLOSING. At Closing, Buyer shall execute a Promissory Note,
in the form attached hereto as Schedule 3.2, in the principal amount of Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000). The Promissory Note
shall bear an interest rate of Thirteen Percent (13%) per annum payable
quarterly in cash on the basis of Ten Percent (10%) per annum with the balance
thereof of Three Percent (3%) per annum accrued from the date of issuance of the
Note and compounded quarterly. Any and all outstanding principal of the
Promissory Note together with all accrued and unpaid interest thereon shall be
due and payable on the third anniversary of the Closing.
3.3. SECURITY FOR THE PROMISSORY NOTE. The Promissory Note shall be secured
by: (i) a pledge by Buyer of all of the outstanding shares of capital stock of
the Company to be evidenced by a Stock Pledge Agreement executed as of the
Closing in the form attached hereto as Schedule 3.3(i), (ii) a security interest
in substantially all of the tangible and intangible assets of the Company,
excluding any LMA Agreement between the Buyer and Radio One, Inc., and/or
Company, evidenced
6
<PAGE>
by a Guaranty and Security Agreement in the form attached hereto as Schedule 3.3
(ii), and (iii) a contingent Warrant in the form attached hereto as Schedule 3.3
(iii) issued by Radio One, Inc., to be exercised for the number of shares of
Radio One, Inc., having a liquidation value of up to Four Million Dollars
($4,000,000) but only to be exercised upon a default under the Promissory Note
where foreclosure on the stock or assets of the Company as further set forth in
the Warrant, are insufficient to cover the full amount of the Promissory Note.
4. FCC APPLICATION AND CLOSING.
4.1. FCC APPLICATION. Within five (5) business days of the execution of
this Agreement Buyer, Shareholder and the Company will join in filing the
Transfer of Control Application. Buyer, Company and Shareholder diligently shall
take or cooperate in the taking of all steps which are reasonably necessary or
appropriate to expedite the prosecution and grant of the Application. Neither
Buyer, Company nor Shareholder by commission or omission shall knowingly impair
its qualifications as a transferor or transferee of the FCC Licenses. Company
will promptly provide Buyer with a copy of any pleading, order, or other
document served on it relating to the Transfer of Control Application. Company
will use its best efforts and otherwise cooperate with Buyer in responding to
any information requested by the FCC related to the Transfer of Control
Application, in making any amendment to this Agreement requested by the FCC
which does not adversely affect Company in a material manner, and in defending
against any petition, complaint, or objection which may be filed against the
Transfer of Control Application. In the event the Transfer of Control
Application as tendered is rejected for any reason, the party liable for the
rejection shall take all reasonable steps to cure the basis for denial provided
that in no event shall any party be required to take any action which would be
materially adverse to that party's interest. Company and Buyer shall share
equally in the amount of any Commission filing fee.
4.2. FINAL CLOSING DATE. Closing of the purchase of the Shares under this
Agreement shall take place within ten (10) business days after the FCC's
approval of the Transfer of Control Application becomes a Final Order at the
offices of Davis Wright Tremaine LLP, 1150 Connecticut Avenue, N.W., Washington,
D.C. 20036, or at such other time or place as the parties may agree.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY.
The Company hereby makes to and for the benefit of Buyer, the following
representations, warranties and covenants:
5.1. EXISTENCE, POWER AND IDENTITY. The Company is a corporation duly
organized and validly existing under the laws of the District of Columbia with
full corporate power and authority (a) to own, lease and use its properties and
assets, (b) to conduct the business and operation of the Station as currently
conducted, (c) to execute and deliver this Agreement and each other document,
agreement and instrument to be executed and delivered by Company in connection
with this Agreement (collectively, the "Company Documents"), and to perform and
comply with all of the terms, obligations and covenants to be performed and
complied with by Company hereunder and
7
<PAGE>
thereunder and (d) true and correct copies of the Company?s Articles of
Incorporation and Bylaws are attached as Schedule 5.1.
5.2. BINDING EFFECT. The execution, delivery and performance by Company of
this Agreement has been and the Company Documents will be duly authorized by all
necessary corporate action, and copies of those authorizing resolutions,
certified by Company's Secretary shall be delivered to Buyer at Closing. No
other corporate action by Company is required for Company's execution, delivery
and performance of this Agreement or any of Company Documents. This Agreement
has been duly and validly executed and delivered by Company to Buyer and
constitutes a legal, valid and binding obligation of Company, enforceable
against Company in accordance with its terms, subject to bankruptcy,
reorganization, fraudulent conveyance, insolvency, moratorium and similar laws
relating to or affecting creditors, and other obligees' rights generally and the
exercise of judicial discretion in accordance with general equitable principles.
5.3. NO VIOLATION. None of (i) the execution, delivery and performance by
Company of this Agreement or any of the Company Documents, (ii) the consummation
of the Transaction, or (iii) Company's compliance with the terms or conditions
hereof will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms or conditions of, constitute a default under, or
violate (a) Company's articles of incorporation or bylaws, (b) any judgment,
decree, order, consent, agreement, lease or other instrument (including any
Material Contract) to which Company is a party or by which Company or its
Business may be legally bound or affected, or (c) any law, rule, regulation or
ordinance of any Governmental Authority applicable to Company or its Business or
the operation of the Station.
5.4. GOVERNMENTAL AUTHORIZATIONS. Except for the FCC Licenses or as set
forth on Schedule 5.4 hereto, no licenses, permits, or authorizations from any
Governmental Authority are required to own, use or operate the Station or to
conduct the Business as currently operated and conducted by Company. The FCC
Licenses are all the Commission authorizations held by Company with respect to
the Station, and are all the Commission authorizations used in or necessary for
the lawful operation of the Station as currently operated by Company. The FCC
Licenses are in full force and effect, are subject to no conditions or
restrictions other than those of general applicability and are unimpaired by any
acts or omissions of Company, Company's officers, employees or agents. Company
has delivered true and complete copies of all FCC Licenses to Buyer. There is
not pending or, to the knowledge of Company, threatened, any action by or before
the Commission or any other Governmental Authority to revoke, cancel, rescind or
modify any of the FCC Licenses (other than proceedings to amend Commission rules
of general applicability or otherwise affecting the broadcast industry
generally), and there is not now issued, outstanding or pending or, to the
knowledge of Company, threatened, by or before the Commission or any other
Governmental Authority, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against Company or
otherwise with respect to the Station. The Station is operating in material
compliance with all FCC Licenses, the Communications Act and the published
rules, regulations, and policies of the Commission. The Commission's most recent
renewals of the FCC Licenses were not challenged by any petition to deny or any
competing application. Company
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has no knowledge of any facts relating to it that, under the Communications Act
or the published rules, regulations, and policies of the Commission would
constitute cause for the Commission to deny Commission renewal of the FCC
Licenses or deny Commission consent to the Transaction.
5.5. CONTRACTS. Schedule 5.5 lists all Contracts to which Company is a
party for which a payment greater than $500 is due for the unexpired term
thereof. The Company has provided Buyer access to copies of all such Contracts.
The Contracts so furnished to Buyer have not been amended or terminated and are
in full force and effect. Company has identified each contract which is a
Material Contract with an asterisk on Schedule 5.5.
5.6. INSURANCE. Schedule 5.6 lists all insurance policies held by Company
with respect to the Business and operation of the Station. Such insurance
policies are in full force and effect, all premiums with respect thereto are
currently paid and Company is in compliance with the terms thereof. Company has
not received any notice from any issuer of any such policies of its intention to
cancel, terminate, or refuse to renew any policy issued by it. Company will
maintain the insurance policies listed on Schedule 5.6 in full force and effect
through the Closing Date.
5.7. INCOME STATEMENTS.
(a) Company has furnished Buyer with the unaudited cash-based income
statements (the "Statements") for the calendar years 1993, 1994, 1995 and 1996.
The Statements fairly present Company's income received and cash expenses of the
Station (not including interest, taxes or depreciation and amortization) as of
the dates and for the periods indicated. From December 31, 1996 to the date of
execution of this Agreement, there has been no material adverse change to the
condition of the assets of the Station.
(b) From December 31, 1996 to the date of execution of this Agreement,
(i) Company has not made any contract, agreement or commitment or incurred any
obligation or liability (contingent or otherwise), except in the ordinary course
of business and consistent with past business practices, or (ii) there has not
been any discharge or satisfaction of any obligation or liability owed by
Company, which is not in the ordinary course of business or which is
inconsistent with past business practices.
(c) Company maintains only the bank accounts as shown in Schedule 5.7
and no other bank accounts of any kind. Buyer has been provided with bank
statements, dated as indicated on Schedule 5.7, related to such accounts (the
"Bank Statements"). Except as shown on such Bank Statements or on Schedule 5.7,
and, with respect to items which have not cleared as of the last Bank
Statements, as shown on the Company's cash receipts and disbursements journal,
there have been no material receipts or disbursements, whether by cash or check,
by the Company of any kind except as specifically permitted hereunder. Since the
date of the last of the Bank Statements furnished to Buyer by the Company, no
checks have been issued for any purpose other than in the ordinary course of
business except as specifically permitted hereunder.
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5.8. EMPLOYEES. Except as otherwise listed in Schedule 5.8, (a) no employee
of Company is represented by a union or other collective bargaining unit, no
application for recognition as a collective bargaining unit has been filed with
the National Labor Relations Board, and, to the knowledge of Company, there has
been no concerted effort to unionize any of Company's employees and (b) Company
has no other written or oral employment agreement or arrangement with any
Company employee, and no written or oral agreement concerning bonus,
termination, hospitalization or vacation. As of this date there is no and at the
time of Closing there will not be any consideration of whatever nature due and
owing by Allied, Shareholder or the Company to any employee of the Company whose
employment is to be terminated effective as of the Closing except regular salary
payments which shall be satisfied by Allied at the end of such employee's
regular pay period. Included in Schedule 5.8 is a list of all persons currently
employed at Company together with an accurate description of the material terms
and conditions of their respective employment as of the date of this Agreement.
Company will promptly advise Buyer of any changes that occur prior to Closing
with respect to such information, provided, that Company, Shareholder and Allied
have no obligation to induce any Company employee to remain employed until the
Closing Date, nor any obligation to Buyer to retain any or all of the employees
until the Closing Date in the event any or all of such employees choose to
resign provided, however, that neither Company Shareholder nor Allied will
encourage employees to seek other employment. Within five (5) days of the filing
of the application specified in Section 4.1, Allied will provide written notice
to each employee that he or she may be terminated by Buyer effective as of the
Closing.
5.9. EMPLOYEE BENEFIT PLANS.
(a) Except as described in Schedule 5.9, Company has not at any time
established, sponsored, maintained, or made any contributions to, or been a
party to any contract or other arrangement or been subject to any statute or
rule requiring it to establish, maintain, sponsor, or make any contribution to,
(i) any "employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended, and regulations
thereunder ("ERISA")) ("Pension Plan"); (ii) any "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA) ("Welfare Plan"); or (iii) any deferred
compensation, bonus, stock option, stock purchase, or other employee benefit
plan, agreement, commitment, or arrangement ("Other Plan"). Company has no
obligation or liability (whether accrued, absolute, contingent, or unliquidated,
whether or not known, and whether due or to become due) with respect to any
"employee benefit plan" (as defined in Section 3(3) of ERISA), or Other Plan
that is not listed in Schedule 5.9.
(b) Each plan or arrangement listed in Schedule 5.9 (and any related
trust or insurance contract pursuant to which benefits under such plans or
arrangements are funded or paid) has been administered in all material respects
in compliance with its terms and in both form and operation is in compliance
with applicable provisions of ERISA, the Code, the Consolidated Omnibus Budget
Reconciliation Act of 1986 and regulations thereunder, and other applicable law.
Each Pension Plan listed in Schedule 5.9 has been determined by the Internal
Revenue Service to be qualified under Section 401(a) and, if applicable, Section
401(k) of the Code, and nothing has occurred or been omitted since the date of
the last such determination that resulted or could result
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in the revocation of such determination. To its knowledge Company has made all
required contributions or payments to or under each plan or arrangement listed
in Schedule 5.9 on a timely basis.
(c) The consummation of this Agreement (and the continued employment
by Buyer of the employees of Company) will not result in any liability to Buyer
for taxes, penalties, interest or any other claims resulting from any employee
benefit plan (as defined in Section 3(3) of ERISA) or Other Plan. In addition,
Company makes the following representations to the best of its knowledge (i) as
to all of its Pension Plans: (a) Company has not become liable to the PBGC under
ERISA under which a lien could attach to the assets of Company; (b) Company has
not ceased operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA; and (c) Company has not made a complete or partial
withdrawal from a multi-employer plan (as defined in Section 3(37) of ERISA) so
as to incur withdrawal liability as defined in Section 4201 of ERISA, and (ii)
all group health plans maintained by Company have been operated in material
compliance with Section 4980B(f) of the Code.
5.10. ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 5.10, to
the knowledge of Company (a) no Hazardous Substances have been treated, stored,
used, released or disposed of on the Studio Site or Transmitter Site in any
manner that would cause Company to incur material liability under any
Environmental Laws; (b) Company is not liable for cleanup or response costs with
respect to any present or past emission, discharge, or release of any Hazardous
Substances; (c) no "underground storage tank" (as that term is defined in
regulations promulgated by the federal Environmental Protection Agency) is used
in the operation of the Station or is located on the Studio Site or the
Transmitter Site; (d) there are no pending actions, suits, claims, legal
proceedings or any other proceedings based on environmental conditions or
noncompliance at the Studio Site or Transmitter Site, or any part thereof, or
otherwise arising from Company's activities involving Hazardous Substances; (e)
no notice, summons, citation, directive, letter or other communication regarding
Hazardous Substances has been received from any party concerning any intentional
or unintentional action or omission on the part of the Company; (f) there are no
conditions, facilities, procedures or any other facts or circumstances at the
Studio Site or Transmitter Site which constitute material noncompliance with
Environmental Laws; and (g) there are no structures, improvements, equipment,
activities, fixtures or facilities at the Studio Site or Transmitter Site which
are constructed with, use or otherwise contain Hazardous Substances, including,
but without limitation, friable asbestos or material amounts of polychlorinated
biphenyls.
5.11. COMPLIANCE WITH LAW. To the Company's knowledge there is no
outstanding complaint, citation, or notice issued by any Governmental Authority
asserting that Company is in material violation of any law, regulation, rule,
ordinance, order, decree or other material requirement of any Governmental
Authority (including any applicable statutes, ordinances or codes relating to
zoning and land use, health and sanitation, environmental protection,
occupational safety and the use of electric power) affecting the Business or
operations of the Station, and Company is in material compliance with all such
laws, regulations, rules, ordinances, decrees, orders and requirements. Without
limiting the foregoing:
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(a) The Station's transmitting and studio equipment is in all material
respects operating in accordance with the terms and conditions of the FCC
Licenses, and the rules, regulations, and policies of the Commission, including
all requirements concerning equipment authorization and human exposure to radio
frequency radiation.
(b) Company has, in the conduct of the Business, materially complied
with all applicable laws, rules and regulations relating to the employment of
labor, including those concerning wages, hours, equal employment opportunity,
collective bargaining, pension and welfare benefit plans, and the payment of
Social Security and similar taxes, and Company is not liable for any arrears of
wages or any tax penalties due to any failure to comply with any of the
foregoing.
(c) All ownership reports, employment reports, tax returns and other
material documents required to be filed by Company with the Commission or other
Governmental Authority have been filed; such reports and filings are accurate
and complete in all material respects; such material items as are required to be
placed in the Station's local public inspection file have been placed in such
file; all proofs of performance and measurements that are required to be made by
Company with respect to the Station's transmission facilities have been
completed and filed at the Station; and all material information contained in
the foregoing documents is true, complete and accurate as of the date thereof.
(d) Company has paid to the Commission the regulatory fees due for the
Station for the years 1994-96 and will timely pay the regulatory fee due for
1997.
5.12. LITIGATION. Except for proceedings affecting radio broadcasters
generally and except as set forth on Schedule 5.12, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
knowledge of Company, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the Business or the operations of the Station. Except as set forth on Schedule
5.12, there is no other litigation, action, suit, complaint, claim,
investigation or proceeding pending, or to the knowledge of Company, threatened
that may give rise to any claim against the Business or adversely affect
Company's ability to consummate the Transaction as provided herein.
5.13. INSOLVENCY PROCEEDINGS. No insolvency proceedings of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors, voluntary or involuntary, affecting Company, the Business or the
Station are pending or, to the knowledge of Company, threatened. Company has not
made an assignment for the benefit of creditors.
5.14. SALES AGREEMENTS. The Sales Agreements in existence on the date
hereof have been entered into in the ordinary course of the Business, at rates
consistent with Company's usual past practices and each Sales Agreement is for a
term no longer than 13 weeks or, if longer, is terminable by the Station upon
not more than 15 days notice.
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5.15. LIABILITIES. Except for the Allied Indebtedness and payables arising
in the ordinary course of business, there are no known liabilities or
obligations of Company relating to the Business or the Station, whether related
to tax or non-tax matters, except taxes not due to be paid.
5.16. SUFFICIENCY OF ASSETS. Except as disclosed separately in Schedule
5.16, the material assets currently used in the Business are in working
condition and are in operation and use in the ordinary course of the Business
and are sufficient for the operation of the Business as currently conducted. The
material broadcast-related assets of the Business are and, on the Closing Date
will be, sufficient to conduct the operation and business of the Station in the
manner in which it is currently being conducted; and no material adverse change
shall have occurred to the condition of such related broadcast assets.
5.17. CERTAIN INTERESTS AND RELATED PARTIES. Except as set forth in
Schedule 5.17 and except for the fact that Shareholder is an officer, director
and principal of Allied, (a) Shareholder has neither any material interest in
any property used in or pertaining to the Business, nor is indebted or otherwise
obligated to Company; (b) Company is not indebted or otherwise obligated to
Shareholder or others except for amounts due under arrangements made in the
ordinary course of business as to salary or reimbursement of ordinary business
expenses not unusual in amount or significance; (c) neither Company nor any
shareholder, officer or director of Company has any interest whatsoever in any
corporation, firm, partnership or other business enterprise which has had any
business transactions with Company relating to the Business or the Station; and
(d) no shareholder of Company has entered into any transactions with Company
relating to the Business or the Station. The consummation of the transactions
contemplated by this Agreement will not (either alone, or with the occurrence of
any termination or constructive termination of any arrangement, or with the
lapse of time, or both) result in any benefit or payment (severance or other)
arising or becoming due from Company to Shareholder after the Closing Date.
5.18. TAXES. The Company has timely filed with all appropriate Governmental
Authority all federal, state, local, and other tax or information returns and
tax reports (including, but not limited to, all income tax, unemployment
compensation, social security, payroll, sales and use, profit, excise,
privilege, occupation, property, ad valorem, franchise, license, school and any
other tax under the laws of the United States or of any state or any municipal
entity or of any political subdivision with valid taxing authority) due for all
periods ended on or before the date hereof. To Company's knowledge, Company has
paid in full all federal, state, commonwealth, foreign, local and other
governmental taxes, estimated taxes, interest, penalties, assessments and
deficiencies (collectively, "Taxes") which have become due pursuant to such
returns or without returns or pursuant to any assessments received by Company.
To Company's knowledge such returns and forms are true, correct and complete in
all material respects, and Company has no liability for any Taxes in excess of
the Taxes shown on such returns. Company is not a party to any pending action or
proceeding and, to the knowledge of Company, there is no action or proceeding
threatened by any Governmental Authority against Company for assessment or
collection of any Taxes, and no unresolved claim for assessment or collection of
any Taxes has been asserted against Company. The Company has not
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executed any agreement with any Governmental Authority extending the period for
assessment or collection of any Taxes. There are no liens for any Taxes on the
assets of the Company.
5.19. NO MISLEADING STATEMENTS. No provision of this Agreement relating to
Company, the Business, or Station or any Schedule contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact required to be stated in order to make the statement, in light of the
circumstances in which it is made, not misleading, and Company will promptly
disclose to Buyer any material fact that Company is obligated to disclose to
assure the continuing accuracy of the representations and warranties contained
in this Section 5 until the Closing Date. All Schedules attached hereto are
materially accurate and complete as of the date hereof.
5.20. BROKER. With the exception of Shareholder's and Company's brokerage
arrangement with Blackburn & Co., Inc. there is no broker or finder or other
person who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
of or action taken by Company. Allied will pay the brokerage fee due Blackburn &
Co., Inc. at Closing.
5.21. SUBSIDIARIES/AFFILIATES. The Company does not have any subsidiaries
or affiliates. The Company does not hold title to the stock of any other
corporation.
5.22. STOCK. The authorized capital stock of Company consists of 1,000
shares of common stock and 500,000 shares of preferred stock. There are
currently 100 shares of issued and outstanding common stock all of which are
owned by Shareholder and no shares of preferred stock of the Company are issued
and outstanding. At the Closing, Buyer will acquire good and marketable title to
and complete ownership of the Shares, free and clear of any Encumbrance. Other
than the Option Agreement, the Company has no outstanding options,
subscriptions, warrants, calls, commitments or agreements to issue or to
repurchase any shares of its stock or other securities, including any right of
conversion or exchange under any outstanding security or other instrument. There
are no unsatisfied preemptive rights in respect of the Shares.
5.23. PROPERTY. Schedule 5.23.1 lists the tangible personal property of
Company. The Company has and will have at Closing good and marketable title to
all of its assets, free and clear of all Encumbrances of any nature whatsoever,
except for taxes, assessments, governmental charges or levies on its property,
if such assessments, governmental charges or levies shall not at the time be due
and delinquent and except as permitted by agreements between the parties. The
Company owns or licenses all material trademarks, trade names, service marks,
copyrights, and all computer programs, software and other intangible rights and
property necessary to conduct its business in the ordinary course consistent
with past practices. All real estate owned or leased by Company is separately
listed on Schedule 5.23.2 and all material leasehold properties held by Company
as lessee are held under valid, binding and enforceable leases, subject only to
such exceptions as are not, individually or in the aggregate, material to the
Business. To the knowledge of the Company neither the whole nor any portion of
any of the leased real property is subject to any pending condemnation
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or similar proceeding by any Governmental Authority. The Company has all
consents, permits, licenses or certificates of occupancy pertaining to the
operations conducted on any leased real property the absence of which would have
a material adverse effect on the business, operations or financial condition of
the Company. The Company has not received written notification specifying the
existence of any violation (which has not been cured) of any building, zoning or
other law, ordinance or regulation in respect of the leased real property or
structures thereon or the use thereof.
5.24. CORPORATE RECORDS. The corporate records of Company have been made
available to Buyer and accurately represent the status of Company in all
material respects.
5.25. DIVIDENDS AND OTHER DISTRIBUTIONS. There has been no dividend or
other distribution of assets or securities whether consisting of money, property
or any other thing of value, declared, issued or paid subsequent to the date of
the most recent Statement described in Section 5.7, except as specifically
permitted herein.
5.26. NAMES; PRINCIPAL PLACE OF BUSINESS. The addresses of Company's chief
executive office and all of Company's additional places of business, and of all
places where any of the tangible personal property of Company is now located, or
has been located during the past 180 days, are correctly listed in Schedule
5.26. During the past five years, Company has not been known by or used, nor, to
the best of Company's knowledge, has any prior owner of the Station been known
by or used, any corporate, partnership, fictitious or other name in the conduct
of the Station's business or in connection with the ownership, use or operation
of the Station, except WYCB-AM or Broadcast Holdings, Inc.
6. REPRESENTATIONS WARRANTIES AND COVENANTS OF SHAREHOLDER.
The Shareholder hereby makes to and for the benefit of Buyer, the following
representations and warranties:
6.1. BINDING EFFECT. This Agreement constitutes the legally valid and
binding obligation of Shareholder, enforceable against him in accordance with
its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
6.2. OWNERSHIP OF STOCK. Shareholder is the sole shareholder of the Company
and Shareholder holds title to 100 shares of common stock and no shares of
preferred stock. Such shares are owned free and clear of any Encumbrance. The
Shares are validly issued, fully paid and nonassessable. Other than the Option
Agreement, Shareholder is not a party to any outstanding options, subscriptions,
warrants, calls, commitments or agreements relating to the disposition of any
shares of stock in the Company, including any right of conversion or exchange
under any outstanding security or other instrument. There are no preemptive
rights to which Shareholder is entitled pursuant to the Articles of
Incorporation.
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6.3. VALIDITY OF OPTION AGREEMENT. The Option Agreement is in full force
and effect and has not been previously exercised, revoked, canceled or
terminated.
7. BUYER'S REPRESENTATIONS WARRANTIES AND COVENANTS. Buyer hereby makes to and
for the benefit of Company and Shareholder, the following representations,
warranties and covenants:
7.1. EXISTENCE AND POWER. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to assume and perform this Agreement.
7.2. BINDING EFFECT. The execution, delivery and performance by Buyer of
this Agreement, and each other document, agreement and instrument to be executed
and delivered by Buyer in connection with this Agreement, specifically including
without limitation the Note, the Guaranty and Security Agreement, the Stock
Pledge Agreement and the UCC's, (collectively, the "Buyer Documents") has been
or will be duly authorized by all necessary corporate action, and copies of
resolutions of the Buyer's Board of Directors, certified by Buyer's Secretary,
shall be delivered to Shareholder at Closing. No other corporate action by Buyer
is required for Buyer's execution, delivery and performance of this Agreement or
any of the Buyer Documents. This Agreement has been, and each of the Buyer
Documents will be, duly and validly executed and delivered by Buyer to Company
and constitutes a legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, subject to bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium and similar laws relating to or affecting
creditors' and other obligees' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
7.3. NO VIOLATION. None of (a) the execution, delivery and performance by
Buyer of this Agreement or any of the Buyer Documents, (b) the consummation of
the Transaction, or (c) Buyer's compliance with the terms and conditions hereof
will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms or conditions of, constitute a default under, or
violate (i) Buyer's articles of incorporation or bylaws or (ii) any judgment,
decree, order, consent agreement, indenture, lease or other instrument to which
Buyer is a party or by which Buyer is legally bound.
7.4. LITIGATION. There is no litigation, action, suit, complaint,
proceeding or investigation, pending or, to the knowledge of Buyer, threatened
that may adversely affect Buyer's ability to consummate the Transaction as
provided herein. Buyer is not aware of any facts that could reasonably result in
any such proceedings.
7.5. LICENSEE QUALIFICATIONS. To the knowledge of Buyer there is no fact
that would, under the rules and regulations of the Commission, disqualify Buyer
from being the transferee of the Shares or the owner and operator of the
Station. Should Buyer become aware of any such fact, it
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will promptly inform Company, and Buyer will use commercially reasonable efforts
to remove any such disqualification. Buyer will not take any action that Buyer
knows, or has reason to believe, would result in such disqualification.
7.6. FINANCIAL QUALIFICATIONS. Buyer has the financial capacity to perform
its obligations hereunder.
7.7. SUBSIDIARY STATUS. As of the Closing, Buyer will be an Unrestricted
Subsidiary as such term is defined in the Indenture dated as of May 15, 1997,
with respect to Radio One, Inc.'s 12% Senior Subordinated Notes due 2004.
8. COVENANTS WITH RESPECT TO CONDUCT OF THE COMPANY.
8.1. ACCESS. Between the date hereof and the Closing Date, Company shall
give Buyer and representatives of Buyer reasonable access during normal business
hours to the Business, the Station, the employees of Company (with the prior
consent of Company not to be unreasonably withheld) and the books and records of
Company relating to the Business and the operation of the Station. It is
expressly understood that, pursuant to this Section, Buyer, at its expense,
shall be entitled to conduct such engineering inspections of the Station, such
environmental assessments and surveys of the Studio Site and the Transmitter
Site (subject to the landlord's prior approval, which Company will cooperate in
obtaining, and provided Buyer restores such sites after such assessments), and
such reviews of Company's financial records as Buyer may desire, so long as the
same do not unreasonably interfere with Company's operation of the Business. No
inspection or investigation made by or on behalf of Buyer, or Buyer's failure to
make any inspection or investigation, shall affect Company's representations,
warranties and covenants hereunder or be deemed to constitute a waiver of any of
those representations, warranties and covenants.
8.2. MATERIAL ADVERSE CHANGES; FINANCIAL STATEMENTS. Through the Closing
Date:
(a) Company shall promptly notify Buyer of any event of which it obtains
knowledge which has had or is likely to have a material adverse effect on the
Business.
(b) Company shall furnish to Buyer (i) monthly cash-based income statements
for Company within fifteen (15) days of the end of the month and (ii) such other
reports as Buyer may reasonably request relating to Company.
(c) Company shall promptly furnish to Buyer copies of all Tax Returns or
excerpts thereof filed with any Governmental Authority relating to Company.
8.3. CONDUCT OF BUSINESS. Between the date that this Agreement is executed
and the Closing Date, Company covenants and agrees that Company shall not
without the prior written consent of Buyer, unless otherwise permitted by this
Agreement:
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(a) conduct the Business in any manner except in the ordinary course
consistent with past practices;
(b) issue, sell or deliver, split, reclassify, combine or otherwise adjust,
any stock, bonds or other securities of which Company is the issuer (whether
authorized and unissued or held in treasury), or grant or issue any options,
warrants or other rights (including convertible securities) calling for the
issue thereof;
(c) borrow any funds or incur, assume or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability
(absolute or contingent), except with respect to liabilities and obligations
arising in the ordinary course of business and consistent with past amounts and
practice;
(d) mortgage or pledge any of its assets, tangible or intangible;
(e) except in the ordinary course of business, sell, lease, exchange or
otherwise transfer, or agree to sell, lease, exchange or otherwise transfer, any
of its material assets, property or rights or cancel any debts or claims;
(f) grant any right of first refusal, option or similar contract to
purchase any of the assets, property or rights used in the Business or held by
Company;
(g) except in the ordinary course of business or as required by Law, make
or agree to any material amendment to or termination of any FCC License relating
to the Business or to which Company is a party;
(h) except as required by Law, adopt, any profit-sharing, bonus, deferred
compensation, insurance, pension, retirement, severance or other employee
benefit plan, payment or arrangement or, except in the ordinary course of
business, enter into any employment, consulting or management contract;
(i) merge or consolidate with any other corporation, acquire control of any
other corporation or business entity, or take any steps incident to, or in
furtherance of, any of such actions, whether by entering into an agreement
providing therefore or otherwise;
(j) make any tax election inconsistent with past practice or Buyer's
interests, or except as required by Law or GAAP, make any material alteration in
the manner of keeping its books, accounts or records, or in the accounting
practices therein reflected;
(k) solicit, either directly or indirectly, initiate, encourage or accept
any offer for the purchase or acquisition of the Business, Company or any of
their respective assets by any party other than Buyer;
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(l) set aside or pay any dividend on Shares or property or directly or
indirectly redeem, purchase or otherwise acquire any of its own stock or debt,
or make any other distributions of its assets to its Shareholder provided that,
one day prior to the Closing, Company shall be specifically permitted to
dividend or otherwise pay to Allied the amount of all cash held by the Company,
the Business or the Station;
(m) amend or alter the Certificate of Incorporation or Bylaws or other
charter documents of Company;
(n) enter into, extend (except as required by the terms thereof) or amend
any Material Contract, other than with respect to Contracts for the purchase,
production, distribution or licensing of programming in the ordinary course of
business and consistent with prior practice;
(o) enter into any other transactions involving liabilities of more than
$25,000.00 on the part of Company;
(p) terminate without comparable replacement or fail to renew any insurance
coverage applicable to the assets or properties of Company; or
(q) compromise or settle any claims or rights for or having a value, in
excess of $25,000.00.
8.4. DAMAGE.
(A) RISK OF LOSS. The risk of loss or damage, confiscation or
condemnation of the Business, the Station and all associated assets shall be
borne by Company at all times prior to Closing. In the event of material loss or
damage, Company shall promptly notify Buyer thereof and use commercially
reasonable efforts to repair, replace or restore the lost or damaged property to
its former condition as soon as possible. If the cost of repairing, replacing or
restoring any lost or damaged property is Twenty-Five Thousand Dollars ($25,000)
or less, and Company has not repaired, replaced or restored such property prior
to the Closing Date, Closing shall occur as scheduled and Buyer may deduct from
the principal amount of the Promissory Note to be delivered at Closing the
amount necessary to restore the lost or damaged property to its former
condition. If the cost to repair, replace, or restore the lost or damaged
property exceeds Twenty-Five Thousand Dollars ($25,000), and Company has not
repaired, replaced or restored such property prior to the Closing Date to the
satisfaction of Buyer, Buyer may, at its option:
(1) elect to consummate the Closing in which event Buyer may deduct
from the principal amount of the Promissory Note to be delivered at Closing the
amount necessary to restore the lost or damaged property to its former condition
less the proceeds payable under any applicable insurance policies with respect
to such claim; or
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(2) elect to postpone the Closing, with prior consent of the
Commission if necessary, for such reasonable period of time (not to exceed
ninety (90) days) as is necessary for Company to repair, replace or restore the
lost or damaged property to its former condition. If, after the expiration of
such extension period the lost or damaged property has not been fully repaired,
replaced or restored to Buyer's reasonable satisfaction, Buyer may terminate
this Agreement, and the parties shall be released and discharged from any
further obligation hereunder.
(B) FAILURE OF BROADCAST TRANSMISSIONS. Company shall give prompt
written notice to Buyer if any of the following (a "Specified Event") shall
occur and continue for a period of more than four (4) hours (except for routine
maintenance): (i) the transmission of the regular broadcast programming of the
Station in the normal and usual manner is interrupted or discontinued; or (ii)
the Station is operated at less than its licensed antenna height above average
terrain or at less than eighty percent (80%) of its licensed effective radiated
power. If, prior to Closing, the Station has not operated at its licensed
operating parameters for more than thirty-six (36) hours (or, in the event of
force majeure or utility failure affecting generally the market served by the
Station, ninety-six (96) hours), whether or not consecutive, during any period
of thirty (30) consecutive days, or if there are three (3) or more Specified
Events each lasting more than four (4) consecutive hours, then Buyer may, at its
option: (i) terminate this Agreement, or (ii) proceed in the manner set forth in
Section 8.4(a)(1) or 8.4(a)(2). In the event of termination of this Agreement by
Buyer pursuant to this Section, the parties shall be released and discharged
from any further obligation hereunder.
(C) RESOLUTION OF DISAGREEMENTS. If the parties are unable to agree
upon the extent of any loss or damage, the cost to repair, replace or restore
any lost or damaged property, the adequacy of any repair, replacement, or
restoration of any lost or damaged property, or any other matter arising under
this Section, if the amount in issue is less than $25,000, Buyer shall deduct
its reasonable estimated cost (less proceeds payable under any applicable
insurance policy) from the Purchase Price. If either party believes the amount
to be greater than $25,000 and Buyer is seeking compensation from Company for
that greater amount, then the parties shall enter into negotiations in an
attempt to reach a satisfactory resolution. If after a thirty-day negotiation
period the parties fail to reach an agreement, then either Company or Buyer may
terminate this Agreement and shall be released and discharged from any further
obligation hereunder.
(D) ADMINISTRATIVE VIOLATIONS. If Company receives any finding, order,
complaint, citation or notice prior to Closing which states that any aspect of
the Business' operation violates or may violate any rule, regulation or order of
the Commission or of any other Governmental Authority (an "Administrative
Violation"), including, any rule, regulation or order concerning environmental
protection, the employment of labor or equal employment opportunity, Company
shall promptly notify Buyer of the Administrative Violation, use commercially
reasonable efforts to remove or correct the Administrative Violation, and be
responsible prior to Closing for the payment of all costs associated therewith,
including any fines or back pay that may be assessed.
8.5. CONTROL OF STATION. The Transaction shall not be consummated until
after the Commission has given its written consent thereto and between the date
of this Agreement and the
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Closing Date, Shareholder and Company shall control, supervise and direct the
operation of the Station.
8.6. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. From the date
of Closing and for a period of three (3) years thereafter, Allied shall provide
Buyer with such cooperation and information as Buyer shall reasonably request in
Buyer's: (i) filing of any tax return, amended return or claim or refund, (ii)
determining a liability for taxes or a right to a refund of taxes, (iii)
participating in or conducting any audit or proceeding in respect of taxes or
(iv) analysis and review of the Statements. Such cooperation and information
shall include providing copies of relevant tax returns or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by tax authorities. Allied shall
make the Company's independent accounting firm and the information relied upon
by that firm, available to provide explanations of any documents or information
provided hereunder. Such cooperation shall not mean that Allied is required to
bear responsibility for any out-of-pocket expenses incurred (although Allied
remains liable for its indemnification obligations if any under Section 10.1).
Should Allied's cooperation pursuant to this Section result in any out-of-pocket
expense, then Allied shall be entitled to reimbursement from Buyer. However, if
Allied's total out-of-pocket expense would at any time exceed $10,000, then
Allied shall inform Buyer prior to incurring such expense. Should Buyer decline
to accept responsibility for total out-of-pocket expenses in excess of $10,000,
then Allied's cooperation pursuant to this Section shall be limited to efforts
that do not result in Allied incurring out-of-pocket expenses in excess of
$10,000. Any information obtained under this Section shall be kept confidential,
except as may be otherwise necessary in connection with the filing of tax
returns or claims for refund or in conducting an audit or other proceeding.
8.7. BANK ACCOUNTS. Buyer will establish a new bank account on behalf of
the Company upon Closing. Allied shall maintain the preexisting bank account
solely to collect accounts receivable and pay accounts payable and such
preexisting account shall be closed within one hundred eighty (180) days of
Closing.
8.8. CLOSING OBLIGATIONS. Company and Buyer shall make commercially
reasonable efforts to satisfy the conditions precedent to Closing.
8.9. TIME BROKERAGE AND OPERATING AGREEMENT. After execution of this
Agreement, Company and Buyer shall cooperate in good faith and use commercially
reasonable efforts to enter into a Time Brokerage Agreement (?TBA) that would be
effective after execution of this Agreement and would permit Buyer to program up
to 24 hours per day, 7 days per week of the Station's programming subject to
Company's obligation to provide programming responsive to the community's needs.
Such agreement would contain terms and conditions standard in the broadcasting
industry for these types of arrangements, provided, that the TBA shall also
contain provisions modifying or waiving certain representations and warranties
of the Company with respect to conditions or events that may be modified
consistent with Buyer's obligation under the TBA.
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9. CONDITIONS PRECEDENT.
9.1. MUTUAL CONDITIONS. The respective obligations of Buyer, Shareholder,
Company and Allied to consummate the Transaction are subject to the satisfaction
of each of the following conditions:
(A) APPROVAL OF TRANSFER OF CONTROL APPLICATION. The Commission shall
have granted the Transfer of Control Application, and such grant shall have
become a Final Order.
(B) ABSENCE OF LITIGATION. As of the Closing Date, no litigation,
action, suit or proceeding enjoining, restraining or prohibiting the
consummation of the Transaction shall be pending before any court, the
Commission or any other Governmental Authority or arbitrator; provided, however,
that this Section may not be invoked by a party if any such litigation, action,
suit or proceeding was solicited or encouraged by, or instituted as a result of
any intentional act or omission of, such party.
9.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION.
In addition to the satisfaction of the mutual conditions contained in
Section 9.1, the obligation of Buyer to consummate the Transaction is subject,
at Buyer's option, to the satisfaction or waiver by Buyer of each of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES. Unless otherwise set forth
therein, the representations and warranties of Company and Shareholder to Buyer
shall be true, complete, and correct in all material respects as of the Closing
Date with the same force and effect as if then made.
(B) COMPLIANCE WITH CONDITIONS. All of the terms, conditions and
covenants to be complied with or performed by Company and Shareholder on or
before the Closing Date under this Agreement and Company Documents shall have
been duly complied with and performed in all material respects.
(C) DISCHARGE OF LIENS.
(1) Company shall have obtained and delivered to Buyer, at Company's
expense, at least 10 days prior to Closing, a report prepared by C.T.
Corporation System (or similar firm reasonably acceptable to Buyer) showing the
results of searches of lien, tax, judgment and litigation records, demonstrating
that the Company and Business are free and clear of all liens, security
interests and encumbrances except the Allied Indebtedness) and any Indebtedness
to be satisfied at Closing and that there are no judgments or pending
litigation. The record searches described in the report shall have taken place
no more than 15 days prior to the Closing Date.
(2) Buyer shall have received a certificate, dated the Closing Date,
and signed by the President of Company to the effect that Company has no
Indebtedness except payables
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in the ordinary course and the Allied Indebtedness which shall be discharged in
full at Closing. Buyer shall also have received such releases and UCC
termination statements as it may reasonably request in connection with the
discharge of any Indebtedness, including the Allied Indebtedness.
(D) THIRD-PARTY CONSENTS. Company shall have obtained any requisite
third-party consents relating to Material Contracts or other approvals which may
be necessary to consummate the Transaction. The consents from each landlord
under the leases for the Studio Site and the Transmitter Site shall state (i)
that such lease is in full force and effect and has not been amended or
modified; (ii) the date to which all rent and/or other payments due thereunder
have been paid; and (iii) that Company is not in breach or default under such
lease, and that no event has occurred that, with notice or the passage of time
or both, would constitute a breach or default thereunder by Company.
(E) FINANCIAL STATEMENTS. The information set forth in the Station's
Statements for the year ending December 31, 1996, and for the period ending
thirty (30) days prior to the Closing Date fairly and accurately reflect the
performance and results of operation of the Business and the Station for those
periods.
(F) SALES AND CUSTOMER INFORMATION. The sales and customer information
provided in Schedule 9.2 are accurate and complete in all material respects.
(G) OPINION OF COMPANY'S COUNSEL. At Closing, Company and Shareholder
shall deliver to Buyer the written opinion or opinions of Company's counsel,
dated the Closing Date, in scope and form satisfactory to Buyer, to the
following effect:
(i) Company is a corporation validly existing and in good standing
under the laws of the District of Columbia and has all requisite corporate power
and authority to enter into and perform this Agreement.
(ii) This Agreement the Note, the Guaranty and Security Agreement,
the UCCs, the Stock Pledge Agreement, and the Warrant (the "Security Documents")
have been duly executed and delivered by Company and such action has been duly
authorized by all necessary corporate action. This Agreement and the Security
Documents constitute the legal, valid, and binding obligation of Company,
enforceable against Company in accordance with their terms, subject to
bankruptcy, reorganization, fraudulent conveyance, insolvency, moratorium and
similar laws relating to or affecting creditors' and other obligees' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles.
(iii) None of (a) the execution and delivery of this Agreement and
the Security Documents, (b) the consummation of the Transaction, or (c)
compliance with the terms and conditions of this Agreement will, with or without
the giving of notice or lapse of time or both, conflict with, breach the terms
and conditions of, constitute a default under, or violate Company's articles of
incorporation or bylaws, any law, rule, regulation or other requirement of any
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Governmental Authority, or any judgment, decree, order, material agreement,
material lease or other material instrument known to counsel to which Company is
a party or by which Company, the Business or the Station is bound.
(iv) To counsel's knowledge, counsel is not representing or advising
Company as to any pending or threatened suit, action, claim or proceeding that
questions or may affect the validity of any action to be taken by Company
pursuant to this Agreement or that seeks to enjoin, restrain or prohibit Company
from carrying out the Transaction.
(v) To counsel's knowledge, counsel is not representing or advising
Company as to any outstanding judgment, or any pending or threatened suit,
action, claim or proceeding (other than proceedings affecting radio broadcasters
generally) that could reasonably be expected to have an adverse effect upon the
Station's assets or upon the business or operations of the Station after
Closing.
(vi) Company is the authorized holder of the FCC Licenses, the FCC
Licenses are in full force and effect, and the FCC Licenses are not the subject
of any pending license renewal application. The FCC Licenses set forth on
Schedule 5.4 constitute all FCC licenses and authorizations issued in connection
with the operation of the Station. There are no applications pending before the
Commission with respect to the Station.
(vii) The Commission has consented to the assignment of the FCC
Licenses to Buyer and that consent has become a Final Order.
(viii) To the best of such Counsel's knowledge, there is no
Commission investigation, notice of apparent liability or order of forfeiture,
pending or outstanding against the Station, or any complaint, petition to deny
or proceeding against or involving Company or the Station pending before the
Commission.
(ix) Shareholder holds title to 100 shares of common stock and no
shares of preferred stock, and such Shares are owned free and clear of any
Encumbrance. The Shares are validly issued, fully paid and nonassessable. The
Shares constitute all the issued and outstanding shares of capital stock of
Company. To counsel's knowledge, there are no outstanding stock options or stock
appreciation rights granted by Shareholder or Company to any person or entity
exercisable now or in the future. To counsel's knowledge, Shareholder has no
outstanding subscriptions, warrants, calls, commitments or agreements to issue
or to repurchase any shares of his stock or other securities, including any
right of conversion or exchange under any outstanding security or other
instrument. There are no unsatisfied preemptive rights to which Shareholder is
entitled.
The foregoing opinions shall be for the benefit of and may be relied on by
Buyer and Buyer's lenders (specifically identified by Buyer on or before the
Closing Date). In rendering such opinions, Company's counsel may rely upon: (a)
corporate records of Company, (b) files and records of the FCC, (c) certificates
of public officials; and (d) certificates and representations of the Company and
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its officers. The opinion may be given as if the law of the District of Columbia
applicable to transactions in that jurisdiction applies.
(H) FINAL ORDER. The Commission's action granting the Transfer of
Control Application shall have become a Final Order.
(I) CLOSING DOCUMENTS. At the Closing Company and Shareholder shall
deliver to Buyer (i) such instruments of conveyance as are necessary to vest in
Buyer title to the Shares, all of which documents shall be dated as of the
Closing Date, duly executed by Company and in form reasonably acceptable to
Buyer; (ii) a certificate, dated the Closing Date, executed by Company's
President certifying as to those matters set forth in Section 9.2(a) and (b);
and (iii) copies of Company's corporate resolutions authorizing the Transaction,
each certified as to accuracy and completeness by Company's Secretary.
(J) RESIGNATION OF DIRECTORS AND OFFICERS. All the directors and
officers of Company identified in an Incumbency Certificate executed by the
President, shall have submitted their resignations in writing to Company. Such
resignations shall be effective as of the Closing.
(K) STOCK CERTIFICATES. Buyer shall receive at Closing duly executed
stock certificates for the shares documenting transfer of the Shares to Buyer.
(L) RECORDS. Buyer shall receive at Closing the original corporate
records of Company and original copies of the Station Records.
(M) INSURANCE POLICIES. Buyer shall receive at Closing all contracts
of insurance (including any cash surrender value thereof).
(N) BROKERAGE FEE. Company shall have paid at Closing the fee due to
Blackburn & Co., Inc.
(O) ACCOUNTS PAYABLE. Allied shall deliver a document stating that all
Accounts Payable that have accrued up until the date of Closing shall be
satisfied within 30 days of receipt of notice that the Account Payable is due.
(P) TRADE AND BARTER. At the Closing, Company shall deliver a
certificate to the effect that all advertising time pursuant to trade and barter
agreements entered into prior to Closing shall have been fully satisfied and
that there is no remaining obligation to provide advertising time pursuant to
such contracts.
(Q) ALLIED INDEBTEDNESS. At the Closing, the Allied Indebtedness shall
be discharged, all loan documents shall be marked as paid, all pledged
collateral shall be returned to the Company and any financing statements
required to release liens on the Company's assets shall be executed by Allied
and delivered to the Company.
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9.3. ADDITIONAL CONDITIONS TO COMPANY'S SHAREHOLDER'S AND ALLIED'S
OBLIGATION. In addition to satisfaction of the mutual conditions contained in
Section 9.1 the obligation of Company, Shareholder and Allied to consummate the
Transaction is subject, at Company's, Shareholder's and Allied's option, to the
satisfaction or waiver by Company, Shareholder and Allied of each of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES. Unless otherwise set forth
therein, the representations and warranties of Buyer to Company and Shareholder
shall be true, complete and correct in all material respects as of the Closing
Date with the same force and effect as if then made.
(B) COMPLIANCE WITH CONDITIONS. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the Closing
Date under this Agreement shall have been duly complied with and performed in
all material respects.
(C) OPINION OF BUYER'S COUNSEL. At Closing, Buyer shall deliver to
Shareholder the written opinion of Buyer's counsel, dated the Closing Date, in
scope and form reasonably satisfactory to Company, to the following effect:
(i) Buyer is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with all requisite
corporate power and authority to enter into and perform this Agreement.
(ii) This Agreement, the Note, the Guaranty and Security Agreement,
the UCCs, the Stock Pledge Agreement, and the Warrant (the "Security Documents")
have been duly executed by Buyer, and such action has been duly authorized by
all necessary corporate action. This Agreement and the Security Documents
constitute the legal, valid, and binding obligation of Buyer, enforceable
against Buyer in accordance with their terms, subject to bankruptcy,
reorganization, fraudulent conveyance, insolvency, moratorium, and similar laws
relating to or affecting creditors' and other obligees' rights generally and the
exercise of judicial discretion in accordance with general equitable principles.
(iii) None of (a) the execution and delivery of this Agreement and
the Security Documents, (b) the consummation of the Transaction, or (c)
compliance with the terms and conditions of this Agreement will, with or without
the giving of notice, lapse of time or both, conflict with, breach the terms and
conditions of, constitute a default under or violate Buyer's articles of
incorporation or by-laws, or, to the knowledge of counsel, any judgment, decree,
order, agreement, indenture, lease or other instrument to which Buyer is a party
or by which Buyer may be bound identified by Buyer on a certificate attached to
the opinion as being material to the Transaction.
(iv) To the knowledge of counsel, no suit, action or proceeding is
pending or threatened that questions or may affect the validity of any action to
be taken by Buyer pursuant
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to this Agreement, or that seeks to enjoin, restrain or prohibit Buyer from
carrying out the Transaction.
The foregoing opinions shall be for the benefit of and may be relied on by
Shareholder. In rendering such opinions, Buyer's counsel may rely upon such
corporate records of Buyer, such certificates of public officials and officers
of Buyer. Any opinion concerning the enforceability of this Agreement may be
based on the laws of the District of Columbia applicable to transactions in that
jurisdiction.
(D) PAYMENT. Buyer shall have delivered executed copies of:
(i) the Promissory Note;
(ii) the Stock Pledge Agreement;
(iii) the Guaranty and Security Agreement;
(iv) the Warrant; and
(v) UCC statements to secure the pledge of stock and assets of the
Company.
(E) CLOSING DOCUMENTS. Buyer shall deliver to Company at the Closing
(i) copies of Buyer's corporate resolutions authorizing the Transaction
certified as to accuracy and completeness by Buyer's Secretary; and (ii) a
certificate, dated the Closing Date, executed by Buyer's President certifying as
to those matters set forth in Section 9.3(a) and (b).
(F) ACCOUNTS RECEIVABLE. Buyer shall deliver a document stating that
all Accounts Receivable that have accrued up until the date of Closing and all
cash on hand, if any, shall be the property of Allied from and after the date of
Closing and stating that the Buyer shall collect Accounts Receivable on Allied's
behalf in a reasonable and customary manner.
10. INDEMNIFICATION.
10.1. OBLIGATIONS OF ALLIED. Subject to the limitations of Sections 10.6
and 10.7, Allied agrees to indemnify and hold harmless (after the Closing)
Buyer, and its respective directors, officers, employees, affiliates, agents and
assigns from and against any and all Loss of Buyer or Company, directly or
indirectly, resulting from, based upon or arising out of:
(a) any inaccuracy in or breach of any of the representations or
warranties made by Company or Shareholder in or pursuant to this Agreement; or
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(b) the failure of Allied, Shareholder or Company to perform any
covenant or obligation of this Agreement relating to the period before the
Closing Date or of Allied after the Closing Date; or
(c) any liability for Taxes or Indebtedness of Company incurred prior
to the Closing; or
(d) any liability for the funding of, payment from or claim against
any Employee Benefit Plans arising prior to the Closing Date; or
(e) third party claims resulting from the actions of Shareholder or
Company in the conduct of the Business prior to the Closing Date.
10.2. OBLIGATIONS OF BUYER. Buyer agrees to indemnify and hold harmless
(after the Closing) Shareholder from and against any Loss of Shareholder,
directly or indirectly, resulting from, based upon or arising out of:
(a) any inaccuracy in or breach of any of the representations,
warranties, covenants or agreements made by Buyer in this Agreement; or
(b) except as to matters as to which Buyer is indemnified under the
terms of Section 10.1, third party claims (in contract, tort or otherwise)
resulting from the actions of Buyer or Company and its conduct of the Business
after Closing; or
(c) any liability for Taxes or Indebtedness of Company incurred after
the Closing.
10.3. PROCEDURE.
(a) NOTICE. Any party seeking indemnification with respect to any Loss
pursuant to Section 10.1 or 10.2 shall give notice to the party required to
provide indemnity hereunder (the "Indemnifying Party"); provided however that
any delay in giving notice shall not release the Indemnifying Party from its
obligations (i) except to the extent the Indemnifying Party is actually
prejudiced thereby or (ii) unless the Indemnifying Party is thereby precluded
from defending or approving settlement of the claim.
(b) DEFENSE. If any claim against an Indemnified Party shall arise by
reason of any claim made by third parties against it, the Indemnifying Party
shall have the right to assume the defense of the matter giving rise to the
claim for indemnification through counsel of its selection reasonably acceptable
to the Indemnified Party at the Indemnifying Party's expense, and the
Indemnified Party shall have the right, at its own expense, to employ counsel to
represent it, which counsel shall act in an advisory capacity only. The
Indemnified Party shall cooperate fully to make available to the Indemnifying
Party all pertinent information under the Indemnified Party's control
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as to the claim and shall make its appropriate personnel, if any, available for
any discovery, trial or appeal. If the Indemnifying Party fails or refuses to
undertake the defense within 30 days after receiving the indemnification notice,
the Indemnified Party shall have the right to assume the defense of such matter
on behalf of and for the account of the Indemnifying Party; provided, however,
that unless the Indemnifying Party has refused to undertake the defense, the
Indemnified Party shall not settle or compromise any claim without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. The Indemnifying Party may settle without the
consent of the Indemnified Party any claim for money at any time, if at its sole
expense and if there is no adverse impact on the Indemnified Party, no fault is
assessed against the Indemnified Party and the Indemnified Party is
unconditionally released from all further potential liability in connection
therewith.
10.4. REMEDIES CUMULATIVE. Each party to this Agreement shall have and
retain all rights and remedies set forth in this Agreement and all of the rights
and remedies such parties have at law or equity.
10.5. NOTICE. Each party agrees to notify the other of any liabilities,
claims or misrepresentations, breaches or other matters covered by this Section
10 upon discovery or receipt of notice thereof.
10.6. THRESHOLD CONCERNING SECTION 10.1. Notwithstanding anything to the
contrary in Section 10.1, the parties shall not be entitled to indemnity under
Section 10.1(a) unless the aggregate Loss indemnified against thereunder exceeds
$25,000.00 (in which case, the Indemnified Party shall be entitled to recovery
from the Indemnifying Party the full amount of the Loss).
10.7. SURVIVAL OF REPRESENTATIONS. The representations and warranties of
the parties set forth in this Agreement or in any certificate, document or
instrument delivered in connection herewith shall survive the execution and
delivery of this Agreement and the Closing hereunder. Notwithstanding the
preceding sentence, any claims or actions with respect thereto shall terminate
unless notice of such claim or action is given to the party against whom
indemnification is sought within one year of the Closing Date, unless such
claims arise under Sections 5.1, 5.2, or 5.4, in which case the survival period
shall be eighteen (18) months, or unless such claims arise under Sections 5.10,
5.18, 5.22, 5.23 and 6.2, in which case the survival period shall be three (3)
years.
10.8. TAX RETURNS.
(A) PREPARATION AND FILING OF RETURNS FOR PRE-CLOSING PERIODS. Company
shall be responsible for the initial preparation and timely filing of all
Federal, State, and local income tax returns of the Company for taxable periods
actually ending on or before the Closing Date. Buyer shall have the right,
directly and through its designated representatives, to review at its expense
any such returns that pertain to the Company at least 30 days prior to the
filing thereof. Company agrees not to take any position or make any election on
any such return inconsistent with prior reporting practices without the prior
written consent of Buyer, if the effect of any such election or position
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may be to increase the Taxes of the Company thereof from taxable periods (or
portions thereof) beginning after the Closing Date or to file for an extension
on the due date for any tax return without first obtaining Buyer's consent.
Allied will forward any "separate company" state and local returns due after the
Closing Date to Buyer, together with any necessary payment of Tax, interest or
penalties, if applicable, for signature and filing at least 15 days prior to the
due date of such returns.
(B) PREPARATION AND FILING OF RETURNS FOR POST-CLOSING PERIODS. Buyer
shall cause to be prepared, and filed, all income tax returns of the Company for
all taxable periods beginning and ending after the Closing.
10.9. ALLOCATION OF TAX LIABILITY.
(A) To the extent permitted by applicable law, the parties hereto
agree to cause federal, state and local tax periods of the Company to be closed
at the close of business on the Closing Date. In the event applicable law does
not permit the closing of any such period, the allocation of tax liability shall
be made in accordance with Section 10.9 (b).
(B) In the case of a tax return for the taxable period beginning
before and ending after the Closing Date ("Overlap Period") based upon income or
gross receipts, the amount of taxes attributable to any Pre-Closing Period or
Post-Closing Period included in the Overlap Period shall be determined by
closing the books of the Company as of the close of business on the Closing Date
and by treating each of such Pre-Closing Period and Post-Closing Period as a
separate taxable year, except that exemptions, allowances or deductions that are
calculated on an annual basis shall be apportioned on a per diem basis. If the
liability for the Taxes for an Overlap Period is determined on a basis other
than income or gross receipts, the amount of Taxes attributable to any
Pre-Closing Period included in the Overlap Period shall be equal to the amount
of Taxes for the Overlap Period multiplied by a fraction, the numerator of which
is the number of days in the Pre-Closing Period included in the Overlap Period
and the denominator of which is the total number of days in the Overlap Period,
and the amount of such Taxes attributable to any Post-Closing Period included in
an Overlap Period shall be the excess of the amount of Taxes for the Overlap
Period over the amount of Taxes attributable to the Pre-Closing Period.
10.10. ACCOUNTS PAYABLE. Following the Closing Date, Allied shall promptly
pay all Accounts Payable arising from the operation of the Company, the Business
or the Station prior to the Closing Date.
11. DEFAULT AND REMEDIES.
11.1. OPPORTUNITY TO CURE. If any party believes the other to be in
material breach hereunder, the former party shall provide the other with written
notice specifying in reasonable detail the nature of such breach. If the
material breach has not been cured by the earlier of: (a) the Closing Date, or
(b) within 20 days after delivery of that notice (or such additional reasonable
time as the circumstances may warrant provided the party in breach undertakes
diligent, good faith efforts to
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cure the breach within such 20-day period and continues such efforts
thereafter), then the party giving such notice may consider the other party to
be in default and exercise the remedies available to such party pursuant to this
Section, subject to the right of the other party to contest the alleged default
through appropriate proceedings.
11.2. COMPANY'S, SHAREHOLDER'S AND ALLIED'S REMEDIES. Buyer recognizes that
if the Transaction is not consummated as a result of Buyer's default, Company
and Allied may be entitled to compensation the extent of which is difficult and
impractical to ascertain. To avoid this problem, the parties agree that, if the
Transaction is not consummated due to the default of Buyer, then Company,
Shareholder and Allied, provided that neither Company, Allied nor Shareholder is
in default or has otherwise failed to comply with their respective obligations
under this Agreement, shall be entitled to payment from Buyer of One Hundred
Thousand Dollars ($100,000). The parties agree that this sum shall constitute
liquidated damages and shall be in lieu of any other relief to which Company,
Shareholder and/or Allied might otherwise be entitled due to Buyer's failure to
consummate the Transaction as a result of a default by Buyer.
11.3. BUYER'S REMEDIES. Company, Allied and Shareholder agree that the
Shares represent an interest in unique property that cannot be readily obtained
on the open market and that Buyer will be irreparably injured if this Agreement
is not specifically enforced. Therefore, Buyer shall have the right specifically
to enforce Company's, Shareholder's and Allied's performance under this
Agreement, and Company, Shareholder and Allied agree (i) to waive the defense in
any such suit that Buyer has an adequate remedy at law and (ii) to interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy. If Buyer elects to terminate this Agreement as a result of Company's or
Shareholder's or Allied's default instead of seeking specific performance, Buyer
shall be entitled to cash in the amount of One Hundred Thousand Dollars
($100,000) which amount shall represent liquidated damages and shall be in lieu
of any other relief to which Buyer might otherwise be entitled due to Company's,
Shareholder's or Allied's failure to consummate the Transaction as a result of a
default by Company, Shareholder or Allied.
12. CANCELLATION OF AGREEMENT.
12.1. TERMINATION OF AGREEMENT. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated by this
Agreement shall terminate at any time before the Closing as follows:
(A) DAMAGE TO STATION. By Buyer upon written notice pursuant to
Section 8.4(a) or 8.4(b) or either party upon written notice pursuant to Section
8.4(c).
(B) MUTUAL CONSENT. By mutual consent in writing by Buyer, Company and
Shareholder.
(C) MATERIAL BREACH. Except as otherwise set forth in the provisions
of Section 8.4, by Buyer or Company, provided such party (which in the case of
Company includes
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Shareholder) is not in material breach of this Agreement, if there has been a
material misrepresentation or other material breach by the other party (and in
the case of Company by Shareholder) of any representation, warranty or covenant
set forth herein; provided, however, that the non-breaching party shall not be
excused from its obligations under this Agreement (i) if such breach (other than
Buyer's failure to deliver the Promissory Note and related Buyer Documents) is
susceptible to cure and the breaching party cures such breach within 20 days
after receipt of notice of such breach from the other party or provides
assurances reasonably satisfactory to the other party that the breach will be
cured prior to Closing or (ii) if such breach gives rise solely to money damages
that can readily be ascertained or estimated with reasonable accuracy and the
breaching party tenders such amount to the other party within 20 days after
receipt of notice of such breach.
(D) BANKRUPTCY; RECEIVERSHIP. By Buyer, if any of the following events
shall have occurred with respect to Company: (i) it has been adjudicated a
bankrupt or insolvent or has admitted in writing its inability to pay its debts
as they mature or has made an assignment for the benefit of creditors, or has
applied for or consented to the appointment of a trustee or receiver for it or
for the major part of its property; (ii) a trustee or receiver has been
appointed for it or for any part of its property without its consent and such
action is not resolved or canceled within sixty (60) days; or (iii) bankruptcy,
reorganization, arrangement or insolvency proceedings, or other proceedings for
relief under any bankruptcy or similar law or laws for the relief of creditors,
have been instituted by or against it and remain undismissed for 60 days or
longer.
(E) FCC APPROVAL. By any party to this Agreement, provided such party
is not otherwise in default, if a Final Order granting the Transfer of Control
Application is not obtained within nine (9) months after the date of Public
Notice announcing the FCC's acceptance of the Transfer of Control Application
for filing.
13. GENERAL PROVISIONS.
13.1. FEES. All Commission filing fees for the Transfer of Control
Application shall be paid one-half by Allied and one-half by Buyer. All other
expenses incurred in connection with this Agreement or the Transaction shall be
paid by the party incurring those expenses whether or not the Transaction is
consummated.
13.2. NOTICES. All notices, requests, demands and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when (a) delivered personally (which shall include delivery by Federal Express
or other recognized overnight courier service that issues a receipt or other
confirmation of delivery) to the party for whom such communication is intended,
(b) delivered by facsimile transmission with confirmation of receipt or (c) five
business days after the date mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
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(i) If to Company or Shareholder:
Mr. G. Cabell Williams, III
Broadcast Holdings, Inc.
c/o Allied Capital Corporation
1666 K Street, N.W., 9th Floor
Washington, D.C. 20006
Fax: (202) 659-2053
with a copy (which shall not constitute notice) to:
Lewis J. Paper, Esquire
Dickstein Shapiro Morin and Oshinsky, LLP
2101 L Street, N.W.
Washington, D.C. 20037
Fax: (202) 887-0689
(ii) If to Buyer:
Mr. Alfred C. Liggins, III, President
WYCB Acquisition Corporation
5900 Princess Garden Parkway
8th Floor
Lanham, Maryland 20706
Fax: (301) 306-9694
with a copy (which shall not constitute notice) to:
Linda J. Eckard, Esquire
Davis Wright and Tramaine
1155 Connecticut Avenue, N.W.
Suite 700
Washington, DC 20036-4313
Fax: (202) 508-6600
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<PAGE>
(iii) If to Allied:
Ms. Gay Truscott
Allied Capital Financial Corporation
Allied Investment Corporation
1666 K Street, N.W., 9th Floor
Washington, D.C. 20006
Fax: (202) 659-2053
Any party may change its address for notices by written notice to the other
given pursuant to this Section. Any notice purportedly given by a means other
than as set forth in this Section shall be deemed ineffective.
13.3. ASSIGNMENT. No party may assign this Agreement without the express
prior written consent of the other parties, except that, Buyer may assign its
rights and obligations pursuant to this Agreement without Company's or
Shareholder's consent prior to Closing to (i) an entity which is a subsidiary or
parent of Buyer or to an entity owned or controlled by Buyer or its principals
or (ii) to Buyer's lenders as collateral for any indebtedness incurred by Buyer;
and subsequent to Closing to (a) any entity which acquires all or substantially
all of the Shares or assets of Company or (b) to Buyer's lenders as collateral
for any indebtedness incurred by Buyer. As part of any permitted assignment,
Buyer's assignee shall assume in writing Buyer's indemnification obligations in
Section 10 and any and all of Buyer's other obligations hereunder, and provided
that no such assignment shall discharge Buyer of its financial obligations
hereunder. Subject to the foregoing, this Agreement shall be binding on, inure
to the benefit of, and be enforceable by the original parties hereto and their
respective successors and permitted assignees.
13.4. EXCLUSIVE DEALINGS. For so long as this Agreement remains in effect,
neither Company nor any person acting on Company's behalf shall, directly or
indirectly, solicit or initiate any offer from, or conduct any negotiations
with, any person or entity concerning the acquisition of all or any interest in
the Shares or in the assets of the Business, other than Buyer or Buyer's
permitted assignees.
13.5. THIRD PARTIES. Nothing in this Agreement, whether express or implied,
is intended to: (a) confer any rights or remedies on any person other than
Company, Buyer and their respective successors and permitted assignees; (b)
relieve or discharge the obligations or liability of any third party; or (c)
give any third party any right of subrogation or action against either Company
or Buyer.
13.6. INDULGENCES. Unless otherwise specifically agreed in writing to the
contrary: (a) the failure of any party at any time to require performance by
another party of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (b) no waiver by any party of any default
by another party shall be taken or held to be a waiver by such party of any
other preceding or subsequent default; and (c) no extension of time granted by
any party for the
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<PAGE>
performance of any obligation or act by any party shall be deemed to be an
extension of time for the performance of any other obligation or act hereunder.
13.7. PRIOR NEGOTIATIONS. This Agreement supersedes in all respects all
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All of
such prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
13.8. SCHEDULES. The Schedules attached hereto or referred to herein are a
material part of this Agreement, as if set forth in full herein.
13.9. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Schedules to this
Agreement and the Buyer Documents set forth the entire understanding between the
parties in connection with the Transaction, and there are no terms, conditions,
warranties or representations other than those contained, referred to or
provided for herein and therein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an instrument
in writing signed by each of the parties hereto.
13.10. COUNSEL. Each party has been represented by its own counsel in
connection with the negotiation and preparation of this Agreement.
13.11. GOVERNING LAW, JURISDICTION. This Agreement shall be governed by,
and construed and enforced in accordance with the laws of the State of Maryland
without regard to the choice of law rules utilized in that jurisdiction. Buyer,
Company, Shareholder and Allied each (a) hereby irrevocably submit to the
jurisdiction of the courts of that state and (b) hereby waive, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
Buyer, Shareholder, Company and Allied each hereby consent to service of process
by certified mail at the address to which notices are to be given. Each party
agrees that its submission to jurisdiction and its consent to service of process
by mail is made for the express benefit of the other parties hereto. Final
judgment against any party in any such action, suit or proceeding may be
enforced in other jurisdictions by suit, action or proceeding on the judgment,
or in any other manner provided by or pursuant to the laws of such other
jurisdiction; provided, however, that any party may at its option bring suit, or
institute other judicial proceedings, in any state or federal court of the
United States or of any country or place where the other party or its assets,
may be found.
13.12. SEVERABILITY. If any term of this Agreement is illegal or
unenforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within
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<PAGE>
the provisions of applicable law and such term, as so modified, and the balance
of this Agreement shall then be fully enforceable.
13.13. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument. Each fully executed set of counterparts shall be
deemed to be an original, and all of the signed counterparts together shall be
deemed to be one and the same instrument.
13.14. FURTHER ASSURANCES. Allied and Shareholder shall at any time and
from time to time after the Closing execute and deliver to Buyer such further
conveyances, assignments and other written assurances as Buyer may reasonably
request to vest and confirm in Buyer (or its assignee) the title and rights to
and in all the Shares and/or assets of the Business to be and intended to be
transferred, assigned and conveyed hereunder.
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<PAGE>
IN WITNESS WHEREOF, and to evidence their assent to the foregoing, Company,
Shareholder, Allied and Buyer have executed this Option and Stock Purchase
Agreement under seal as of the date first written above.
SELLER:
BROADCAST HOLDINGS, INC.
BY:
---------------------------------
G. CABELL WILLIAMS, III
PRESIDENT
SHAREHOLDER (SOLELY TO THE EXTENT
SPECIFICALLY SET FORTH IN THIS
AGREEMENT AT SECTIONS 2.1(B),
2.2(B), 4.1, 6.1, 6.2, 6.3, 11.2,
11.3 AND 13.14):
G. CABELL WILLIAMS, III
BY:
---------------------------------
G. CABELL WILLIAMS, III
BUYER:
WYCB ACQUISITION CORP.
BY:
---------------------------------
ALFRED C. LIGGINS, III
PRESIDENT
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<PAGE>
ALLIED CAPITAL FINANCIAL CORPORATION
BY:
---------------------------------
NAME: ________________________
TITLE: ________________________
38
AMENDED AND RESTATED WARRANT
WARRANT NO. 11 3.27 WARRANTS
------ ------
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
APPLICABLE STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON
FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY APPLICABLE STATE SECURITIES LAW.
"This instrument/agreement is subject to a Standstill Agreement dated as of
the Closing Date among RADIO ONE, INC., the Subsidiaries of Radio One, Inc.
from time to time, the Investors (as defined therein), the Senior Lenders
(as defined therein) and NationsBank of Texas, N.A., as Agent to the Senior
Lenders (as defined therein) and individually as a Lender, and United
States Trust Company of New York, as Trustee for the Senior Subordinated
Noteholders (as defined therein). By its acceptance of this
instrument/agreement, the holder hereof agrees to be bound by the
provisions of such Standstill Agreement to the same extent that each
Investor is bound. In the event of any inconsistency between the terms of
this instrument/agreement and the terms of such Standstill Agreement, the
terms of the Standstill Agreement shall govern and be controlling."
RADIO ONE, INC.
This warrant certificate (the "Warrant Certificate") certifies that, for
value received, TSG Ventures L.P. or registered assigns under Section 8 hereof
(the "Holder") is the owner of 3 and 27/100 (3.27) WARRANTS specified above (the
"Warrants") each of which entitles the Holder thereof to purchase one (1) fully
paid and nonassessable share of Common Stock, par value $.01 per share, of Radio
One, Inc., a corporation organized under the laws of the State of Delaware (the
"Company"), or such other number of shares as may be determined pursuant to an
adjustment in accordance with Section 4 hereof, at the price per share set forth
in Section 4 hereof, subject to adjustment from time to time pursuant to Section
4 hereof (the "Warrant Price") and subject to the provisions and upon the terms
and conditions set forth herein.
<PAGE>
1. Term of Warrant.
Each Warrant is exercisable (i) at any time after the date hereof by
Investors holding a majority of the outstanding shares of Preferred Stock (or,
if the Preferred Stock has been redeemed in full prior to such date, by
Investors holding a majority of the outstanding shares of Preferred Stock
immediately prior to such redemption) (the ARequisite Holders@), or (ii) at any
time after the Preferred Stock has been paid in full at the option of the Holder
hereof; provided, however, that if the Holder is a ASpecialized Small Business
Investment Company@ (as defined in the 26 U.S.C. ' 1044(c)(3)), this Warrant may
not in any event be exercised after the sixth (6th) anniversary of the
redemption in full of all Preferred Stock held by the Holder. Upon the
consummation by the Company of a Qualified Public Offering, this Warrant shall
be subject to automatic exercise, on a net basis, as provided in Section 2(a)
hereof.
2. Method of Exercise and Payment; Issuance of New Warrant Certificate;
Contingent Exercise.
(a) In connection with any exercise pursuant to Section 1 hereof, this
Warrant Certificate shall be surrendered (with the notice of exercise form
attached hereto as Exhibit 1 duly executed) at the principal office of the
Company together with the payment to the Company of (i) cash or a certified
check or a wire transfer in an amount equal to the then applicable Warrant Price
multiplied by the number of shares of Common Stock then being purchased or (ii)
that number of shares of Common Stock of the Company having a fair market value
(as defined below) equal to the then applicable Warrant Price multiplied by the
number of shares of Common Stock then being purchased. In the alternative, the
Holder hereof may exercise its right to purchase some or all of the shares of
Common Stock pursuant to this Warrant Certificate on a net basis, such that,
without the exchange of any funds, the Holder hereof receives that number of
shares of Common Stock subscribed to pursuant to this Warrant Certificate less
that number of shares of Common Stock having an aggregate fair market value (as
defined below) at the time of exercise equal to the aggregate Warrant Price that
would otherwise have been paid by the Holder for the number of shares of Common
Stock subscribed to under this Warrant Certificate. Fair market value, on a
per-share basis, shall be deemed to be (i) the initial offering price of the
Common Stock to the public in a Qualified Public Offering; and (ii) if the
Common Stock is not publicly held or traded, "fair market value" shall mean the
Per Share Net Equity Value of the Company as determined pursuant to Section 5.03
of the Warrantholders= Agreement.
(b) The Company agrees that the shares of Common Stock so purchased
shall be deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant Certificate
shall have been surrendered and payment made for such shares as aforesaid. In
the event of any exercise of the rights represented by this Warrant Certificate,
certificates for the shares of Common Stock so purchased shall be delivered to
the Holder hereof within 15 days thereafter and, unless all of the Warrants
represented by this Warrant Certificate have been fully exercised or have
expired
2
<PAGE>
pursuant to Section 1 hereof, a new Warrant Certificate representing the shares
of Common Stock, if any, with respect to which the Warrants represented by this
Warrant Certificate shall not then have been exercised, shall also be issued to
the Holder hereof within such 15 day period.
3. Common Stock Fully Paid; Reservation of Shares.
All Common Stock which may be issued upon the exercise of the Warrants
will, upon issuance, be fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof. During the period within
which the rights represented by this Warrant Certificate may be exercised, the
Company will at all times have authorized, and reserved for the purpose of the
issuance upon exercise of the purchase rights evidenced by this Warrant
Certificate, a sufficient number of shares of its Common Stock to provide for
the exercise of the Warrants.
4. Warrant Price; Adjustment of Warrant Price and Number of Shares.
The Warrant Price shall be $100.00 per share of Common Stock, and the
Warrant Price and the number of shares of Common Stock purchasable upon exercise
of the Warrants shall be subject to adjustment from time to time, as follows:
(a) Reclassification, Consolidation or Merger. In case of any
reclassification or change of outstanding securities of the class issuable upon
exercise of the Warrants, or in case of any consolidation or merger of the
Company with or into another corporation or entity, other than a consolidation
or merger with another corporation or entity in which the Company is the
continuing corporation and which does not result in any reclassification,
conversion or change of outstanding securities issuable upon exercise of the
Warrants, or in case of any sale of all or substantially all of the assets of
the Company, the Company, or such successor or purchasing corporation, as the
case may be, shall execute a new warrant certificate (the "New Warrant
Certificate"), providing that the Holder of this Warrant Certificate shall have
the right to exercise such new warrants and procure upon such exercise, in lieu
of each share of Common Stock theretofore issuable upon exercise of the
Warrants, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, conversion, change,
consolidation, or merger by a holder of one share of Common Stock. Such New
Warrant Certificate shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
4. The provisions of this Section 4(a) shall similarly apply to successive
reclassifications, changes, consolidations, mergers and transfers.
(b) Subdivisions, Combinations and Stock Dividends. If the Company at
any time while this Warrant Certificate is outstanding and unexpired shall
subdivide or combine its Common Stock, or shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to its
Common Stock consisting of, shares of
3
<PAGE>
Common Stock, then the Warrant Price shall be adjusted, from and after the date
of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
Upon each adjustment in the Warrant Price pursuant to this Section
4(b), the number of shares of Common Stock purchasable hereunder shall be
adjusted to the product obtained by multiplying the number of shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction (i) the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and (ii) the denominator of which shall be the Warrant Price
immediately thereafter.
(c) [Intentionally Omitted.]
5. Notice of Adjustments.
Whenever any adjustment shall be made pursuant to Section 4 hereof, the
Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares of Common Stock then purchasable upon exercise of the Warrants, and shall
cause copies of such certificate to be mailed to the Holder hereof at the
address specified in Section 9(d) hereof, or at such other address as may be
provided to the Company in writing by the Holder hereof.
6. Other Agreements; Definitions; Put and Call Rights.
4
<PAGE>
For purposes of this Warrant Certificate, all capitalized terms that are
used herein without definition shall have the respective meanings ascribed
thereto in either the Preferred Stockholders= Agreement (the APreferred
Stockholders= Agreement@), dated as of May 14, 1997, by and among the Holder,
the Company and certain other parties named therein, the Warrantholders=
Agreement, dated as of June 6, 1995, as amended by the First Amendment to the
Warrantholders= Agreement, dated as of May 19, 1997, by and among the Holder,
the Company and certain other parties named therein (the AWarrantholders=
Agreement@) or, in the event that a capitalized term used herein without
definition is not defined in the Preferred Stockholders= Agreement or the
Warrantholders= Agreement, but is defined in the Securities Purchase Agreement,
dated as of June 6, 1995, by and among the Holder, the Company and certain other
parties named therein (the ASecurities Purchase Agreement@), the Securities
Purchase Agreement. The Holder of this Warrant Certificate shall be entitled to
the rights and subject to the terms and conditions of the Preferred
Stockholders= Agreement and Warrantholders= Agreement, and in the event of any
inconsistency between the terms hereof and the terms of the Preferred
Stockholders= Agreement or the Warrantholders= Agreement, as the case may be,
the terms of the Preferred Stockholders= Agreement or the Warrantholders=
Agreement shall control. Without limiting the generality of the foregoing, this
Warrant Certificate and the Warrants represented hereby are subject to the Aput@
and Acall@ provisions of Article V of the Warrantholders= Agreement which are
incorporated herein by reference.
7. Compliance with Securities Act.
The Holder of this Warrant Certificate, by acceptance hereof, agrees that
the Warrants and the shares of Common Stock to be issued upon exercise thereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of the Warrants or any shares of Common Stock to be issued upon exercise
thereof except under circumstances which will not result in a violation of the
Act. Upon exercise of the Warrants, the Holder hereof shall, if requested by the
Company, confirm in writing that the shares of Common Stock so purchased are
being acquired for investment and not with a view toward distribution or resale.
This Warrant Certificate and all shares of Common Stock issued upon exercise of
the Warrants (unless registered under the Act) shall be stamped or imprinted
with a legend substantially in the following form:
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) IN A
TRANSACTION WHICH IS NOT IN VIOLATION OF THE REGISTRATION REQUIREMENTS OF
THE ACT OR ANY APPLICABLE STATE SECURITIES LAW.
8. Transfer.
5
<PAGE>
Subject to compliance with the terms of Section 7 above, the Warrants and
all rights under this Warrant Certificate are transferable, in whole or in part,
at the principal office of the Company by the Holder hereof, in person or by its
duly authorized attorney, upon surrender of this Warrant Certificate properly
endorsed (with the instrument of transfer form attached hereto as Exhibit 2 duly
executed). Each Holder of this Warrant Certificate, by taking or holding the
same, consents and agrees that this Warrant Certificate, when endorsed in blank,
shall be deemed negotiable; provided, however, that the last Holder of this
Warrant Certificate as registered on the books of the Company may be treated by
the Company and all other persons dealing with this Warrant Certificate as the
absolute owner of the Warrants for any purposes and as the person entitled to
exercise the rights represented by this Warrant Certificate or to transfer the
Warrants on the books of the Company, any notice to the contrary
notwithstanding, unless and until such Holder seeks to transfer registered
ownership of the Warrants on the books of the Company and such transfer is
effected.
9. Miscellaneous.
(a) Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant
Certificate and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement or bond reasonably satisfactory in form and amount to the
Company or, in the case of mutilation, on surrender and cancellation of this
Warrant Certificate, the Company, at its expense, will execute and deliver, in
lieu of this Warrant Certificate, a new warrant certificate of like tenor.
(b) Notice of Capital Changes. In case:
(i) the Company shall declare any dividend or distribution
payable to the holders of shares of Common Stock;
(ii) there shall be any capital reorganization or
reclassification of the capital of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its
assets to, another corporation or business organization;
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(iv) the Company shall propose to commence an initial public
offering;
then, in any one or more of said cases, the Company shall give the Holder hereof
written notice of such event, in the manner set forth in Section 9(d) below, at
least 90 days prior to the date on which a record shall be taken for such
dividend or distribution or for determining shareholders entitled to vote upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or the date when any such transaction shall take place,
as the case may be.
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<PAGE>
(d) Notice. Any notice to be given to either party under this Warrant
Certificate shall be in writing and shall be deemed to have been given to the
Company or the Holder hereof, as the case may be, when delivered in hand or when
sent by first class mail, postage prepaid, addressed, if to the Company, at its
principal office and, if to the Holder hereof, at its address as set forth in
the Company's books and records or at such other address as the Holder hereof
may have provided to the Company in writing.
(e) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant Certificate.
7
<PAGE>
(f) Governing Law. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
This Warrant Certificate has been executed as of this 9th day of January,
1998.
RADIO ONE, INC.
By:
---------------------------
Name:
Title:
8
THIS WARRANT, AND THE SHARES ISSUABLE UPON EXERCISE HEREOF, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION
IS AVAILABLE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
APPLICABLE STATE SECURITIES OR "BLUE SKY LAWS". THE TRANSFER OF THIS
WARRANT IS SUBJECT TO THE CONDITIONS SET FORTH HEREIN, AND THE COMPANY
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS WARRANT UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. THE RIGHT TO
EXERCISE THIS WARRANT IS, AND THE NUMBER OF SHARES ISSUABLE UPON EXERCISE
HEREOF IS EXTREMELY LIMITED. ALL SUCH LIMITATIONS ARE SPECIFIED HEREIN.
RADIO ONE, INC.
STOCK PURCHASE WARRANT
Date of Issuance: ___________ Certificate No. W-______
FOR VALUE RECEIVED, Radio One, Inc., a Delaware corporation (the
"Company"), hereby grants to Allied Capital Financial Corporation or its
registered assigns (the "Registered Holder") the right to purchase from the
Company up to 40,000 shares (as adjusted from time to time in accordance
herewith, the "Maximum Warrant Shares") of the Company's 15% Series A Cumulative
Redeemable Preferred Stock, par value $.01 per share (the "Preferred Stock"), as
provided herein at an aggregate exercise price equal to the Deficiency Amount
(as adjusted from time to time in accordance herewith, the "Exercise Price").
This Warrant (the "Warrant") is issued pursuant to the terms of the Option and
Stock Purchase Agreement, dated as of November _____, 1997, by and among
Broadcast Holdings, Inc., G. Cabell Williams, the sole shareholder thereof, the
Registered Holder and WYCB Acquisition Corp., a wholly-owned subsidiary of the
Company (the "Purchase Agreement"). Certain capitalized terms used herein are
defined in Section 5 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for such
securities are subject to adjustment pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
<PAGE>
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may only exercise the purchase
rights represented by this Warrant during the period commencing on the
Deficiency Date and ending on the date which is six months after the occurrence
of the Deficiency Date (the "Exercise Period"). If this Warrant has not been
exercised prior to 5:00 P.M., New York City time, on the last day of the
Exercise Period, or, if prior to the Exercise Time, all outstanding monetary
obligations under the Note have been paid in full, this Warrant shall cease to
be exercisable and shall become null and void, and all rights of the Registered
Holder hereunder shall cease.
1B. Purchase Rights. During the Exercise Period, the Registered Holder
shall be entitled to purchase from the Company a number of shares of Preferred
Stock equal to (a) the quotient obtained by dividing (i) the Deficiency Amount
by (ii) the Liquidation Value; provided, however, that the maximum number of
shares of Preferred Stock for which this Warrant shall be exercisable shall be
limited to the Maximum Warrant Shares.
1C. Exercise Procedure.
(a) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(i) a completed Exercise Agreement, as described in paragraph 1D
below, executed by the Person exercising the purchase rights
represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in
Exhibit II hereto evidencing the assignment of this Warrant to the
Purchaser, in which case the Registered Holder shall have complied
with the provisions set forth in Section 8 hereof; and
(iv) a joinder agreement executed by the Purchaser evidencing
such Purchasers' agreement to be bound by the terms of that certain
Standstill Agreement effective as of May 19, 1997, by and among the
Company, the Company's subsidiaries who are a party thereto,
NationsBank of Texas, N.A., as Agent, and the other parties named
therein (the "Standstill Agreement"), as amended, as if such Purchaser
were designated an "Investor" as such term is defined in the
Standstill Agreement.
(b) Certificates for shares of Preferred Stock purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser the Company's
receipt of the originally executed Note, marked paid in full, together with
appropriate assignment agreements effecting the assignment of all of the
Purchase Documents to the Company.
2
<PAGE>
(c) The Preferred Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Preferred Stock at the Exercise Time so long as the Purchaser has
satisfied its delivery requirements under clauses (a) and (b) of this Section
1C.
(d) The issuance of certificates for shares of Preferred Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Preferred Stock. Each share of Preferred Stock issuable upon exercise
of this Warrant shall, upon payment of the Exercise Price therefor, be fully
paid and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(e) The Company shall not close its books against the transfer of this
Warrant or of any share of Preferred Stock issued or issuable upon the exercise
of this Warrant in any manner which interferes with the timely exercise of this
Warrant.
(f) The Company shall assist and cooperate with any Registered Holder
or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to, or in connection with, any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(g) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Preferred Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of shares of
Preferred Stock issuable upon the exercise of this Warrant. All shares of
Preferred Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Preferred Stock may be so issued without violation of any
applicable law or governmental regulation. The Company shall, from time to time,
take all such action as may be necessary to assure that the par value of the
unissued Preferred Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price. The Company shall not take any
action which would cause the number of authorized but unissued shares of
Preferred Stock to be less than the number of such shares required to be
reserved hereunder for issuance upon exercise of this Warrant.
1D. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
except that if the shares of Preferred Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Preferred Stock are to be issued. Such Exercise Agreement shall be dated the
actual date of execution thereof.
Section 2. Dilution Protection.
3
<PAGE>
2A. Adjustment of Exercise Price, Number of Maximum Warrant Shares and
Liquidation Value. In order to prevent dilution of the rights granted under this
Warrant, the Maximum Warrant Shares shall be subject to adjustment from time to
time as follows: (i) if the Company at any time subdivides (by any stock split,
stock dividend, recapitalization or otherwise) its outstanding shares of
Preferred Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
Maximum Warrant Shares will be proportionately increased; (ii) if the Company at
any time combines (by reverse stock split or otherwise) its outstanding shares
of Preferred Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
Maximum Warrant Shares will be proportionately decreased; and (iii) if the
Maximum Warrant Shares are adjusted pursuant to clause (i) or (ii) of this
Section 2A, then the Liquidation Value shall be increased or decreased, as
appropriate, such that the aggregate Liquidation Value of the Maximum Warrant
Shares shall at all times equal $4,000,000.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets or other transaction, in
each case which is effected in such a way that the holders of Preferred Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Preferred Stock is
referred to herein as "Organic Change." Prior to the consummation of any Organic
Change, the Company shall make appropriate provision to insure that the
Registered Holder of the Warrant shall thereafter have the right to acquire and
receive, in lieu of or addition to (as the case may be) the shares of Preferred
Stock immediately theretofore acquirable and receivable upon the exercise of
this Warrant, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for the number of shares of Preferred
Stock immediately theretofore acquirable and receivable upon exercise of this
Warrant had such Organic Change not taken place. In any such case, the Company
shall make appropriate provision with respect to such holder's rights and
interests to insure that the provisions of this Section 2 shall thereafter be
applicable to the Warrant. The Company shall not effect any such consolidation,
merger or sale unless, prior to the consummation thereof, the successor entity
(if other than the Company) resulting from consolidation or merger or the entity
purchasing such assets assumes by written instrument, the obligation to deliver
to such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
2C. Notices. The Company shall give written notice to the Registered Holder
at least 20 days prior to the date on which any Organic Change, dissolution or
liquidation shall take place.
Section 3. Definitions. The following terms have meanings set forth below:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the
4
<PAGE>
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of 10%
or more of the voting securities of a Person shall be deemed to be control.
"Collateral" has the meaning given to such term in that certain Security
Agreement dated as of _________________ 1997 among Broadcast Holdings, Inc.,
WYCB Acquisition Corp., Allied Capital Financial Corporation and Allied
Investment Corporation.
"Deficiency Amount" means the amount that remains due and payable under the
Note on the Deficiency Date, which amount shall be certified to the Company by
each of a senior executive officer and the chief financial officer of the holder
of the Note.
"Deficiency Date" means the first date upon which a Deficiency Amount
exists following a default and acceleration of the indebtedness under the Note,
and after which Allied has exercised in full all of its rights (including
foreclosure) under the Security Agreement, at law or in equity with respect to,
and realized all proceeds or other amounts payable in respect of any sale or
other disposition of, the Collateral.
"Liquidation Value" means $100 per share of Preferred Stock (subject to
adjustment in accordance herewith).
"Market Price" means, as to any security, the average of the closing prices
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York City time, on such day, or, if on
any day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which "Market Price" is being determined and
the 20 consecutive business days prior to such day; provided that if such
security is listed on any domestic securities exchange the term "business days"
as used in this sentence means business days on which such exchange is open for
trading. If at any time such security is not listed on any domestic securities
exchange or quoted in the NASDAQ System or the domestic over-the-counter market,
the "Market Price" shall be the fair value thereof determined jointly by the
Company and the Registered Holder; provided that, if such parties are unable to
reach agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Registered
Holder. The determination of such appraiser shall be final and binding on the
Company and the Registered Holder, and the fees and expenses of such appraiser
shall be paid by the Registered Holder.
"Note" means that certain Promissory Note issued by WYCB Acquisition Corp.,
a Delaware corporation and wholly owned subsidiary of the Company, on
___________ 1998, to Allied Capital Financial Corporation in an original
principal amount of $3,750,000.
5
<PAGE>
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"Purchase Documents" means the Purchase Agreement, the Note, and all of the
other agreements entered into in connection therewith including, without
limitation, all of the security and pledge agreements.
Section 4. Determination of the Deficiency Amount and Deficiency Date.
(a) Upon the occurrence of an Event of Default under the Note or the
Security Agreement, the Registered Holder, subject to any applicable cure
period, may exercise its rights under the Security Agreement and the Pledge
Agreement as permitted therein; the date of consummation of the sale of all or
substantially all of the assets ("Assignment") or the sale of all of the shares
("Transfer") which includes an assignment or transfer of the FCC Licenses (as
defined in the Purchase Agreement) shall be the Deficiency Date, provided, that
the Registered Holder has satisfied the conditions set forth in this Section 4
to effectuate an Assignment or Transfer and further provided that if no such
Assignment or Transfer occurs within two (2) years of the date of the Event of
Default, then the Deficiency Date shall be two (2) years from the date of the
Event of Default.
(b) The Deficiency Amount shall be $4,000,000 minus (i) the amount
actually received by the Registered Holder from the Assignment or Transfer net
of all costs and fees incurred in enforcing its rights under the Security
Agreement and Pledge Agreement; (ii) the proceeds of any other disposition of
Collateral or Shares occurring prior to the Deficiency Date and (iii) any other
amount received by the Registered Holder in satisfaction of amounts due under
the Note and the fair market value of any assets retained by or for the benefit
of, directly or indirectly, of the Registered Holder after the consummation of
the Assignment or Transfer. In the event that no Assignment of Transfer has
occurred before the Deficiency Date, the Deficiency Amount shall be $4,000,000,
subject to subparagraph (f) below.
(c) Prior to an Assignment or Transfer, the Registered Holder shall
obtain an appraisal of the fair market value of the business and assets of
WYCB-AM as a going concern, based upon the price a willing buyer would offer in
an arms-length negotiation to a willing seller not compelled to sell. The
Registered Holder shall retain two qualified media broker/appraisers to perform
appraisals, and the lower of the two appraisals shall be the Appraisal. The
Registered Holder shall promptly inform the Company as to the results of such
Appraisals.
(d) Subject to satisfying the conditions set forth in this Section 4,
the Registered Holder may consummate an Assignment or Transfer at any purchase
price, provided, that in the event the Assignment or Transfer is for
consideration less than ninety percent (90%) of the Appraisal ("Upset Price"),
then the Deficiency Amount shall be reduced by the amount that such
consideration is less than the Upset Price.
(e) The Registered Holder is under no obligation to consummate an
Assignment or Transfer at any price, provided, that the Registered Holder must
use commercially reasonable efforts
6
<PAGE>
to sell the Collateral or the Shares for the highest available cash price. The
Registered Holder agrees to retain any nationally known media brokerage firm and
negotiate in good faith with any potential purchaser. The Registered Holder
shall inform the Company as to the broker's proposed price for a transaction
constituting an Assignment or Transfer and as to each offer such broker receives
with respect thereto.
(f) In the event the Registered Holder received a cash offer on
customary terms and condition greater than the Appraisal (the "Offer") and does
not accept such Offer, then the Deficiency Amount shall be reduced by the amount
of the Offer if no Assignment or Transfer occurs within two (2) years of an
Event of Default.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Preferred Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Preferred Stock
acquirable by exercise hereof or as a stockholder of the Company.
Section 6. Transfer of Warrant.
(a) This Warrant and the rights hereunder shall not be transferred
prior to the Deficiency Date, provided that Allied may transfer this Warrant and
the rights hereunder in whole but not in part to an Affiliate of Allied (subject
to compliance with applicable securities laws).
(b) On and after the Deficiency Date, this Warrant and the rights
hereunder may be transferred in whole but not in part as provided in this
Section 6(b). The Registered Holder shall deliver a written notice (an "Offer
Notice") to the Company disclosing the terms and conditions of the proposed
transfer at least 30 days prior to such transfer. The Company may elect to
purchase this Warrant at the price and on the terms specified in the Offer
Notice at any time within 20 days of receipt of such notice by delivering a
written acceptance to the Registered Holder and the closing of such purchase by
the Company shall occur within 30 days after the delivery of such written
acceptance. If the Company has not elected to purchase this Warrant within 20
days of receipt of the Offer Notice (the "Authorization Date"), the Registered
Holder may transfer this Warrant to the purchaser specified in the Offer Notice
during the thirty day period following the Authorization Date upon surrender of
this Warrant with a properly executed Assignment (in the form of Exhibit II
hereto) at the principal office of the Company. If the Registered Holder fails
to transfer this Warrant during the thirty day period following the
Authorization Date, any transfer of this Warrant shall again be subject to the
procedures set forth in this Section 6(b).
Section 7. Replacement. Upon receipt of evidence reasonably satisfactory to
the Company (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the
7
<PAGE>
Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the same rights represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
Section 8. Notices. Except as otherwise expressly provided herein, all
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid,
and shall be deemed to have been given when so delivered, sent or deposited in
the U. S. Mail (i) to the Company, at its principal executive offices and (ii)
to the Registered Holder of this Warrant, at such holder's address as it appears
in the records of the Company (unless otherwise indicated by any such holder).
Section 9. Amendment and Waiver. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holder.
Section 10. Descriptive Headings; Governing Law. The descriptive headings
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The construction,
validity, interpretation and enforceability of this Warrant and the exhibits
hereto shall be governed by the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
RADIO ONE, INC.
By:
------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
8
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby (a) certifies that the Deficiency
Amount is equal to $_____, and (b) agrees to subscribe for the purchase of
______ shares of the Preferred Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant. As
further consideration for the purchase of _____ shares of the Preferred Stock
covered by such Warrant and as a condition to such purchase, the undersigned
hereby forever assigns all of its rights under the Purchase Documents to the
Company and agrees to take any and all necessary actions to effect this
assignment in full. Terms not defined herein have the meaning assigned to them
in the Warrant.
Signature______________________________
Address________________________________
________________________________
EX-I
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) unto:
NAME OF ASSIGNEE ADDRESS
Dated: Signature
--------------------------------
Witness
--------------------------------
EX-II
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO:______________
[Collective Exercise]
The undersigned, constituting the Requisite Holders, hereby elect to
exercise all of the Warrants contemplated by a certain Warrantholders= Agreement
dated as of June 6, 1995, as amended.
[Individual Exercise]
1. The undersigned hereby elects to purchase _________ shares of the
________ Common Stock of ________ pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
----------------------------
(Name)
----------------------------
----------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
Dated:
----------------------------
Signature
9
<PAGE>
EXHIBIT 2
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto the rights represented by the within Warrant Certificate to purchase
[ ] shares of Common Stock of Radio One, Inc. to which the within Warrant
Certificate relates and appoints _______________________ to transfer such rights
on the books of Radio One, Inc. with full power of substitution in the premises.
Dated:__________________ ----------------------------
Signature
10
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
RADIO ONE, INC.,
AS THE BORROWER
THE SEVERAL LENDERS FROM TIME
TO TIME PARTIES HERETO
AND
NATIONSBANK OF TEXAS, N.A.,
AS THE AGENT
DATED EFFECTIVE AS OF MAY 19, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 1. CERTAIN DEFINITIONS AND TERMS.................................... 2
1.1 Defined Terms........................................................ 2
1.2 Other Definitional Provisions ....................................... 32
1.3 Computation of Time Periods.......................................... 33
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.................................. 33
2.1 Tranche A Commitments and Tranche A Notes............................ 33
2.2 Tranche B Commitments and Tranche B Notes............................ 33
2.3 Procedure for Borrowing.............................................. 34
2.4 Repayment of Loans................................................... 35
SECTION 3. LETTERS OF CREDIT...................................................... 35
3.1 L/C Commitment....................................................... 35
3.2 Procedure for Issuance of Letters of Credit.......................... 36
3.3 Fees, Commissions and Other Charges.................................. 36
3.4 L/C Participations................................................... 36
3.5 Reimbursement Obligation of the Borrower............................. 38
3.6 Obligations Absolute................................................. 38
3.7 Letter of Credit Payments............................................ 39
3.8 Application.......................................................... 39
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANSAND LETTERS OF CREDIT............ 39
4.1 Interest Rates and Payment Dates..................................... 39
4.2 Optional and Mandatory Commitment Reductions and Prepayments......... 40
4.3 Commitment Fees, etc................................................. 42
4.4 Computation of Interest and Fees..................................... 43
4.5 Conversion and Continuation Options.................................. 43
4.6 Minimum Amounts of Eurodollar Tranches............................... 44
4.7 Inability to Determine Interest Rate................................. 44
4.8 Pro Rata Treatment and Payments...................................... 45
4.9 Requirements of Law.................................................. 46
4.10 Taxes................................................................ 47
4.11 INDEMNITY............................................................ 49
4.12 Change of Lending Office............................................. 49
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................... 50
5.1 Financial Condition.................................................. 50
5.2 No Change............................................................ 50
5.3 Existence; Compliance with Law....................................... 50
5.4 Power; Authorization; Enforceable Obligations........................ 51
5.5 No Legal Bar......................................................... 51
5.6 No Material Litigation............................................... 51
5.7 No Default........................................................... 52
5.8 Ownership of Property; Intellectual Property......................... 52
5.9 No Burdensome Restrictions........................................... 52
5.10 Taxes................................................................ 52
5.11 Federal Regulations.................................................. 53
5.12 ERISA................................................................ 53
5.13 Investment Company Act; Other Regulations............................ 53
5.14 Restricted Subsidiaries.............................................. 54
5.15 Insurance............................................................ 55
5.16 Authorization Matters................................................ 55
5.17 Environmental Matters................................................ 55
5.18 Accuracy of Information.............................................. 57
5.19 Security Documents................................................... 57
5.20 Solvency............................................................. 57
5.21 Labor Matters........................................................ 58
5.22 Prior Names.......................................................... 58
5.23 Chief Executive Office; Chief Place of Business...................... 58
5.24 Real Property; Leases................................................ 58
5.25 Ownership of Stations................................................ 58
5.26 Possession of Necessary Authorizations............................... 59
5.27 FCC, Copyright, Patent and Trademark Matters......................... 59
5.28 License Subsidiaries................................................. 59
SECTION 6. CONDITIONS PRECEDENT................................................... 60
6.1 Conditions to Effectiveness of this Agreement........................ 60
6.2 Condition to Initial Extension of Credit under Tranche B Facility.... 63
6.3 Conditions to All Extensions of Credit............................... 63
SECTION 7. AFFIRMATIVE COVENANTS.................................................. 65
7.1 Financial Statements................................................. 65
7.2 Certificates; Other Information...................................... 66
7.3 Payment of Obligations............................................... 66
7.4 Conduct of Business and Maintenance of Existence, etc................ 67
7.5 Maintenance of Property; Insurance................................... 67
7.6 Inspection of Property; Books and Records; Discussions............... 67
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
7.7 Notices.............................................................. 67
7.8 Environmental Laws................................................... 69
7.9 Collateral........................................................... 69
7.10 Use of Proceeds...................................................... 71
7.11 New Restricted Subsidiaries.......................................... 71
7.12 Taxes................................................................ 71
7.13 Further Assurances................................................... 71
7.14 Appraisals of Collateral............................................. 72
SECTION 8. NEGATIVE COVENANTS..................................................... 72
8.1 Financial Condition Covenants........................................ 72
8.2 Limitation on Indebtedness and Preferred Stock....................... 74
8.3 Limitation on Liens.................................................. 75
8.4 Limitation on Fundamental Changes.................................... 75
8.5 Limitation on Sale of Assets......................................... 75
8.6 Limitation on Restricted Payments; Other Payment Limitations......... 76
8.7 Limitation on Acquisitions........................................... 77
8.8 Investments.......................................................... 77
8.9 Limitation on Transactions with Affiliates........................... 77
8.10 Limitation on Restrictions on Restricted Subsidiary Distributions.... 78
8.11 Limitation on Lines of Business...................................... 79
8.12 Limitation on Sale or Issuance of Equity Interests................... 79
8.13 Limitation on Material Agreements.................................... 80
8.14 Limitation on Asset Swaps............................................ 80
8.15 Certain Intercompany Matters......................................... 81
SECTION 9. EVENTS OF DEFAULT...................................................... 81
SECTION 10. THE AGENT............................................................. 85
10.1 Appointment.......................................................... 85
10.2 Delegation of Duties................................................. 85
10.3 EXCULPATORY PROVISIONS............................................... 85
10.4 Reliance by the Agent................................................ 86
10.5 Notice of Default.................................................... 86
10.6 Non-Reliance on the Agent and the Other Lenders...................... 86
10.7 INDEMNIFICATION...................................................... 87
10.8 The Agent in Its Individual Capacity................................. 87
10.9 Successor Agent...................................................... 88
SECTION 11. MISCELLANEOUS......................................................... 89
11.1 Amendments and Waivers............................................... 89
11.2 Notices.............................................................. 89
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
11.3 No Waiver; Cumulative Remedies....................................... 90
11.4 Survival of Representations and Warranties........................... 90
11.5 Payment of Expenses and Taxes........................................ 90
11.6 Successors and Assigns; Participations and Assignments............... 91
11.7 Adjustments; Set-off................................................. 94
11.8 Counterparts; When Effective......................................... 95
11.9 Severability......................................................... 95
11.10 Integration.......................................................... 95
11.11 GOVERNING LAW........................................................ 95
11.12 VENUE; SERVICE OF PROCESS............................................ 96
11.13 Acknowledgements..................................................... 96
11.14 WAIVERS OF JURY TRIAL................................................ 97
11.15 Maximum Interest Rate................................................ 97
11.16 Confidentiality...................................................... 98
11.17 Amendment and Restatement............................................ 98
11.18 FINAL AGREEMENT...................................................... 99
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Exhibits
<S> <C> <C>
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Restricted Subsidiary Guaranty
Exhibit D - Form of Operating Agreement
Exhibit E - Form of Perfection Certificate
Exhibit F - Form of Restricted Subsidiary Pledge Agreement
Exhibit G - Form of Restricted Subsidiary Security Agreement
Exhibit H-1 - Form of Tranche A Note
Exhibit H-2 - Form of Tranche B Note
Exhibit I - Form of Notice of Borrowing
Exhibit J - Form of Notice of Conversion/Continuation
Exhibit K - Form of Closing Certificate
Exhibit L - Form of Legal Opinion of Kirkland & Ellis
Exhibit M - Form of Legal Opinion of FCC counsel
Exhibit N - Form of Confirmation of Liens
Exhibit O - Form of Alternative Note
</TABLE>
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Schedules
- ---------
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.1 - Commitments and Addresses of Lenders
Schedule 5.4 - Required Consents and Approvals
Schedule 5.6 - List of Outstanding Litigation
Schedule 5.14(a) - List of Restricted Subsidiaries and Owners of Equity Interests
Schedule 5.14(b) - List of Shareholder and Voting Agreements, Warrants,
Restrictions on Transfer of Equity Interests
Schedule 5.22(a) - Prior Trade Names
Schedule 5.22(b) - Current Trade Names
Schedule 5.23 - Chief Executive Office; Chief Place of Business
Schedule 5.24 - List of Real Property Owned and Leased
Schedule 5.25 - Stations Owned
Schedule 5.26 - List of Petitions, Actions, Investigations, Notices of
Violation or Forfeiture, Complaints and Proceedings
before the FCC
Schedule 5.27 - Patents and Trademarks
Schedule 8.2 - Indebtedness
Schedule 8.9 - Existing Affiliate Transactions
</TABLE>
vi
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into
effective as of May 19, 1997 among Radio One, Inc., a Delaware corporation (the
"Borrower"), the several lenders from time to time parties hereto (the
"Lenders") and NationsBank of Texas, N.A., as the Agent for the Lenders.
PRELIMINARY STATEMENT
Radio One, Inc., a District of Columbia corporation
(predecessor in interest to the Borrower), the Subsidiaries of Radio One, Inc.,
a District of Columbia corporation, from time to time parties thereto,
NationsBank of Texas, N.A., as agent for the lenders party thereto and
individually as a lender and the other lenders from time to time party thereto
(including NationsBank, the "Existing Lenders") entered into that certain
Amended and Restated Credit Agreement, dated as of June 6, 1995 (as amended, the
"Existing Credit Agreement").
On May 19, 1997, the Borrower (i) issued 12% Senior
Subordinated Notes due 2004 to certain investors pursuant to an offering under
Rule 144A of the Securities Act, (ii) repaid all of the outstanding indebtedness
and other obligations due under the Existing Credit Agreement, (iii) exchanged
the Existing Subordinated Notes (hereinafter defined) for the Senior Preferred
Stock (hereinafter defined) and (iv) acquired WPHI-FM, licensed to Jenkintown,
Pennsylvania (collectively, the "Related Transactions").
In connection with the Related Transactions, the Existing
Lenders (other than NationsBank) assigned all of their rights, interests and
commitments under the Existing Credit Agreement to NationsBank pursuant to that
certain Assignment and Acceptance, dated effective as of May 19, 1997, among the
Existing Lenders (the "Assignment"). After such Assignment, NationsBank and the
Borrower entered into that certain Fourth Amendment to Credit Agreement, dated
May 19, 1997, pursuant to which the Borrower and NationsBank agreed to, among
other things, reduce the aggregate commitment thereunder to $7,500,000 and, at a
later date, evidence their agreements to further modifications to the Existing
Credit Agreement as set forth herein.
The Borrower and NationsBank desire to enter into this Amended
and Restated Credit Agreement to evidence their agreements with respect to
certain further modifications to the Existing Credit Agreement.
In consideration of the premises, the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that the
Existing Credit Agreement is hereby amended and restated in its entirety as
follows:
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<PAGE>
SECTION 1.
CERTAIN DEFINITIONS AND TERMS
1.1 Defined Terms. For purposes of this Agreement, the
following terms shall have the following meanings:
"ABR" means the fluctuating rate of interest per annum as
shall be in effect from time to time equal to the sum of (a) 1.375% per annum,
plus (b) the greater of (I) the rate of interest announced publicly by the Agent
from time to time as its U.S. dollar prime commercial lending rate (which rate
may or may not be the lowest rate of interest charged by the Agent) and (ii) the
sum of 0.5% plus the Federal Funds Rate. The ABR shall be adjusted automatically
as of the opening of business on the effective date of each change in the prime
commercial lending rate or Federal Funds Rate to account for such change.
"ABR Loan" means any Loan that bears interest at the ABR.
"Acquisitions" has the meaning set forth in Section 8.7.
"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of this
definition, "control of" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") any Person means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means NationsBank of Texas, N.A., as agent for the
Lenders pursuant to this Agreement, and its successors and assigns in such
capacity as appointed pursuant to Section 10.9.
"Aggregate Commitment" means the sum of all of the Commitments
of all of the Lenders (in each case, as the same may be increased, reduced or
otherwise adjusted from time to time as provided herein).
"Aggregate Outstandings of Tranche A Credit" means, as to any
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Tranche A Loans made by such Lender then outstanding and (b) such
Lender's Specified Percentage of the Tranche A L/C Obligations then outstanding.
2
<PAGE>
"Aggregate Outstandings of Tranche B Credit" means, as to any
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Tranche B Loans made by such Lender then outstanding and (b) such
Lender's Specified Percentage of the Tranche B L/C Obligations then
outstanding.
"Agreement" means this Amended and Restated Credit Agreement,
including the Schedules and Exhibits, as the same may be amended, modified,
restated, supplemented, renewed, extended, increased, rearranged or substituted
from time to time.
"Allied Warrant" means that certain contingent Warrant to be
issued by Borrower to Allied Capital Financial Corporation in connection with
the acquisition of station WYCB-AM, Washington, D.C. by an Unrestricted
Subsidiary of the Borrower, to be exercised for the number of shares of Series A
15% Senior Cumulative Redeemable Stock of the Borrower having a liquidation
value of up to Four Million Dollars ($4,000,000) but only to be exercised upon a
default under the $4,000,000 promissory note given by such Unrestricted
Subsidiary to Allied where foreclosure on the stock and assets of the
Unrestricted Subsidiary are insufficient to cover the full amount of such
promissory note.
"Alternative Note" has the meaning set forth in Section
11.6(d).
"Alternative Noteholder" has the meaning set forth in Section
11.6(e).
"Amended and Restated Certificate of Incorporation" means that
certain Amended and Restated Certificate of Incorporation of Radio One, Inc.
filed with the Secretary of State of Delaware on May 16, 1997, as amended from
time to time in accordance with the terms hereof and thereof.
"Application" means an application, in form and substance
consistent with this Agreement and mutually satisfactory to the Borrower and the
Issuing Lender, requesting the Issuing Lender to open a Letter of Credit and
designating whether such Letter of Credit is to be issued under the Tranche A
Facility or the Tranche B Facility.
"Asset Swap" means the execution of a definitive agreement,
subject only to FCC approval and other customary closing conditions, that the
Borrower in good faith believes will be satisfied, for a substantially
concurrent purchase and sale, or exchange, of Broadcast Assets between the
Borrower or any of its Wholly Owned Restricted Subsidiaries and another Person
or group of Affiliated Persons; provided that any amendment to or waiver of any
closing condition which individually or in the aggregate is material to the
Asset Swap shall be deemed to be a new Asset Swap.
"Assignee" has the meaning set forth in Section 11.6(C).
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit A.
3
<PAGE>
"Authorizations" means all filings, recordings and
registrations with, and all validations or exemptions, approvals, orders,
authorizations, consents, Licenses, certificates and permits from, the FCC and
other Governmental Authorities.
"Available Tranche A Commitment" means at any time, as to any
Lender, an amount equal to (a) the amount of such Lender's Tranche A Commitment
at such time, minus (b) such Lender's Aggregate Outstandings of Tranche A Credit
at such time.
"Available Tranche B Commitment" means, as to any Lender, an
amount equal to (a) the amount of such Lender's Tranche B Commitment at such
time, minus (b) such Lender's Aggregate Outstandings of Tranche B Credit at such
time; provided, however that the Borrower may not borrow, or request the
issuance of a Letter of Credit, under any Tranche B Commitment until such time
as such Lender's Aggregate Outstandings of Tranche A Credit equals its Tranche A
Commitment.
"Board" means the Board of Governors of the Federal Reserve
System.
"Borrower" has the meaning set forth in the introductory
paragraph of this Agreement.
"Borrowing Date" means any Business Day (I) specified in a
Notice of Borrowing pursuant to Section 2.3 as a date on which the Borrower
requests the Lenders to make Loans hereunder or (ii) specified in an Application
pursuant to Section 3.2 as a date on which the Borrower requests the Issuing
Lender to issue Letters of Credit hereunder.
"Broadcast Assets" means assets used or useful in the
ownership or operation of a Station.
"Broadcast Cash Flow" means Operating Cash Flow plus Corporate
Overhead Expense.
"Budget" has the meaning set forth in Section 7.2(e).
"Business" has the meaning set forth in Section 5.17(C).
"Business Day" means (a) for all purposes other than as
provided in clause (b) below, any day other than a Saturday, Sunday or other day
on which commercial banks in Dallas, Texas or Baltimore, Maryland are authorized
or required by law to close and (b) with respect to all notices and
determinations in connection with any borrowings in respect of Eurodollar Loans,
any day that is a Business Day described in clause (a) above and that is also a
day for trading between prime banks in the London interbank market.
4
<PAGE>
"Capital Expenditure" means with respect to any Person any
liabilities incurred or expenditures made (net of any casualty insurance
proceeds or condemnation awards used to replace fixed assets following a
casualty event or condemnation with respect thereto) by such Person that, in
conformity with GAAP, is required to be accounted for as a capital expenditure
on the consolidated balance sheet of such Person; provided, however, that
Capital Expenditures shall not include expenditures incurred in connection with
Acquisitions.
"Capital Lease Obligations" means with respect to any Person,
at any time any determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be required to be
capitalized on the consolidated balance sheet of such Person in accordance with
GAAP.
"Cash Equivalents" means (I) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
less than one year from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of less than one year from the date
of acquisition, bankers' acceptances with maturities of less than one year and
overnight bank deposits, in each case with any Lender party to the Credit
Agreement or with any domestic commercial bank having capital and surplus in
excess of $500,000,000 and a Keefe Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) entered into with
any financial institution meeting the qualifications specified in clause (iii)
immediately above, (v) commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Ratings Services and
in each case maturing within nine months after the date of acquisition and (vi)
interests in money market mutual funds which invest solely in assets in
securities of the type described in clauses (I)-(v) immediately above.
"Change of Control" means the occurrence of any of the
following:
(i) the sale, lease or transfer, in one or a series
of related transactions, of all or substantially all of the Borrower's
assets to any Person or group (as such term is used in Section 13(d)(3)
of the Exchange Act) (other than any or all of the Principal
Shareholders or their Related Parties);
(ii) the adoption of a plan relating to the
liquidation or dissolution of the Borrower;
(iii) prior to the first Public Equity Offering of
the Borrower, either (x) the Principal Shareholders and their Related
Parties cease to be the beneficial owner of at least 35% of the voting
power of the voting stock of the Borrower or (y) any Person or group
(as such term is used in Section 13(d)(3) of the Exchange Act) other
than the Warrantholders acquires, directly or indirectly, 35% or more
of the voting power of the voting stock of the Borrower by way of
merger, consolidation or otherwise;
5
<PAGE>
(iv) following the first Public Equity Offering of
the Borrower, any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) (other than one or more of the Principal
Shareholders and their Related Parties) acquires, directly or
indirectly, 35% or more of the voting power of the voting stock of the
Borrower by way of merger or consolidation or otherwise; provided that
such acquisition will not constitute a "Change of Control" (x) in the
case of a Person or group consisting of the Warrantholders, if and for
so long as the Principal Shareholders and Related Parties, individually
or collectively, own at least 30% of the voting power of the voting
stock of the Borrower and have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of the Borrower, or (y) in the case of any
Person or group not including any Warrantholder, unless or until such
Person or group owns, directly or indirectly, more of the voting power
of the voting stock of the Borrower than the Principal Shareholders and
their Related Parties; or
(v) the Continuing Directors cease for any reason
(other than as a result and during the continuance of a default under
the Warrant Agreement entitling the Investors to appoint directors) to
constitute a majority of the directors of the Borrower then in office.
For purposes of this definition, any transfer of an Equity Interest of an entity
that was formed for the purpose of acquiring voting stock of the Borrower shall
be deemed to be a transfer of such portion of such voting stock as corresponds
to the portion of the equity of such entity that has been so transferred.
"Charter Documents" means with respect to any Person (a) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such Person and (b) the bylaws (or the equivalent governing
documents) of such Person.
"Closing Certificate" has the meaning set forth in Section
6.1(b).
"Code" means the Internal Revenue Code of 1986, as amended,
and all regulations promulgated and rulings issued thereunder.
"Collateral" means all assets of the Borrower and the
Restricted Subsidiaries and all common stock and voting securities or securities
convertible or exchangeable into common stock or voting securities and all
warrants or options or other securities to purchase such common stock and voting
securities of the Borrower and all Equity Interests of each of the Restricted
Subsidiaries, in each case whether now owned or hereinafter acquired, upon which
a lien is purported to be created by any Security Documents.
"Commitment" means, as to any Lender, the sum of its Tranche A
Commitment and its Tranche B Commitment.
6
<PAGE>
"Commitment Letter" means the letter agreement, dated April
25, 1997, to the Borrower from NationsBank, agreed to and accepted by the
Borrower on April 29, 1997, as amended.
"Common Equity" means the Common Stock and Non-Voting Common
Stock of the Borrower, collectively.
"Common Stock" means the voting class A common stock, par
value $.01 per share, of the Borrower.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b) or (c) of the Code.
"Communications Act" means the Communications Act of 1934, as
amended, and the rules and regulations and published policies thereunder, as
amended and in effect from time to time.
"Compliance Certificate" means a certificate of a Responsible
Officer of the Borrower, substantially in the form of Exhibit B.
"Confirmation of Liens" has the meaning set forth in Section
6.1(j).
"Consolidated Cash Interest Expense" means, with respect to
any period, the amount of Consolidated Interest Expense for such period to the
extent it represents cash disbursements by the Borrower and its Restricted
Subsidiaries during such period.
"Consolidated Interest Expense" means, without duplication,
with respect to any period, the sum of (a) the interest expense and all
capitalized interest of the Borrower and its Restricted Subsidiaries for such
period, on a consolidated basis, including, without limitation, (i) amortization
of debt discount, (ii) the net cost under interest rate contracts (including
amortization of debt discount), (iii) the interest portion of any deferred
payment obligation and (iv) accrued interest, plus (b) the interest component of
any Capital Lease Obligation paid or accrued or scheduled to be paid or accrued
by the Borrower during such period, determined on a consolidated basis in
accordance with GAAP; provided, however, that any dividends with respect to the
Senior Preferred Stock shall not be considered for purposes of this definition.
"Continuing Director" means any member of the Board of
Directors of the Borrower who (i) is a member of that Board of Directors of the
Borrower on the Effective Date or (ii) was nominated for election by either (a)
one or more of the Principal Shareholders (or a Related Party thereof) or (b)
the Board of Directors of the Borrower a majority of whom were directors on the
Effective Date or whose election or nomination for election was previously
approved by one or more of the Principal Shareholders or such directors.
7
<PAGE>
"Contractual Obligation" of any Person means any provision of
any security issued by such Person or subordination agreement, indenture,
mortgage, deed of trust, security agreement, lease agreement, guaranty,
contract, undertaking, instrument or other agreement to which such Person is a
party or by which it or any of its property, assets or revenues is bound or to
which any of its property, assets or revenues is subject, including, without
limitation, with respect to the Loan Parties, obligations in respect of Material
Leases, LMA Agreements, the Senior Subordinated Debt Documents, the Preferred
Stock Documents, and the documents and instruments executed in connection with
the Acquisition of WPHI-FM.
"Corporate Overhead Expense" means all general and
administrative expenses incurred during any fiscal period which are not
associated with, or attributable to, the particular operations of one or more of
the Stations and which are properly classified as general and administrative
expenses on the Borrower's financial statements, including compensation paid to
Senior Management, insurance, rent, professional fees, travel and entertainment
expenses; notwithstanding any generally accepted accounting principles to the
contrary, Corporate Overhead Expense shall include all compensation and
distributions paid to or for the benefit of the Management Stockholders (other
than Moore), directly or indirectly.
"Customary Permitted Liens" means Liens on the property or
assets of any Person (other than Liens arising pursuant to any Environmental Law
and Liens in favor of the PBGC):
(a) with respect to the payment of Taxes, assessments or
governmental charges or levies which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP;
(b) of landlords arising by statute and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by Law created in the ordinary course of business of such
Person for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(c) incurred, or pledges and deposits made, in the ordinary
course of business of such Person in connection with worker's
compensation, unemployment insurance, pensions or other types of social
security benefits;
(d) arising with respect to zoning restrictions, licenses,
covenants, building restrictions and other similar charges or
encumbrances on the use of real property of such Person which do not
materially interfere with the ordinary conduct of such Person's
business; and
8
<PAGE>
(e) minor defects and irregularities in titles, survey
exceptions, encumbrances, easements or reservations of others for
rights-of-way, roads, pipelines, railroad crossings, services,
utilities or other similar purposes which do not adversely affect the
value of the property, or outstanding mineral rights or reservations
(including rights with respect to the removal of mineral resource)
which do not materially diminish the value of the surface estate,
assuming usage of such surface estate similar to that being carried on
by any Loan Party as of the Effective Date.
"Default" means any of the events specified in Section 9,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Disposition" has the meaning set forth in Section 8.5.
"Disqualified Stock" means any Equity Interest that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"EBITDA" of a specified Person means, for any period, the
consolidated net income of such specified Person and its Restricted Subsidiaries
for such period:
(a) plus (without duplication and to the extent
involved in computing such consolidated net income) (i) interest
expense, (ii) provision for taxes on income or profits and (iii)
depreciation and amortization and other non-cash items (including
amortization of goodwill and other intangibles and barter expenses),
and
(b) minus (without duplication and to the extent
involved in computing such consolidated net income) (i) any gains (or
plus losses), together with any related provision for taxes on such
gains (or losses), realized in connection with any sale of assets
(including, without limitation, dispositions pursuant to Sale and
Leaseback Transactions), (ii) any non-cash or extraordinary gains (or
plus losses), together with any related provision for taxes on such
extraordinary gains (or losses), (iii) the amount of any cash payments
related to non-cash charges that were added back in determining EBITDA
in any prior period and (iv) barter revenues,
provided, however, that
(1) the net income of any other Person that is
accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash
to such specified Person whose EBITDA is being determined or a Wholly
Owned Restricted Subsidiary thereof;
9
<PAGE>
(2) the net income of any other Person that is a
Restricted Subsidiary (other than a Wholly Owned Restricted Subsidiary)
or is an Unrestricted Subsidiary shall be included only to the extent
of the amount of dividends or distributions paid in cash to such
specified Person whose EBITDA is being determined or a Wholly Owned
Restricted Subsidiary thereof;
(3) the net income (loss) of any other Person
acquired after the Effective Date in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded
(to the extent otherwise included); and
(4) gains or losses from sales of assets other than
sales of assets acquired and held for resale in the ordinary course of
business shall be excluded (to the extent otherwise included).
All of the foregoing will be determined in accordance with GAAP.
"Effective Date" has the meaning set forth in Section 11.8.
"Environmental Laws" means any and all Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
regulating, relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any time
hereafter be in effect.
"Equity Interest" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities convertible
into such equity, and including, in the case of a partnership, partnership
interests (whether general or limited) and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.
"Equity Proceeds" has the meaning set forth in Section 4.2(e).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
10
<PAGE>
"Eurocurrency Reserve Requirements" means, for any day as
applied to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of the
Federal Reserve System.
"Eurodollar Base Rate" means, with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the rate per annum equal
to the rate at which NationsBank is offered Dollar deposits at or about 10:00
A.M., Dallas, Texas time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its Eurodollar Loans are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein and in an amount comparable to the amount
of its Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans" means Loans, the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%), plus 2.625%:
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche" means the collective reference to
Eurodollar Loans made by the Lenders, the then current Interest Periods of which
begin on the same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default" means any of the events specified in
Section 9, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Proceeds" has the meaning set forth in Section 4.2(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statutes.
"Exchange Agreement" means that certain Exchange Agreement,
dated as of June 6, 1995, by and among the Borrower and the Series A Preferred
Investors (as such term is
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defined in the Preferred Stockholders' Agreement), as amended from time to time
in accordance with the terms hereof and thereof.
"Existing Credit Agreement" has the meaning set forth in the
Preliminary Statement.
"Existing Lender(s)" has the meaning set forth in the
Preliminary Statement.
"Existing Subordinated Notes" means those certain 15%
Subordinated Promissory Notes due 2003 issued to the Investors pursuant to the
Securities Purchase Agreement.
"Fair Market Value" means with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. All determinations in the
covenants of Fair Market Value shall be made by the Board of Directors of the
Borrower and shall be evidenced by a resolution of such Board set forth in a
certificate of a Responsible Officer delivered to the Agent, upon which the
Agent may conclusively rely.
"FCC" means the Federal Communications Commission (or any
successor agency, commission, bureau, department or other political subdivision
of the United States of America).
"FCC License" means any radio broadcast service, community
antenna relay service, broadcast auxiliary license, earth station registration,
business radio, microwave or special safety radio service license issued by the
FCC pursuant to the Communications Act of 1934, as amended.
"Federal Funds Rate" means for any day the rate per annum
(rounded upwards if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the preceding Business Day as so published on the next succeeding Business Day
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to the
Agent on such day on such transactions as reasonably determined by the Agent.
"Fee Letter" means that certain letter agreement, dated as of
October 31, 1997, between the Agent and the Borrower concerning certain fees to
be paid in connection with this Agreement, as such letter agreement may be
amended, modified, restated, supplemented, renewed, extended, increased,
rearranged or substituted from time to time.
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"Final Order" means an action by the FCC or other Tribunal
that has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended and with respect to which no requests by any Person are pending for
administrative or judicial review, reconsideration, appeal or stay and the time
for filing any such requests and the time to review or comment with respect to
any such action and for the FCC or other Tribunal to set aside such action on
its own order have expired.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Effective Date, including those
set forth in (i) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (ii) statements
and pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Greyhound Agreement" means that certain Loan Agreement, dated
as of August 31, 1993, between Radio One, Inc., a District of Columbia
corporation (predecessor in interest to the Borrower), Radio One Maryland, Inc.
and Greyhound Financial Corporation.
"Guaranty" means (i) those certain Guaranties, dated June 6,
1995 from each of Radio One of Maryland, Inc., a Delaware corporation, Radio One
License, Inc., a District of Columbia corporation and Radio One of Maryland
License, Inc., a District of Columbia corporation and (ii) that certain
Guaranty, dated August 30, 1996, from Radio One License LLC, a District of
Columbia limited liability company and (iii) each Guaranty of a Restricted
Subsidiary, substantially in the form of Exhibit C, executed and delivered as
required pursuant to the terms hereof, as the same may be amended, modified,
restated, supplemented, renewed, extended, rearranged or substituted from time
to time.
"Guaranty Obligation" means for any Person, without
duplication, any obligation, contingent or otherwise, of such Person
guaranteeing or otherwise becoming liable for any Indebtedness of any other
Person ("primary obligor") in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person, direct or indirect
(a) to purchase or pay, or to advance or supply funds for the purchase or
payment of such Indebtedness or to purchase, or to advance or supply funds for
the purchase of, any security for the payment of such Indebtedness, (b) to
purchase property, securities or services for the purpose of assuring the owner
of such Indebtedness of the payment of such Indebtedness or (c) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness; provided that the
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term Guaranty Obligation shall not include endorsements for collection or
deposit, in each case in the ordinary course of the endorser's business.
"Highest Lawful Rate" shall mean at the particular time in
question the maximum rate of interest which, under applicable Law, the Lenders
are then permitted to charge on the Obligations. If the maximum rate of interest
which, under applicable Law, the Lenders are permitted to charge on the
Obligations shall change after the Effective Date, the Highest Lawful Rate shall
be automatically increased or decreased, as the case may be, from time to time
as of the effective time of each change in the Highest Lawful Rate without
notice to the Borrower. For purposes of determining the Highest Lawful Rate
under the applicable Law of the State of Texas, the applicable rate ceiling
shall be (a) the weekly rate ceiling described in and computed in accordance
with the provisions of Articles 5069-1D and 5069-1H.002, Title 79, Revised Civil
Statutes of Texas, 1925, as amended ("Art. 5069-1D"), or (b) if the parties
subsequently contract as allowed by applicable Law the quarterly ceiling or the
annualized ceiling computed pursuant to Art. 5069-1D; provided, however, that at
any time the indicated rate ceiling, the quarterly ceiling or the annualized
ceiling shall be less than 18% per annum or more than 24% per annum, the
provisions of Section 1D.009 of said Art. 5069-1D shall control for purposes of
such determination, as applicable.
"Hughes" means Catherine L. Hughes.
"Immediate Family Member" means, with respect to any
individual, such individual's spouse (past or current), descendants (natural or
adoptive, of the whole or half blood) of the parents of such individual, such
individual's grandparents and parents (natural or adoptive), and the
grandparents, parents and descendants of parents (natural or adoptive, of the
whole or half blood) of such individual's spouse (past or current).
"Indebtedness" means, with respect to any Person, whether or
not contingent, (i) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices) or which is evidenced by a note, bond,
debenture or similar instrument, (ii) all Capital Lease Obligations of such
Person, (iii) all obligations of such Person in respect of surety bonds, letters
of credit, bankers' acceptances and similar instruments issued or created for
the account of such Person, (iv) all Interest Hedge Agreements of such Person,
(v) any liability secured by any Lien on any property owned by such Person even
if such Person has not assumed or otherwise become liable for the payment
thereof to the extent of the value of the property subject to such Lien, (vi)
all Disqualified Stock of such Person, and (vii) to the extent not otherwise
included, any Guaranty Obligation of such Person; provided, however, in no event
shall the Senior Preferred Stock (including any and all accrued dividends
thereon) be considered "Indebtedness."
"Information" means written information, including, without
limitation, certificates, reports, statements (other than financial statements,
budgets, projections and similar financial data) and documents.
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"Insolvency" means with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Intellectual Property Security Agreement" means that certain
Intellectual Property Security Agreement and Assignment, dated June 6, 1995,
executed and delivered by the Borrower and each other such security agreement,
substantially in the same form as the foregoing, executed and delivered by a
Restricted Subsidiary as required by the terms hereof, as such security
agreements may be amended, modified, restated, supplemented, renewed, extended,
rearranged or substituted from time to time.
"Intercompany Notes" means that certain Subordinated Line of
Credit Note, dated effective as of August 30, 1996, executed by Radio One
License LLC, payable to the order of the Borrower and endorsed to the Agent in
the original principal amount of $53,000,000.
"Interest Coverage Ratio" means, as of the date of any
determination, the ratio of (a) Operating Cash Flow to (b) Interest Expense, in
each case for the most recently ended four fiscal quarter period.
Notwithstanding the foregoing, the Interest Coverage Ratio (i) for the fiscal
quarter ending September 30, 1997, shall be calculated using the Operating Cash
Flow and the Interest Expense for the two fiscal quarters ending on such date,
and (ii) for the fiscal quarter ending December 28, 1997, shall be calculated
using the Operating Cash Flow and the Interest Expense for the three fiscal
quarters ending on such date.
"Interest Expense" means for any fiscal quarter or fiscal year
of the Borrower, as applicable, the aggregate of all interest and fees,
including but not limited to agency fees, letter of credit fees and commitment
fees actually paid in cash by the Borrower or any of the Restricted
Subsidiaries, during such period in respect of Indebtedness, all as determined
on a consolidated basis in accordance with GAAP.
"Interest Hedge Agreements" means any interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements, or
any similar agreements, or arrangements designed to hedge the risk of variable
interest rate volatility.
"Interest Payment Date" means (a) as to any ABR Loan, (i) the
last Business Day of each March, June, September and December prior to the
Termination Date and (ii) the Termination Date, (b) as to any Eurodollar Loan
(i) having an Interest Period of three months or less, the last day of such
Interest Period, (ii) having an Interest Period longer than three months, each
day which is three months or a whole multiple thereof, after the first day of
such Interest Period and the last day of such Interest Period and (iii) the
Termination Date.
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"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter (or, to the
extent available from all Lenders, nine or twelve months thereafter),
as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, given with respect
thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter (or, to the extent
available from all Lenders, nine or twelve months thereafter), as
selected by the Borrower by irrevocable notice to the Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Termination Date shall end on the Termination Date; and
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Investment" means, in any Person, any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of a Guaranty Obligation
or similar arrangement) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Equity Interests,
Indebtedness or other similar instruments issued by such Person. For purposes of
Section 8.8, any property transferred to or from an Unrestricted Subsidiary
shall be valued at its Fair Market Value at the time of such transfer, in each
case as determined in good faith by the Board of Directors of the Borrower.
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"Investors" means Alta Subordinated Debt Partners III, L.P.,
BancBoston Investments Inc., Grant M. Wilson, Syncom Capital Corporation,
Alliance Enterprise Corporation, Greater Philadelphia Venture Capital
Corporation, Inc., Opportunity Capital Corporation, Capital Dimensions Venture
Fund, Inc., TSG Ventures and Fulcrum Venture Capital Corporation.
"Issuing Lender" means NationsBank, provided that, in the
event that NationsBank shall be replaced as the Agent pursuant to Section 10.9,
no Letter of Credit shall be issued by NationsBank on or after the date of such
replacement and (ii) the replacement Agent shall be the Issuing Lender from and
after the date of such replacement.
"LMA Agreements" means any time brokerage agreement, local
marketing agreement, local market affiliation agreement, joint sales agreement,
joint operating agreement or joint operating venture for the operation of a
radio station or related or similar agreements entered into, directly or
indirectly, between any Loan Party and any other Person other than another Loan
Party.
"Law" means all applicable statutes, laws, ordinances,
regulations, rules, guidelines, orders, writs, injunctions, or decrees of any
state, commonwealth, nation, territory, province, possession, township, county,
parish, municipality or Tribunal.
"L/C Obligations" means at any time, an amount equal to the
sum of (a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of all unpaid
Reimbursement Obligations.
"Lender" has the meaning set forth in the introductory
paragraph of this Agreement.
"Letters of Credit" has the meaning set forth in Section
3.1(a).
"License" means as to any Person, any license, permit,
certificate of need, authorization, certification, accreditation, franchise,
approval, or grant of rights by any Governmental Authority or other Person
necessary or appropriate for such Person to own, maintain, or operate its
business or property, including FCC Licenses.
"License Subsidiaries" means any Restricted Subsidiary of the
Borrower organized by the Borrower for the sole purpose of holding FCC licenses
and other Necessary Authorizations.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
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"Liggins" means Alfred C. Liggins, III.
"Loan" means any Loan made by any Lender pursuant to this
Agreement.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Confirmation of Liens, all UCC financing statements, the
Subordination Agreement, any Application, any Interest Hedge Agreements with any
Lenders relating to the Loans, the Fee Letter, all certificates executed and
delivered by any Loan Party in connection with any Loan Document, any agreements
between any Loan Party and the Agent or any Lender in respect of fees or the
reimbursement of costs and expenses in connection with the transactions
contemplated hereby and any and all other documents, instruments, certificates
and agreements now or hereafter executed and delivered by any Person pursuant to
or in connection with any of the foregoing, and any and all present or future
amendments, modifications, supplements, renewals, extensions, increases,
restatements, rearrangements or substitutions from time to time of all or any
part of any of the foregoing.
"Loan Parties" means the collective reference to the Borrower
and the Restricted Subsidiaries.
"Majority Lenders" means at any time when no Loans or L/C
Obligations are outstanding, the Lenders having Commitments equal to or more
than 66-2/3% of the Total Commitment, and at any time when Loans or L/C
Obligations are outstanding, the Lenders with outstanding Loans and
participations in L/C Obligations having an unpaid principal balance and face
amount, respectively, equal to or more than 66-2/3% of all Loans and L/C
Obligations outstanding, excluding from such calculation the Lenders which have
failed or refused to fund a Loan or their respective portion of an unpaid
Reimbursement Obligation.
"Management Stockholders" means Hughes, Liggins and Moore.
"Material Adverse Effect" means (i) any adverse effect upon
the validity or enforceability of any Loan Document or the rights and remedies
of the Lenders thereunder, (ii) any material adverse effect on the business,
condition (financial or otherwise), operations, performance, property or assets
of (x) the Borrower and its Restricted Subsidiaries taken as a whole or (y) any
License Subsidiary or (iii) any material adverse effect upon the ability of any
Loan Party to perform its obligations under any Loan Document.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
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"Material Lease" means each lease of real property by any Loan
Party, as lessee, sublessee or lessor, which is a radio studio location or
antenna, tower or transmitter site.
"Moore" means Jerry A. Moore, III.
"Mortgages" means each deed of trust, leasehold deed of trust,
mortgage, deed to secure debt, leasehold mortgage, collateral assignment of
leases or other real estate security document securing the Obligations or any
portion thereof and all modifications and supplements to any of the foregoing
that are executed and delivered by any Loan Party pursuant to or in connection
with any of the Loan Documents, and any and all amendments, modifications,
restatements, supplements, renewals, extensions, rearrangements or substitutions
from time to time of any of the foregoing.
"Multiemployer Plan" means a multiemployer plan as defined in
sections 3(37) or 4001(a)(3) of ERISA or section 414 of the Code to which the
Borrower or any Common Controlled Entity is making, or has made, or is accruing,
or has accrued, an obligation to make contributions.
"Necessary Authorization" means any license, permit, consent,
franchise, order approval or authorization from, or any filing, recording or
registration with, any Tribunal (including, without limitation, the FCC)
necessary to the conduct of any Loan Party's business or for the ownership,
maintenance and operation by any Loan Party of its Stations and other properties
or to the performance by any Loan Party of its obligations under any LMA
Agreement to which it is a party.
"Net Proceeds" means, with respect to any Disposition by any
Person, the aggregate cash proceeds received by such Person in respect of such
Disposition, which amount is equal to the excess, if any, of:
(i) the cash received by such Person (including any cash
payments received by way of deferred payment pursuant to, or
monetization of, a note or installment receivable or otherwise, but
only as and when received) in connection with such Disposition, over
(ii) the sum of
(a) the amount of any Indebtedness including any
premium thereon and fees and expenses associated therewith
which is required to be repaid by such Person in connection
with such Disposition, plus
(b) the out-of-pocket expenses (1) incurred by such
Person in connection with such Disposition, and (2) if such
Person is a Restricted Subsidiary, incurred in connection with
the transfer of such amount to the parent company or entity of
such Person, plus
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(c) provision for taxes, including income taxes,
attributable to the Disposition or attributable to required
prepayments or repayments of Indebtedness with the proceeds of
such Disposition, plus
(d) a reasonable reserve for the after-tax costs of
any indemnification payments (fixed or contingent)
attributable to the seller's indemnities to the purchaser in
respect of such Disposition undertaken by the Borrower or any
of the Restricted Subsidiaries in connection with such
Disposition.
For purposes of this definition and amounts due under Section
4.2(d), the following are deemed to be cash: (x) the assumption of Indebtedness
of the Borrower or any Restricted Subsidiary and the release of the Borrower or
such Restricted Subsidiary from all liability on such Indebtedness in connection
with such Disposition (other than customary indemnification provisions relating
thereto that do not involve the repayment of funded Indebtedness) and (y)
securities or notes received by the Borrower or any Restricted Subsidiary from
the transferee that are promptly converted by the Borrower or such Restricted
Subsidiary into cash.
"Net Revenues" means gross revenues less agency commissions,
after all proper charges and reserves, as determined in accordance with GAAP.
"Non-Excluded Taxes" has the meaning set forth in Section
4.10(a).
"Non-U.S. Lender" has the meaning set forth in Section
4.10(b).
"Non-Voting Common Stock" means the non-voting class B common
stock, par value $.01 per share of the Borrower.
"Notes" means the collective reference to the Tranche A Notes
and the Tranche B Notes.
"Notice of Borrowing" has the meaning set forth in Section 2.3.
"Notice of Conversion/Continuation" has the meaning set forth
in Section 4.5.
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"Obligations" means the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and Reimbursement Obligations and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Loan Party, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loans and Reimbursement Obligations and all other obligations and
liabilities of any Loan Party to the Agent or to any Lender (or, in the case of
any Interest Hedge Agreement, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Interest Hedge
Agreement entered into with any Lender (or any Affiliate of any Lender) or any
other document executed and delivered by any Loan Party in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all reasonable fees, charges and disbursements of counsel to the Agent or to any
Lender that are required to be paid by any Loan Party pursuant hereto) or
otherwise.
"Operating Agreement" means an agreement substantially in the
form of Exhibit D.
"Operating Cash Flow" means for the Borrower and its
Restricted Subsidiaries on a consolidated basis for the period involved, Net
Revenues for such period, minus (a) operating expenses for such period as
determined in accordance with GAAP (exclusive of depreciation, amortization and
barter expenses) incurred or paid during such period, (b) cash Taxes paid during
such period and (c) Corporate Overhead Expense. Notwithstanding anything to the
contrary contained in the foregoing, the Net Revenues of Unrestricted
Subsidiaries may be included in the Net Revenues of the Borrower and the
Restricted Subsidiaries but only to the extent of the amount of dividends or
distributions paid in cash to the Borrower and the Restricted Subsidiaries from
such Unrestricted Subsidiaries. Operating Cash Flow shall exclude the effect of
non-cash income or expense (including the effect of any exchange of advertising
time for non-cash consideration such as merchandise, services or program
material), non-cash losses from Restricted Subsidiaries and any write-up or
write-down of assets or write-down of liabilities of the Borrower or its
Restricted Subsidiaries, as determined in accordance with GAAP.
For purposes of calculating Operating Cash Flow with respect
to Stations not owned at all times during the period involved in determining
Operating Cash Flow, there shall be (a) included the Operating Cash Flow of any
Stations acquired by the Borrower or any Restricted Subsidiary during the period
involved in such determination and (b) excluded the Operating Cash Flow of any
Stations disposed of by the Borrower or any Restricted Subsidiary during the
period involved in such determination, assuming in each such case that such
Stations were acquired or disposed of, as the case may be, on the first day of
such period.
"Operating Lease" means any lease that is an operating lease
in accordance with GAAP and that has an initial or remaining noncancellable
lease term in excess of one year.
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"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
ss.ss.651 et seq., as amended.
"Participant" has the meaning set forth in Section 11.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Perfection Certificate" means a Perfection Certificate, dated
as of October 31, 1997, duly executed by each Loan Party, in the form of Exhibit
E and delivered to the Agent pursuant to Section 6.1(v).
"Permitted Escrow Deposits" has the meaning set forth in
Section 3.1(a).
"Permitted Investments" means:
(i) any Investment in the Borrower or any Wholly
Owned Restricted Subsidiary;
(ii) any Investment in Cash Equivalents;
(iii) any Investment in a Person if, as a result of
such Investment, (a) such Person becomes a Wholly Owned Restricted
Subsidiary of the Borrower, or (b) such Person either (1) is merged,
consolidated or amalgamated with or into the Borrower or one of its
Wholly Owned Restricted Subsidiaries and the Borrower or such Wholly
Owned Restricted Subsidiary is the Surviving Person or the Surviving
Person becomes a Wholly Owned Restricted Subsidiary, or (2) transfers
or conveys all or substantially all of its assets to, or is liquidated
into, the Borrower or one of its Wholly Owned Restricted Subsidiaries;
and
(iv) any Investment in accounts and notes receivable
acquired in the ordinary course of business.
"Permitted Line of Business" has the meaning set forth in
Section 8.11.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"Plan" means at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) a "contributing sponsor" as defined in
Section 4001(a)(13) of ERISA or a member of such contributing sponsor's "control
group" as defined in Section 4001(a)(14) of ERISA.
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"Pledge Agreements" means (i) that certain Shareholder Pledge
Agreement, dated as of June 6, 1995, executed by Hughes, Liggins and Moore in
favor of the Agent for the benefit of the Lenders, (ii) that certain Pledge
Agreement, dated effective as of May 19, 1997, executed by the Borrower in favor
of the Agent for the benefit of the Lenders, (iii) that certain Pledge
Agreement, dated as of June 6, 1995, executed by the Investors in favor of the
Agent for the benefit of the Lenders (the "Warrantholders' Pledge") and (iv)
each Pledge Agreement of a Restricted Subsidiary, substantially in the form of
Exhibit F executed and delivered as required pursuant to the terms hereof, as
each of the foregoing may be amended, modified, restated, supplemented, renewed,
extended, rearranged and substituted from time to time.
"Preferred Stock", as applied to the Equity Interests of any
Person, means Equity Interests of any class or classes (however designated) that
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class of such
Person.
"Preferred Stock Documents" means all of the documents,
agreements, instruments, proxies and certificates executed and delivered by any
Loan Party in connection with the Senior Preferred Stock or otherwise relating
to the Senior Preferred Stock, including but not limited to the Securities
Purchase Agreement, the Warrant Agreement, the Exchange Agreement, the Amended
and Restated Certificate of Incorporation, the Preferred Stockholders'
Agreement, the Warrant Certificates and all security agreements, guaranties,
pledge agreements, collateral assignments, mortgages, deeds of trust and other
security documents relating to any of the foregoing, all certificates and
proxies executed and delivered in connection with any of the foregoing and all
other documents, agreements and instruments now or hereafter executed or
delivered by any Person in connection with or as security for the payment and
performance of the Senior Preferred Stock, as amended, in each case, with the
consent (to the extent necessary) of the Lenders required pursuant to the
Subordination Agreement.
"Preferred Stockholders' Agreement" means that certain
Preferred Stockholders' Agreement, dated as of May 14, 1997 by and among the
Investors, the Borrower, Radio One Licenses, Inc. (the surviving corporation of
the merger of Radio One License LLC) and the Management Stockholders, as amended
from time to time and in accordance with the terms hereof and thereof.
"Prime Rate" has the meaning set forth in the definition of
ABR.
"Principal Shareholders" means Catherine L. Hughes and Alfred
C. Liggins, III and their respective estates, executors and heirs.
"Properties" has the meaning set forth in Section 5.17(e).
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"Public Equity Offering" means an underwritten primary public
offering of common stock of the Borrower pursuant to an effective registration
statement under the Securities Act.
"Purchase Agreement" means that certain Purchase Agreement,
dated as of May 14, 1997, among the Borrower, as the issuer thereunder, Radio
One Licenses, Inc., as a guarantor thereunder, and Credit Suisse First Boston
Corporation and NationsBanc Capital Markets, Inc., acting on behalf of
themselves and as the representatives of the several initial purchasers
thereunder, regarding the sale by the Borrower of the Senior Subordinated Notes.
"Purchase Money Indebtedness" means Indebtedness of the
Borrower and the Restricted Subsidiaries incurred in connection with the
purchase of property or assets for the business of the Borrower and the
Restricted Subsidiaries.
"Purchase Money Lien" means any Lien securing solely Purchase
Money Indebtedness; provided that (i) any such Lien attaches concurrently with
the acquisition of the subject property, (ii) such Lien attaches solely to the
property so acquired in such transaction and (iii) the principal amount of the
Indebtedness secured thereby does not exceed 100% of the cost of such property.
"Register" has the meaning set forth in Section 11.6(g).
"Reimbursement Obligations" means the obligations of the
Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for amounts
drawn under Letters of Credit.
"Related Party" means, with respect to any Principal
Shareholder, (i) any 80% (or more) owned Subsidiary or Immediate Family Member
(in the case of an individual) of such Principal Shareholder or (ii) any Person,
the beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of such Principal
Shareholder or an Immediate Family Member, or (iii) any Person employed by the
Borrower in a management capacity as of the Effective Date.
"Reorganization" means with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss. 2615.
"Requirement of Law" means as to any Person, the Charter
Documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority
(including any Authorization), in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
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"Responsible Officer" means the chief executive officer, the
president or the chief financial officer of the relevant Loan Party.
"Restricted Payment" means, with respect to any Person, (i)
the declaration or payment of any dividends or any other distributions of any
sort in respect of its Equity Interests (including any payment in connection
with any merger or consolidation involving such Person) or similar payment to
the direct or indirect holders of its Equity Interests (other than in each such
case distributions payable solely in its Equity Interests that is not
Disqualified Stock) and dividends or distributions payable solely to the
Borrower or a Wholly Owned Restricted Subsidiary, (ii) the purchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
Borrower held by any Person or of any Equity Interests of a Restricted
Subsidiary held by any Person (other than a Wholly Owned Restricted Subsidiary),
including the exercise of any option to exchange any Equity Interests (other
than its Equity Interests of the Borrower that is not Disqualified Stock), or
(iii) the purchase, repurchase, redemption, defeasance (including without
limitation, any payment or deposit in respect of defeasance under Article Eight
of the Senior Subordinated Notes Indenture) or other acquisition or retirement
for value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment of any Subordinated Debt.
"Restricted Subsidiaries" means a Subsidiary of the Borrower
other than an Unrestricted Subsidiary.
"Rights" means rights, remedies, powers and privileges.
"Sale and Leaseback Transaction" means a transaction whereby
any Loan Party becomes liable with respect to any lease, whether an Operating
Lease or a capital lease, or any property (whether real, personal or mixed),
whether now owned or hereafter acquired, which (a) any Loan Party has sold or
transferred or is to sell or transfer to any other Person or (b) any Loan Party
intends to use for substantially the same purposes as any other property which
has been or is to be sold or transferred by any Loan Party to any other Person
in connection with such lease.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Securities Purchase Agreement" means that certain Agreement
for Purchase and Sale of $17,000,000 Subordinated Secured Promissory Notes Due
2003 and Warrants to Purchase Common Stock of Radio One, Inc., dated as of June
6, 1995, among the Borrower, the Subsidiaries of the Borrower party thereto,
Liggins, Hughes, Moore and the Investors, as amended with the consent of the
Lenders required pursuant to the Subordination Agreement.
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"Security Agreements" means (i) that certain Amended and
Restated Borrower Security Agreement, dated effective as of May 19, 1997,
executed by the Borrower in favor of the Agent for the benefit of the Lenders;
(ii) that certain Security Agreement [Radio One Licenses, Inc.], dated effective
as of May 19, 1997, executed by Radio One Licenses, Inc., a Delaware corporation
and (iii) each Security Agreement of a Restricted Subsidiary, substantially in
the form of Exhibit G executed and delivered as required pursuant to the terms
hereof, as each of the foregoing may be amended, modified, restated,
supplemented, renewed, extended, rearranged and substituted from time to time.
"Security Documents" means the Security Agreements, the Pledge
Agreements, the Intellectual Property Security Agreements, the Mortgages, each
Guaranty and any and all other agreements, deeds of trust, mortgages, chattel
mortgages, security agreements, pledges, guaranties, assignments of proceeds,
assignments of income, assignments of contract rights, assignments of
partnership interest, assignments of royalty interests, assignments of
performance or other collateral assignments, completion or surety bonds, standby
agreements, subordination agreements, undertakings and other documents,
agreements, instruments and financing statements now or hereafter executed and
delivered by any Person in connection with, or as security for the payment or
performance of, the Obligations or any part thereof.
"Senior Management" shall mean Hughes, Liggins and Scott R.
Royster.
"Senior Preferred Stock" means (i) 84,843.03 shares of the
Series A 15% Senior Cumulative Redeemable Preferred Stock, par value $.01 per
share, (ii) 124,467.10 shares of the Series B 15% Senior Cumulative Redeemable
Preferred Stock, par value $.01 per share and (iii) if exercised, the number of
shares of Series A 15% Senior Cumulative Redeemable Preferred Stock to which the
holder of the Allied Warrant is entitled thereunder not to exceed an original
liquidation value of $4,000,000, provided that the holder of such Allied Warrant
has assumed all the obligations and liabilities under, and become a party to,
the Standstill Agreement as an "Investor" thereunder.
"Senior Subordinated Debt Documents" means any and all
agreements relating to the Senior Subordinated Indebtedness, including but not
limited to the Senior Subordinated Notes, the Purchase Agreement, the Senior
Subordinated Notes Indenture, the Standstill Agreement and the Senior
Subordinated Guaranties.
"Senior Subordinated Guaranties" means any and all guaranties
of the Senior Subordinated Indebtedness.
"Senior Subordinated Indebtedness" means the Indebtedness owed
by the Loan Parties to the Senior Subordinated Note Holders in an original
principal amount not to exceed $85,478,000 which bears interest and has a
maturity as set forth in the Senior Subordinated Notes Indenture.
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"Senior Subordinated Note Holders" means the holders of the
Senior Subordinated Notes.
"Senior Subordinated Notes" means (a) those certain 12% Senior
Subordinated Notes due 2004, from the Borrower in the aggregate original
principal amount of $85,478,000, issued pursuant to the Senior Subordinated
Notes Indenture; and (b) all senior subordinated notes of the Borrower issued in
exchange for the Senior Subordinated Notes on terms substantially identical to
the terms of the Senior Subordinated Notes.
"Senior Subordinated Notes Indenture" means that certain
Indenture, dated as of May 15, 1997, among the Borrower, the Restricted
Subsidiaries and United States Trust Company of New York, as trustee for the
Senior Subordinated Note Holders, as amended from time to time in accordance
with the terms hereof and thereof.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of the date of
any determination, that on such date (a) the fair value of the property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Specified Percentage" means at any time, as to any Lender,
the percentage of the sum of the Tranche A Commitments and/or the sum of the
Tranche B Commitments, as the context requires, then constituted by such
Lender's Tranche A Commitment and/or Tranche B Commitment, as the context
requires.
"Standstill Agreement" means that certain Standstill
Agreement, dated as of May 19, 1997, between the Borrower, Radio One Licenses,
Inc., the Investors, United States Trust Company of New York, as trustee on
behalf of the Senior Subordinated Note Holders, the Management Stockholders and
the Agent, which Standstill Agreement was given in substitution
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and replacement of the Subordination Agreement as amended from time to time in
accordance with the terms hereof and thereof.
"Station" or "Stations" has the meaning set forth in Section
5.25.
"Subordinated Debt" means any Indebtedness of the Borrower or
any Restricted Subsidiary if the instrument creating or evidencing such
Indebtedness or pursuant to which such Indebtedness is outstanding expressly
provides that such Indebtedness is (i) if incurred by the Borrower, subordinated
in right of payment to the Obligations or (ii) if incurred by a Restricted
Subsidiary, subordinated in right of payment to the Guaranty and other
Obligations of such Restricted Subsidiary.
"Subordinated Guaranties" means those certain Guaranties,
dated June 6, 1995, executed and delivered by each of Radio One of Maryland,
Inc., a Delaware corporation, Radio One License, Inc., a District of Columbia
corporation, and Radio One of Maryland License, Inc., a District of Columbia
corporation, guaranteeing the payment and performance of the Existing
Subordinated Notes and any other guarantees of any Loan Party guaranteeing the
payment or performance of the Existing Subordinated Notes.
"Subordinated Pledge Agreement" means that certain Shareholder
Pledge Agreement dated June 6, 1995, executed and delivered by the Management
Stockholders to Alta Subordinated Debt Partners III, L.P., as secured party for
the ratable benefit of the Investors securing the payment of the Existing
Subordinated Notes.
"Subordination Agreement" means the Standstill Agreement,
which Standstill Agreement was given in replacement of that certain
Intercreditor and Subordination Agreement, dated as of June 6, 1995, executed by
the Loan Parties, the Investors, the Management Stockholders and the Agent.
Accordingly, all references in any Loan Document or any other agreement or
document to the Subordination Agreement shall mean the Standstill Agreement.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of all Voting Equity Interests entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees or other governing body thereof is at the time owned or
controlled by such Person (regardless of whether such Equity Interests are owned
directly or through one or more other Subsidiaries of such Person or a
combination thereof). Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower. "Wholly Owned Subsidiary" shall mean (a) any
such corporation of which all of such shares, other than directors' qualifying
shares, are so owned or controlled, directly or indirectly, and (b) any such
partnership, association, joint venture or other entity in which such Person
owns or controls, directly or indirectly, 100% of such interests.
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"Surviving Person" means, with respect to any Person involved
in or that makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made.
"Tax Return" means, with respect to any Person, any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes of such Person, including any schedule or attachment thereto
and including any amendment thereof.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, deductions, withholdings or other charges of any nature whatsoever from
time to time or at any time imposed by any Law or Tribunal, excluding, in the
case of each Lender and the Agent, taxes based on or measured by its net income,
and franchise taxes and any doing business taxes imposed on it, by any
jurisdiction (or political subdivisions thereof) in which the Agent or such
Lender or any applicable lending office is organized, located or doing business.
"Termination Date" means the earlier of (i) October 31, 2000,
(ii) the date the Commitments under this Agreement are otherwise canceled or
terminated in their entirety and (iii) the date all of the Obligations shall
become due and payable whether at stated maturity, by acceleration or otherwise
in accordance with the term hereof.
"Total Available Tranche A Commitment" means the sum of the
Available Tranche A Commitments of all of the Lenders.
"Total Available Tranche B Commitment" means the sum of the
Available Tranche B Commitments of all of the Lenders.
"Tranche A Commitment" means as to any Lender, its obligation,
if any, to make Tranche A Loans to, and/or issue or participate in Letters of
Credit issued on behalf of, the Borrower in an aggregate amount not to exceed at
any one time outstanding the amount set forth opposite such Lender's name in
Schedule 1.1 under the heading "Tranche A Commitment" or, in the case of any
Lender that is an Assignee, the amount of the assigning Lender's Tranche A
Commitment assigned to such Assignee pursuant to Section 11.6(c) and set forth
in the applicable Assignment and Acceptance (in each case, as the same may be
increased, reduced or otherwise adjusted from time to time as provided herein).
"Tranche A Facility" means all of the Tranche A Commitments of
all of the Lenders and the Tranche A Loans made, and Letters of Credit issued,
thereunder.
"Tranche A L/C Obligations" means L/C Obligations relating to
Letters of Credit issued under the Tranche A Facility.
"Tranche A Loans" as defined in Section 2.1.
"Tranche A Note" as defined in Section 2.1.
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"Tranche B Commitment" means as to any Lender, the obligation
of such Lender, if any, to make Tranche B Loans to, and/or to issue or
participate in Letters of Credit issued on behalf of, the Borrower in an
aggregate principal amount not to exceed the amount set forth under the heading
"Tranche B Commitment" opposite such Lender's name on Schedule 1.1 or, in the
case of any Lender that is an Assignee, the amount of the assigning Lender's
Tranche B Commitment assigned to such Assignee pursuant to Section 11.6(c) and
set forth in the applicable Assignment and Acceptance (in each case, as the same
may be increased, reduced or otherwise adjusted from time to time as provided
herein).
"Tranche B Facility" means all of the Tranche B Commitments of
all of the Lenders and the Tranche B Loans made, and Letters of Credit issued,
thereunder.
"Tranche B L/C Obligations" means L/C Obligations relating to
Letters of Credit issued under the Tranche B Facility.
"Tranche B Loans" as defined in Section 2.2.
"Tranche B Note" as defined in Section 2.2.
"Tribunal" means any court or governmental department,
commission, board, bureau, agency or instrumentality of the United States of
America or any state, commonwealth, nation, territory, province, possession,
township, county, parish or municipality, whether now or hereafter constituted
or existing.
"UCC" means the Uniform Commercial Code as enacted in the
State of Texas or other applicable jurisdiction, as amended from time to time.
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Borrower that is formed or acquired after the Effective Date, which is funded
through Investments as permitted by Section 8.8 (as designated by the Board of
Directors of the Borrower, as provided below) and (ii) any direct or indirect
Subsidiary of an Unrestricted Subsidiary; provided that at the time of the
Investment by the Borrower to such Subsidiary (a) neither the Borrower nor any
of its Restricted Subsidiaries provides credit support for any Indebtedness of
such Subsidiary (including any undertaking, agreement or instrument evidencing
such Indebtedness) other than Investments permitted under Section 8.8, (b) such
Subsidiary is not liable, directly or indirectly, with respect to any
Indebtedness other than Unrestricted Subsidiary Indebtedness, (c) such
Unrestricted Subsidiary is not a party to any agreement, contract, arrangement
or understanding at such time with the Borrower or any Restricted Subsidiary of
the Borrower except for transactions with Affiliates permitted by the terms of
this Agreement unless the terms of any such agreement,
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contract, arrangement or understanding are no less favorable to the Borrower or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Borrower and (d) such Unrestricted
Subsidiary does not own any Equity Interest in or Indebtedness of any Subsidiary
of the Borrower that has not theretofore been and is not simultaneously being
designated an Unrestricted Subsidiary. Any such designation by the Board of
Directors of the Borrower shall be evidenced to the Agent by delivering to the
Agent of a board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. The Board of Directors of the Borrower may designate any
Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) both
immediately after giving effect to such designation, no Default or Event of
Default shall exist or will result therefrom, (ii) immediately after giving
effect to such designation, the Borrower could incur $1.00 of additional
Indebtedness pursuant to Section 4.03(a) of the Senior Subordinated Notes
Indenture and (ii) all Indebtedness of such Unrestricted Subsidiary shall be
deemed to be incurred (for purposes of Section 8.2 of this Agreement) on the
date such Subsidiary is designated a Restricted Subsidiary.
"Unrestricted Subsidiary Indebtedness" means of any
Unrestricted Subsidiary, Indebtedness of such Unrestricted Subsidiary (other
than a guarantee of Indebtedness of the Borrower or any Restricted Subsidiary
which is non-recourse to the Borrower and its Restricted Subsidiaries) (i) as to
which neither the Borrower nor any Restricted Subsidiary is directly or
indirectly liable (by virtue of the Borrower or any such Restricted Subsidiary
being the primary obligor on, guarantor of, or otherwise liable in any respect
to, such Indebtedness) and (ii) which, upon the occurrence of a default with
respect thereto, does not result in, or permit any holder of any Indebtedness of
the Borrower or any Restricted Subsidiary to declare a default on such
Indebtedness of the Borrower or any Restricted Subsidiary or cause the payment
thereof to be accelerated or payable prior to its stated maturity.
"Voting Equity Interests" means, with respect to any Person,
all classes of Equity Interest or other interests (including partnership
interests) of such Person then outstanding and normally entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof.
"Voting Stock" means the total voting power of all classes of
capital stock then outstanding of the Borrower and normally entitled (without
regard to the occurrence of any contingency) to vote in elections of directors
of the Borrower.
"Warrant Agreement" means that certain Warrantholders'
Agreement, dated as of June 6, 1995 among the Borrower, the Management
Stockholders and the Investors, as amended by that certain First Amendment to
the Warrantholders' Agreement (the "First Amendment to Warrant Agreement"),
dated as of May 19, 1997 and as otherwise amended from time to time with the
consent of the Lenders to the extent required pursuant to the Standstill
Agreement.
"Warrant Certificates" means those certain warrant
certificates issued to the Investors pursuant to the Securities Purchase
Agreement and the Exchange Agreement which
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warrant certificates were replaced by replacement certificates (entitled
"Amended and Restated Warrants") issued in connection with the First Amendment
to Warrant Agreement and any and all other warrant certificates issued in
replacement or substitution therefor, which Warrant Certificates are pledged to
the Agent for the benefit of the Lenders as security for the Obligations.
"Warrantholders" means the holders of Warrants issued pursuant
to the Securities Purchase Agreement and the Exchange Agreement or shares of
Common Stock issued in exchange therefor.
"Warrantholders' Pledge" has the meaning set forth in the
definition of Pledge Agreements.
"Warrants" means those certain Series B Amended and Restated
Warrants and those certain Series A Amended and Restated Warrants given in
replacement for the warrants issued to the Investors pursuant to the Securities
Purchase Agreement and the Exchange Agreement, to purchase an aggregate of
147.04 shares of the Common Equity of the Borrower on a fully diluted basis
subject to the terms and provisions of the Warrant Certificates.
"Wholly Owned Subsidiary" has the meaning set forth in the
definition of Subsidiary.
"WPHI-FM" means that certain radio station to be acquired by
the Borrower on or before the Effective Date pursuant to the terms and
conditions of the WPHI Purchase Agreement, which radio station was formerly
known as WDRE-FM.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the same defined meanings when used in the Notes or
other Loan Documents.
(b) As used in any Loan Document, accounting terms relating to
the Borrower and its Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein", "hereto" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement and
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined in any Loan Document
shall be equally applicable to both the singular and plural forms of such terms.
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(e) Unless stipulated otherwise all references in any of the
Loan Documents to "dollars", "money", "payments" or other similar financial or
monetary terms, are references to currency of the United States of America and
all references to interest are to simple not compound interest.
(f) The headings and captions used in any of the Loan
Documents are for convenience only and shall not be deemed to limit, amplify or
modify the terms of the Loan Documents nor affect the meaning thereof.
(g) References in this Agreement or any other Loan Document to
knowledge by the Borrower or any Subsidiary of events or circumstances shall be
deemed to refer to events or circumstances of which any Responsible Officer has
actual knowledge or reasonably should have knowledge.
(h) References in this Agreement or any other Loan Document to
financial statements shall be deemed to include all related schedules and notes
thereto.
1.3 Computation of Time Periods. For purposes of computation
of periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding".
SECTION 2.
AMOUNT AND TERMS OF COMMITMENTS
2.1 Tranche A Commitments and Tranche A Notes. (a) Subject to
and in reliance upon the terms, conditions, representations and warranties
contained in the Loan Documents, each Lender severally agrees to make Loans
under its Available Tranche A Commitment to the Borrower from time to time until
the Termination Date ("Tranche A Loans"), provided that in no event shall the
Aggregate Outstandings of Tranche A Credit of any Lender at any time exceed such
Lender's Tranche A Commitment. Until the Termination Date, the Borrower may use
the Available Tranche A Commitments by borrowing, prepaying the Tranche A Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Tranche A Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Agent in accordance with Sections 2.3 and
4.5, provided that no Tranche A Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Termination Date.
(c) In order to evidence the Tranche A Loans, the Borrower
will execute and deliver to each Lender a promissory note substantially in the
form of Exhibit H-1, with appropriate insertions as to payee, date and principal
amount (each, as amended, supplemented,
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replaced or otherwise modified from time to time, a "Tranche A Note"), payable
to the order of each Lender and in a principal amount equal to each such
Lender's Tranche A Commitment. Each Tranche A Note shall (x) be dated the
Effective Date or the date of any reissuance of such Tranche A Note, (y) be
stated to mature on the Termination Date and (z) provide for the payment of
interest in accordance with Section 4.1.
2.2 Tranche B Commitments and Tranche B Notes. (a) Subject to
and in reliance upon the terms, conditions, representations and warranties
contained in the Loan Documents, each Lender severally agrees to make Loans
under its Available Tranche B Commitment to the Borrower from time to time until
the Termination Date ("Tranche B Loans"), provided that in no event shall the
Aggregate Outstandings of Tranche B Credit of any Lender at any time exceed such
Lender's Tranche B Commitment. Until the Termination Date, the Borrower may use
the Available Tranche B Commitments by borrowing, prepaying the Tranche B Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Tranche B Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Agent in accordance with Sections 2.3 and
4.5, provided that no Tranche B Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Termination Date.
(c) In order to evidence the Tranche B Loans, the Borrower
will execute and deliver to each Lender a promissory note substantially in the
form of Exhibit H-2, with appropriate insertions as to payee, date and principal
amount (each, as amended, supplemented, replaced or otherwise modified from time
to time, a "Tranche B Note"), payable to the order of each Lender and in a
principal amount equal to each such Lender's Tranche B Commitment. Each Tranche
B Note shall (x) be dated the Effective Date or the date of any reissuance of
such Tranche B Note, (y) be stated to mature on the Tranche B Maturity Date and
(z) provide for the payment of interest in accordance with Section 4.1.
2.3 Procedure for Borrowing. Subject to the applicable terms
and conditions contained in Section 6 of this Agreement, the Borrower may borrow
under (i) the Tranche A Commitments at any time prior to the Termination Date
and/or (ii) the Tranche B Commitments at any time after the date on which the
Total Available Tranche A Commitment equals zero (0), but prior to the
Termination Date, on any Business Day by delivery to the Agent of an irrevocable
notice substantially in the form of Exhibit I (a "Notice of Borrowing"). A
Notice of Borrowing must be received by the Agent prior to 11:00 A.M., Dallas,
Texas time, (a) three Business Days prior to the requested Borrowing Date, if
all or any part of the requested Loans are to be initially Eurodollar Loans, or
(b) on the requested Borrowing Date. A Notice of Borrowing shall specify (i) the
amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof and
(iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
respective amounts of each Eurodollar Tranche and the respective lengths of the
initial Interest Periods therefor. Borrowings under the Tranche A Commitments
shall be in an amount equal to (x) in the case of
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ABR Loans, $100,000 or a whole multiple of $50,000 in excess thereof (or, if the
then available amount of the Tranche A Commitments is less than $100,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $500,000 or a whole
multiple of $100,000 in excess thereof. Borrowings under the Tranche B
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$100,000 or a whole multiple of $50,000 in excess thereof (or, if the then
available amount of the Tranche B Commitments is less than $100,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $500,000 or a whole multiple of
$100,000 in excess thereof. Upon receipt of any such Notice of Borrowing from
the Borrower, the Agent shall promptly notify each Lender thereof. Each such
Lender will make the amount of its pro rata share of each applicable borrowing
available to the Agent for the account of the Borrower at the office of the
Agent specified as the Funding Office in Schedule 1.1 prior to 1:00 P.M.,
Dallas, Texas time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Agent. Such borrowing will then be made available
to the Borrower by the Agent crediting the account of the Borrower as so
directed by the Borrower in a Notice of Borrowing with the aggregate of the
amounts made available to the Agent by the Lenders and in like funds as received
by the Agent.
2.4 Repayment of Loans. (a) The Borrower hereby
unconditionally promises to pay to the Agent for the account of each Lender, (i)
the then unpaid principal amount of each Tranche A Loan of such Lender on the
Termination Date (or such earlier date on which the Tranche A Loans become due
and payable pursuant to Section 9), (ii) the then unpaid principal amount of
each Tranche B Loan of such Lender on the Termination Date (or such earlier date
on which the Tranche B Loans become due and payable pursuant to Section 9), and
(iii) the amounts specified in Section 4.2 on the dates specified in Section
4.2. The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding until payment in full thereof
at the rates per annum, and on the dates, set forth in Section 4.1.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Agent shall maintain the Register pursuant to Section
11.6(g), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Loan made hereunder, whether the Loan is a Tranche A or a
Tranche B Loan, the type thereof and each Interest Period, if any, applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) both
the amount of any sum received by the Agent hereunder from the Borrower and each
Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 11.6(g) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Agent to maintain the Register or any
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such account, shall not in any manner affect the obligation of the Borrower to
repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, Issuing Lender, in reliance on the agreements of the other Lenders set
forth in Section 3.4(a), agrees to issue letters of credit under the Tranche A
Facility and under the Tranche B Facility (collectively, the "Letters of
Credit") for the account of the Borrower on any Business Day in such customary
form as may be approved from time to time by such Issuing Lender; provided that
Issuing Lender shall not issue any (i) Letter of Credit under the Tranche A
Facility if, after giving effect to such issuance, the Tranche A L/C Obligations
would exceed the lesser of (x) $1,000,000 or (y) the Total Available Tranche A
Commitment at such time or (ii) Letter of Credit under the Tranche B Facility
if, after giving effect to such issuance, the Tranche B L/C Obligations would
exceed the lesser of (x) $2,500,000 or (y) the Total Available Tranche B
Commitment at such time. Each Letter of Credit shall (i) be denominated in
Dollars, (ii) used solely (A) for making good faith escrow deposits in
connection with acquisitions of radio stations by the Borrower or any Subsidiary
of the Borrower, provided that any agreement, commitment or undertaking made in
connection therewith is non-recourse to the Borrower and the Restricted
Subsidiaries other than with respect to such escrow deposit ("Permitted Escrow
Deposits") or (B) to secure Capital Lease Obligations to the extent permitted
hereunder and (iii) expire no later than the earlier of (x) the Termination Date
and (y) the date which is 12 months after its date of issuance.
(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
Texas.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any other Lender to exceed any limits imposed by,
any applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender, at the office of the Issuing Lender
specified in Section 11.2, an application therefor, completed to the reasonable
satisfaction of the Issuing Lender, and such other certificates, documents and
other papers and information as the Issuing Lender may reasonably request. Upon
receipt of any Application, the Issuing Lender will process such Application and
the certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the
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Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof.
3.3 Fees, Commissions and Other Charges. The Borrower shall
pay to the Issuing Lender, a letter of credit fee with respect to each Letter of
Credit equal to the greater of (i) $500 or (ii) 1% of the face amount of each
such Letter of Credit, payable on the date of each issuance of a letter of
credit. Such fee shall be nonrefundable.
3.4 L/C Participations. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each Lender, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each Lender irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender,
for such Lender's own account and risk an undivided interest equal to such
Lender's Specified Percentage in the Issuing Lender's obligations and rights
under each Letter of Credit issued by the Issuing Lender and the amount of each
draft paid by the Issuing Lender thereunder. Each Lender unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit issued by the Issuing Lender for which the Issuing Lender is
not reimbursed in full by the Borrower in accordance with Section 3.5(a), such
Lender shall pay to the Issuing Lender upon demand at the office of the Issuing
Lender specified in Schedule 1.1 an amount equal to such Lender's Specified
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any Lender to the
Issuing Lender pursuant to this Section in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such Lender shall pay to the Issuing Lender on demand an amount equal to
the product of such amount, times the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
a fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount required to be
paid by any Lender pursuant to this Section is not in fact made available to the
Issuing Lender by such Lender within three Business Days after the date such
payment is due, the Issuing Lender shall be entitled to recover from such
Lender, on demand, such amount with interest thereon calculated from and
including the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender at a rate per annum equal to the
ABR. A certificate of the Issuing Lender submitted to any Lender with respect to
any amounts owing under this Section shall be conclusive in the absence of
manifest error.
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(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any Lender its pro rata
share of such payment in accordance with this Section , the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of Collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will, if such payment is received prior to 1:00 p.m., Dallas, Texas time,
on a Business Day, distribute to such Lender its pro rata share thereof on the
same Business Day or if received later than 1:00 p.m. on the next succeeding
Business Day; provided, however, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such Lender shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
(d) Notwithstanding anything to the contrary in this
Agreement, each Lender's obligation to make the Loans referred to in Section
3.5(b) and to purchase and fund participating interests pursuant to Section
3.4(a) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or the Borrower may have
against the Issuing Lender, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 6, (iii) any adverse change in the condition (financial or otherwise) of
any Loan Party, (iv) any breach of this Agreement or any other Loan Document by
any Loan Party or any Lender, or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower
agrees to reimburse the Issuing Lender (it being understood that such
reimbursement shall be effected by means of a borrowing of Loans unless the
Agent shall determine in its sole discretion that such Loans may not be made for
such purpose as a result of a Default or Event of Default pursuant to Section
9(f)), upon receipt of notice from the Issuing Lender of the date and amount of
a draft presented under any Letter of Credit and paid by the Issuing Lender, for
the amount of such draft so paid and any taxes, fees, charges or other costs or
expenses incurred by the Issuing Lender in connection with such payment. Each
such payment shall be made to the Issuing Lender, at the office of the Issuing
Lender specified in Schedule 1.1 in Dollars and in immediately available funds,
on the date on which the Borrower receives such notice, if received prior to
11:00 A.M., Dallas, Texas time, on a Business Day and otherwise on the next
succeeding Business Day.
(b) Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this Section 3.5, (i) from the date the draft under
the affected Letter of Credit is paid by the Issuing Bank to the date on which
the Borrower is required to pay such amounts pursuant to paragraph (a) above at
a rate per annum equal to the ABR and (ii) thereafter until payment in full at
the rate which would be payable on any Loans which were then overdue. Except as
otherwise specified in Section 3.5(a), each drawing under any Letter of Credit
shall constitute a request by the Borrower to the Agent for a borrowing of Loans
that are ABR Loans pursuant to Section 2.3 in the amount of such drawing. The
Borrowing Date with respect to such
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borrowing shall be the date of payment of such drawing and the proceeds of such
Loans shall be applied by the Agent to reimburse the Issuing Lender for the
amounts paid under such Letter of Credit.
3.6 Obligations Absolute. Subject to the penultimate sentence
of this Section 3.6, the Borrower's obligations under this Section shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrower may have or
have had against the Issuing Lender, any Lender or any beneficiary of a Letter
of Credit. The Borrower also agrees with the Issuing Lender that the Issuing
Lender and the Lenders shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or any claims whatsoever of the Borrower against any beneficiary of
such Letter of Credit or any such transferee. So long as the Issuing Lender acts
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of Texas, the Issuing Lender and the Lenders shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by such Person's
gross negligence or willful misconduct. The Borrower agrees that any action
taken or omitted by the Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of Texas, shall be binding
on the Borrower and shall not result in any liability of either the Issuing
Lender or any Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly notify
the Borrower and the Lenders of the date and amount thereof. Subject to Section
3.6, the responsibility of the Issuing Lender to the Borrower in connection with
any draft presented for payment under any Letter of Credit shall, in addition to
any payment obligation expressly provided for in such Letter of Credit, be
limited to determining that the documents (including each draft) delivered under
such Letter of Credit in connection with such presentment appear on their face
to be in conformity with such Letter of Credit.
3.8 Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Agreement, the provisions of this Agreement shall apply.
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SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS
AND LETTERS OF CREDIT
4.1 Interest Rates and Payment Dates. (a) Subject to Section
11.15, each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day.
(b) Subject to Section 11.15, each ABR Loan shall bear
interest for each day that it is outstanding at a rate per annum equal to the
ABR for such day.
(c) (i) Subject to Section 11.15, after the occurrence and
during the continuance of an Event of Default, all Loans and Reimbursement
Obligations shall bear interest at a rate per annum which is equal to (x) in the
case of the Loans, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section 4.1 plus 2% or (y) in the case of
Reimbursement Obligations, at a rate per annum equal to the ABR plus 2% and (ii)
if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee, letter of credit fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the ABR plus 2%, in each case, with respect to clauses (i)
and (ii) above, from the date of such non-payment until such amount is paid in
full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
4.2 Optional and Mandatory Commitment Reductions and
Prepayments. (a) The Borrower may at any time and from time to time prepay the
Loans, in whole or in part, without premium or penalty (it being understood that
amounts payable pursuant to Section 4.11 do not constitute premium or penalty),
upon at least three Business Days' irrevocable notice to the Agent (in the case
of Eurodollar Loans) or at least one Business Day's irrevocable notice to the
Agent (in the case of ABR Loans), specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, ABR Loans or a combination
thereof, and, in each case if a combination thereof, the principal amount
allocable to each. Upon the receipt of any such notice the Agent shall promptly
notify each Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with (if a Eurodollar Loan is prepaid other than at the end of the Interest
Period applicable thereto) any amounts payable pursuant to Section 4.11. Partial
prepayments of (i) Tranche A Loans shall be in an aggregate principal amount of
$100,000 or a whole multiple of $50,000 in excess thereof and (ii) Tranche B
Loans shall be in an aggregate principal amount of $100,000 or a whole multiple
of $50,000 in excess thereof. Prepayments will be applied first to the Tranche A
Facility and then to the Tranche B Facility.
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(b) The Borrower shall have the right, upon not less than
three Business Days' notice to the Agent (which will promptly notify the Lenders
thereof), to terminate the Tranche A Commitments and/or the Tranche B
Commitments or, from time to time, to reduce the amount of the Tranche A
Commitments and/or the Tranche B Commitments; provided that (i) any such
terminations or reductions shall first be applied as terminations of or
reductions in the Tranche A Commitments until the same are eliminated and then
as terminations of or reductions in the Tranche B Commitments; and (ii) no such
termination or reduction of the Tranche A Commitments or the Tranche B
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Tranche A Loans or the Tranche B Loans made on the effective
date thereof, (x) the sum of the Aggregate Outstandings of Tranche A Credit of
all Lenders would exceed the Total Available Tranche A Commitment then in effect
or (y) the sum of the Aggregate Outstandings of Tranche B Credit of all Lenders
would exceed the Total Available Tranche B Commitment then in effect, as
applicable. Any such reduction in the (i) Tranche A Commitments shall be in a
minimum amount of $100,000 or a whole multiple of $50,000 in excess thereof and
shall reduce permanently the Tranche A Commitments then in effect and (ii)
Tranche B Commitments shall be in a minimum amount of $100,000 or a whole
multiple of $50,000 in excess thereof and shall reduce permanently the Tranche B
Commitments then in effect.
(c) If at any time the sum of all of the Lenders' Aggregate
Outstandings of Tranche A Credit exceed the Total Available Tranche A Commitment
then in effect or (ii) the sum of all of the Lenders' Aggregate Outstandings of
Tranche B Credit exceed the Total Available Tranche B Commitments then in
effect, the Borrower shall, without notice or demand, immediately repay the
Tranche A Loans and/or the Tranche B Loans, as applicable, in an aggregate
principal amount equal to such excess, together with interest accrued to the
date of such payment or repayment and any amounts payable under Section 4.11. To
the extent that, after giving effect to any prepayment of the Tranche A Loans or
the Tranche B Loans required by the preceding sentence, the sum of the Tranche A
L/C Obligations still exceeds the Total Available Tranche A Commitment or the
sum of the Tranche B L/C Obligations still exceeds the Total Available Tranche B
Commitment then in effect, the Borrower shall, without notice or demand,
immediately cash collateralize the then outstanding L/C Obligations in an amount
equal to such excess upon terms reasonably satisfactory to the Agent. Any
amounts deposited in any cash collateral account established pursuant to this
Section 4.2 shall be invested in Cash Equivalents having a one day maturity or
such other Cash Equivalents as shall be acceptable to the Agent and the
Borrower.
(d) In the event of any Disposition, the Net Proceeds of which
are not reinvested in Broadcast Assets within 270 days of such Disposition (any
such Net Proceeds not so reinvested being herein referred to as "Excess
Proceeds"), the Borrower shall (i) repay the Tranche A Loans, together with
interest accrued to the date of such payment and any amounts payable under
Section 4.11, in an aggregate amount equal to the Excess Proceeds of such
Disposition and (ii) after the Tranche A Loans, shall have been repaid in full,
the Excess Proceeds shall be applied in payment of the Tranche B Loans, together
with interest accrued to the date of such payment and any amounts payable under
Section 4.11. To the extent that, after
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giving effect to any repayment of the Tranche A Loans and the Tranche B Loans
required by the preceding sentence, the principal amount outstanding under such
Loans shall have been reduced to zero (0), then any amounts remaining of such
Excess Proceeds of any such Disposition shall be deposited into a cash
collateral account in the name of the Agent for the benefit of the Lenders to
secure the then outstanding L/C Obligations, if any, in such order as the Agent
shall determine, up to the aggregate face amount of all such outstanding L/C
Obligations, upon terms reasonably satisfactory to the Agent. Notwithstanding
the foregoing provisions of this Section 4.2(d), the Borrower and the Restricted
Subsidiaries shall not be required to apply any Excess Proceeds in accordance
with this Section 4.2(d) unless or until such Excess Proceeds either singularly
or when aggregated with all other Excess Proceeds from all Dispositions exceed
$1,000,000. Notwithstanding anything to the contrary set forth herein, in the
event (i) a Default or Event of Default exists or (ii) the aggregate Excess
Proceeds realized since May 19, 1997 equals or exceeds $4,750,000, then (A) any
and all Net Proceeds received on or after such events by the Borrower or any
Restricted Subsidiary shall be used to repay Loans and to cash collateralize the
L/C Obligations as aforesaid and (B) the Tranche A Commitments and then the
Tranche B Commitments shall be permanently reduced by the amount of such Net
Proceeds.
(e) In the event that Equity Interests in the Borrower are
issued (other than with respect to the Allied Warrant) or sold by the Borrower,
then no later than the third Business Day following the date of receipt of the
proceeds from any issuance or sale of such Equity Interests (other than (a)
proceeds of the issuance or sale of Equity Interests received on or before the
Effective Date; and (b) proceeds from the issuance or sale of Equity Interests
to the Borrower or any Wholly Owned Restricted Subsidiary of the Borrower by any
Person that was a Restricted Subsidiary of the Borrower immediately prior to
such issuance), the Borrower shall (i) repay the Tranche A Loans in an amount
equal to the proceeds of such Equity Interests, net of underwriting discounts
and commissions and other reasonable costs associated therewith (the "Equity
Proceeds") and (ii) after the Tranche A Loans shall have been repaid in full,
repay the Tranche B Loans with the balance of such Equity Proceeds; provided
that the Borrower shall not be required to repay the Loans under this Section
4.2(e) with any Equity Proceeds that are used by the Borrower to make
Investments in Unrestricted Subsidiaries within 30 days of the receipt of such
Equity Proceeds, as permitted under Section 8.8(b). Notwithstanding anything to
the contrary contained above, if at any time a Default or Event of Default
exists, then all Equity Proceeds received on or after such event shall be used
to prepay the Loans as aforesaid and in addition to such repayment of the Loans,
the Tranche A Commitments and/or the Tranche B Commitments, as applicable, shall
also each be permanently reduced by the amount of such repayments.
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(f) In the event that any Loan Party creates, incurs, acquires
or issues any Indebtedness (other than Indebtedness permitted under Section
8.2), then no later than the third Business Day following the date of receipt of
the proceeds from the creation, incurrence, acquisition or issuance of any such
Indebtedness, the Borrower shall (i) first, repay the Tranche A Loans in an
amount equal to such proceeds and (ii) after the Tranche A Loans have been paid
in full, repay the Tranche B Loans with the balance of such proceeds. In
addition, if at any time a Default or Event of Default exists, then the Tranche
A Commitments and/or the Tranche B Commitments, as applicable, shall also each
be permanently reduced by the amount of such repayments made on the Tranche A
Loans and/or the Tranche B Loans, as applicable.
(g) Upon the consummation of any Permitted Acquisition for
which an escrow deposit has been made with a Loan advanced or Letter of Credit
issued hereunder, the Borrower shall concurrently with the consummation of such
Permitted Acquisition, repay the Loans and/or terminate the Letters of Credit
issued for such escrow deposits relating thereto in an amount equal to the
amount of such escrow deposit.
(h) In the case of any reduction of the Commitments, the
Borrower shall, if applicable, comply with the requirements of Section 4.2(c).
Each repayment of the Loans under this Section 4.2 shall be accompanied by
accrued interest to the date of such repayment on the amount repaid and any
amounts payable under Section 4.11.
4.3 Commitment Fees, etc. (a) Subject to Section 11.15, the
Borrower agrees to pay to the Agent for the account of each Lender, a commitment
fee computed at the rate of 1/2 of 1% per annum on the average daily amount of
the unused Tranche A Commitments of each Lender commencing from the Effective
Date. Such commitment fee shall be payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the date on
which the Tranche A Commitments shall have terminated.
(b) Subject to Section 11.15, until the date of the initial
extension of credit under the Tranche B Facility, the Borrower agrees to pay to
the Agent for the account of each Lender, a commitment fee computed at the rate
of 1/4 of 1% per annum on the amount of the Tranche B Commitments of each Lender
commencing from the Effective Date and, after the date of the initial extension
of credit under the Tranche B Facility, a commitment fee equal to 1/2 of 1% per
annum on the average daily amount of the unused Tranche B Commitments of each
Lender commencing from such date of the initial extension of credit under the
Tranche B Facility. Such commitment fee shall be payable quarterly in arrears on
the last Business Day of each March, June, September and December and on the
date on which the Tranche B Commitments shall have terminated.
(c) Subject to Section 11.15, the Borrower shall pay (without
duplication of any other fee payable under this Section 4.3) to the Agent, the
facility fees with respect to Option B in the amounts and on the dates agreed to
in the Commitment Letter and the Fee Letter.
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4.4 Computation of Interest and Fees. (a) Interest based on
the Eurodollar Rate and fees shall be calculated on the basis of a 360-day year
for the actual days elapsed; and interest based on the ABR shall be calculated
on the basis of a 365- (or 366-, as the case may be) day year for the actual
days elapsed. The Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Agent shall as soon as practicable
notify the Borrower and the Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The Agent shall,
at the request of the Borrower, deliver to the Borrower a statement showing in
reasonable detail the calculations used by the Agent in determining any interest
rate pursuant to Section 4.1 (a).
(c) The fees described in this Agreement, the Fee Letter and
the Commitment Letter represent compensation for services rendered and to be
rendered separate and apart from the lending of money or the provision of credit
and do not constitute compensation for the use, detention, or forbearance of
money, and the obligation of the Borrower to pay each fee described herein shall
be in addition to, and not in lieu of, the obligation of the Borrower to pay
interest, other fees described in the Loan Documents, and expenses otherwise
described in the Loan Documents. Fees shall be payable when due in Dollars and
in immediately available funds. All such fees shall be non-refundable.
4.5 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to ABR Loans by giving the
Agent an irrevocable notice substantially in the form of Exhibit J (a "Notice of
Conversion/Continuation"), at least one Business Day prior to such election,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert ABR Loans to Eurodollar Loans or to continue Eurodollar
Loans as Eurodollar Loans by giving the Agent a Notice of
Conversion/Continuation at least three Business Days' prior to such election.
Any such Notice of Conversion/Continuation to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon receipt
of any such Notice of Conversion/Continuation the Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Loans and ABR
Loans may be converted as provided herein, provided that (i) no Loan may be
converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and (ii) no Tranche A Loan may be converted into a Eurodollar Loan if
the Interest Period selected therefor would expire after the Termination Date
and no Tranche B Loan may be converted into a Eurodollar Loan if the Interest
Period selected therefor would expire after the Tranche B Maturity Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to
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the Agent, of the length of the next Interest Period to be applicable to such
Loans, determined in accordance with the applicable provisions of the term
"Interest Period" set forth in Section 1.1, provided that no Eurodollar Loan may
be continued as such (i) when any Event of Default has occurred and is
continuing or (ii) after the date that is one month prior to the Termination
Date, and provided, further, that if the Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice of continuation pursuant to
this Section 4.5(b), the Agent shall promptly notify each Lender thereof.
4.6 Minimum Amounts of Eurodollar Tranches. All borrowings,
conversions, continuations and payments of Loans hereunder and all selections of
Interest Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Eurodollar Loans comprising (i) each Eurodollar Tranche of Tranche A
Loans shall be equal to $500,000 or a whole multiple of $100,000 in excess
thereof and (ii) each Eurodollar Tranche of Tranche B Loans shall be equal to
$100,000 or a whole multiple of $100,000 in excess thereof. In no event shall
there be more than six Eurodollar Tranches outstanding at any time.
4.7 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Agent shall have determined (which determination shall
be made in good faith and shall be conclusive and binding upon the Borrower
absent manifest error) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Agent shall have received notice from the Majority
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making, maintaining or converting
that portion of the outstanding principal balance of their affected Loans during
such Interest Period,
the Agent shall give facsimile notice thereof to the Borrower and the Lenders as
soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans that were to have been converted on the first day of
such Interest Period to Eurodollar Loans shall be continued as ABR Loans and (z)
any outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to ABR Loans. Until such notice has been withdrawn by the Agent
or the Majority Lenders, as the case may be, no further Eurodollar Loans shall
be made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
4.8 Pro Rata Treatment and Payments. (a) Each borrowing of
Loans hereunder shall be made, each payment by the Borrower on account of any
commitment fee
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hereunder shall be allocated by the Agent, and any reduction of the Tranche A
Commitments or the Tranche B Commitments shall be allocated by the Agent, pro
rata according to the respective Specified Percentages of the Lenders. Each
payment (including each prepayment) by the Borrower on account of principal of
and interest on, or commitment fees related to, the Loans or Reimbursement
Obligations shall be allocated by the Agent pro rata according to the respective
Specified Percentages of such Loans and Reimbursement Obligations then held by
the Lenders. All payments (including prepayments) to be made by the Borrower
hereunder and under any Notes, whether on account of principal, interest, fees,
Reimbursement Obligations or otherwise, shall be made without set-off or
counterclaim and shall be made prior to 1:00 P.M., Dallas, Texas time, on the
due date thereof to the Agent, for the account of the Lenders, at the Agent's
office specified in Section 11.2, in Dollars and in immediately available funds.
Payments received by the Agent after such time shall be deemed to have been
received on the next Business Day. If any payment hereunder becomes due and
payable on a day other than a Business Day, the maturity of such payment shall
be extended to the next succeeding Business Day, (and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension) unless, with respect to payments of Eurodollar Loans
only, the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.
(b) Unless the Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Agent, the Agent
may assume that such Lender is making such amount available to the Agent, and
the Agent may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not made available to the Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts owing under this Section 4.8 shall be
conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Agent by such Lender within three
Business Days of such Borrowing Date, the Agent shall notify the Borrower of the
failure of such Lender to make such amount available to the Agent and the Agent
shall also be entitled to recover, on demand from the Borrower, such amount with
interest thereon at a rate per annum equal to the ABR plus the Applicable Margin
in effect on the Borrowing Date.
4.9 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the Effective Date:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Note or any Eurodollar Loan made by it, or change the basis of taxation
of payments to such Lender in respect thereof
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(except for Non-Excluded Taxes covered by Section 4.10, net income
taxes and franchise taxes (imposed in lieu of net income taxes));
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, within five Business Days
following receipt by the Borrower of notice from such Lender, through the Agent,
in accordance herewith, the Borrower shall pay such Lender such additional
amount or amounts as will compensate such Lender for such increased cost or
reduced amount receivable.
(b) If any Lender shall have determined in good faith that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the Effective Date shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount reasonably deemed by
such Lender to be material, then from time to time, the Borrower shall promptly
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this Section 4.9, it shall promptly deliver a certificate to
the Borrower (with a copy to the Agent), setting forth in reasonable detail an
explanation of the basis for requesting such compensation. Such certificate as
to any additional amounts payable pursuant to this Section 4.9 submitted by such
Lender to the Borrower (with a copy to the Agent) shall be conclusive in the
absence of manifest error provided such determinations are made on a reasonable
basis. The Borrower shall pay each Lender the amount shown as due on any such
certificate delivered by it within 15 days after the Borrower's receipt thereof.
The agreements in this Section 4.9 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
4.10 Taxes. (a) All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on
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account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
(i) net income taxes; (ii) franchise and doing business taxes imposed on the
Agent or any Lender as a result of a present or former connection between the
Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note); (iii) any Taxes, levies,
imposts, deductions, charges or withholdings that are in effect and that would
apply to a payment to such Lender as of the Effective Date; and (iv) if any
Person acquires any interest in this Agreement or any Note pursuant to the
provisions hereof, including without limitation a participation (whether or not
by operation of law), or a foreign Lender changes the office in which the Loan
is made, accounted for or booked (any such Person or such foreign Lender in that
event being referred to as a "Tax Transferee"), any Taxes, levies, imposts,
deductions, charges or withholdings to the extent that they are in effect and
would apply to a payment to such Tax Transferee as of the date of the
acquisition of such interest or change in office, as the case may be. If any
such non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Agent or any Lender hereunder or under any Note, the amounts so
payable to the Agent or such Lender shall be increased to the extent necessary
to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Non-U.S. Lender if
such Lender fails to comply with the requirements of paragraph (b) of this
Section. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If, when the Borrower is required by this Section 4.10(a) to pay any
Non-Excluded Taxes, the Borrower fails to pay such Non-Excluded Taxes when due
to the appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agent and the Lenders for any incremental taxes, interest or penalties that
may become payable by the Agent or any Lender as a result of any such failure.
(b) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of
America, or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrower and the Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two copies of either
U.S. Internal Revenue Service Form 1001 or Form 4224, or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors thereto
(and, if such Non-U.S. Lender delivers a Form W-8, an annual certificate
representing that such
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Non-U.S. Lender (i) is not a "bank" for purposes of Section 881(c) of the Code
(and is not subject to regulatory or other legal requirements as a bank in any
jurisdiction, and has not been treated as a bank in any filing with or
submission made to any Governmental Authority or rating agency), (ii) is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code)
of the Borrower and (iii) is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
(or, in the case of a Non-U.S. Lender entitled to a reduced treaty rate, a
partial exemption) from, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents, along with such
other additional forms as the Borrower, the Agent (or, in the case of a
Participant, the Lender from which the related participation shall have been
purchased) may reasonably request to establish the availability of such
exemption. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of Section 4.10, a Non-U.S. Lender shall not
be required to deliver any form pursuant to this Section 4.10(b) that such
Non-U.S. Lender is not legally able to deliver, it being understood and agreed
that, in the event that a Non-U.S. Lender fails to deliver any forms otherwise
required to be delivered pursuant to this Section 4.10(b), or notifies the
Borrower that any previously delivered certificate is no longer in force, the
Borrower shall withhold such amounts as the Borrower shall reasonably determine
are required by law and shall not be required to make any additional payment
with respect thereto to the Non-U.S. Lender, unless such failure to deliver or
notify is a result of change in law subsequent to the Effective Date.
(c) If a Lender (or Transferee) or the Agent shall become
aware that it is entitled to receive a refund in respect of Non-Excluded Taxes
paid by the Borrower, or as to which it has been indemnified by the Borrower,
which refund in the good faith judgment of such Lender (or Transferee) is
allocable to such payment made pursuant to this Section 4.10, it shall promptly
notify the Borrower of the availability of such refund and shall, within 30 days
after receipt of a request by the Borrower, apply for such refund. If any Lender
(or Transferee) or the Agent receives a refund in respect of any Non-Excluded
Taxes paid by the Borrower, or as to which it has been indemnified by the
Borrower, it shall promptly notify the Borrower of such refund and shall, within
15 days after receipt, repay such refund to the Borrower. The agreements in this
Section 4.10 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
4.11 INDEMNITY. THE BORROWER AGREES TO INDEMNIFY EACH LENDER
AND TO HOLD EACH LENDER HARMLESS FROM ANY LOSS OR EXPENSE WHICH SUCH LENDER MAY
SUSTAIN OR INCUR AS A CONSEQUENCE OF (A) DEFAULT BY THE BORROWER IN MAKING A
BORROWING OF,
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CONVERSION INTO OR CONTINUATION OF EURODOLLAR LOANS AFTER THE BORROWER HAS GIVEN
A NOTICE REQUESTING THE SAME IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT, (B) DEFAULT BY THE BORROWER IN MAKING ANY PREPAYMENT OF EURODOLLAR
LOANS AFTER THE BORROWER HAS GIVEN A NOTICE THEREOF IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT OR (C) THE MAKING OF A PREPAYMENT OF EURODOLLAR
LOANS ON A DAY WHICH IS NOT THE LAST DAY OF AN INTEREST PERIOD WITH RESPECT
THERETO. SUCH INDEMNIFICATION MAY INCLUDE AN AMOUNT EQUAL TO THE EXCESS, IF ANY,
OF (I) THE AMOUNT OF INTEREST WHICH WOULD HAVE ACCRUED ON THE AMOUNT SO PREPAID,
OR NOT SO BORROWED, CONVERTED OR CONTINUED, FOR THE PERIOD FROM THE DATE OF SUCH
PREPAYMENT OR OF SUCH FAILURE TO BORROW, CONVERT OR CONTINUE TO, BUT NOT
INCLUDING, THE LAST DAY OF SUCH INTEREST PERIOD (OR, IN THE CASE OF A FAILURE TO
BORROW, CONVERT OR CONTINUE, THE INTEREST PERIOD THAT WOULD HAVE COMMENCED ON
THE DATE OF SUCH FAILURE) IN EACH CASE AT THE APPLICABLE RATE OF INTEREST FOR
SUCH LOANS PROVIDED FOR HEREIN OVER (II) THE AMOUNT OF INTEREST (AS REASONABLY
DETERMINED BY SUCH LENDER) WHICH WOULD HAVE ACCRUED TO SUCH BANK ON SUCH AMOUNT
BY PLACING SUCH AMOUNT ON DEPOSIT FOR A COMPARABLE PERIOD WITH LEADING BANKS IN
THE INTERBANK EURODOLLAR MARKET. THIS COVENANT SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT AND THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE
HEREUNDER.
4.12 Change of Lending Office. Each Lender agrees that if it
makes any demand for payment under Section 4.9 or 4.10(a), it will use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, as
determined in its sole discretion) to designate a different lending office if
the making of such a designation would reduce or obviate the need for the
Borrower to make payments under Sections 4.9 or 4.10(a) or would eliminate or
reduce the effect of any adoption or change described in Section 4.9.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and to issue Letters of Credit, the Borrower
hereby represents and warrants to the Agent and each Lender that:
5.1 Financial Condition. (a) The consolidated balance sheet of
the Borrower and its Restricted Subsidiaries at December 31, 1996 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by Arthur Andersen L.L.P., copies of which have
heretofore been furnished to each Lender, present fairly in all material
respects the consolidated financial condition of the Borrower and its Restricted
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Subsidiaries, taken as a whole, as at such date, and the consolidated results of
their operations and their consolidated cash flows for the fiscal year then
ended. All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants and as
disclosed therein). Except as set forth in Schedule 5.1, during the period from
December 31, 1996 to and including the Effective Date there has been no sale,
transfer or other disposition by the Borrower or any of its Restricted
Subsidiaries of any material part of its business, assets or property and no
purchase or other acquisition of any business, assets or property (including any
Equity Interests of any other Person) material in relation to the consolidated
financial condition of the Borrower and its Restricted Subsidiaries at December
31, 1996.
(b) The financial statements of the Borrower and the
Restricted Subsidiaries and other information most recently delivered under
Sections 7.1(a) and (b) were prepared in accordance with GAAP and present fairly
in all material respects the consolidated financial condition, results of
operations, and cash flows of the Borrower and the Restricted Subsidiaries,
taken as a whole, as of, and for the portion of the fiscal year ending on the
date or dates thereof (subject in the case of interim statements only to normal
year-end audit adjustments and the absence of footnotes).
5.2 No Change. Since June 30, 1996, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
5.3 Existence; Compliance with Law. The Borrower and each
Subsidiary (a) is duly organized, validly existing and, where applicable, in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate or partnership power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified
and, where applicable, in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect,
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
5.4 Power; Authorization; Enforceable Obligations. Each Loan
Party has the power and authority, and the legal right, to make, deliver and
perform each of the Loan Documents to which it is a party and, in the case of
the Borrower, to borrow hereunder and thereunder, and has taken all necessary
corporate or partnership action to authorize the execution, delivery and
performance of each of the Loan Documents to which it is a party and, in the
case of the Borrower, to authorize the borrowings on the terms and conditions of
this Agreement. Except as set forth on Schedule 5.4, no consent or authorization
of, filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person (including any partner or shareholder of any Loan
Party, any Affiliate of any Loan Party) is required to be obtained or made by
any Loan Party or any other Person, in connection with the execution, delivery
and performance of the Loan Documents, other than such as have been obtained or
made and are in
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full force and effect or which are immaterial. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person (including any partner or shareholder of any Loan
Party or any Affiliate of any Loan Party) is required to be obtained or made by
any Loan Party or any Subsidiary of any Loan Party in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents other than such as have been obtained or
made and are in full force and effect or which are immaterial. Each Loan
Document to which each Loan Party is a party has been duly executed and
delivered on behalf of each such Loan Party. Each Loan Document constitutes a
legal, valid and binding obligation of each Loan Party party thereto enforceable
against each such Loan Party in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent transfer or conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
5.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents, the borrowings hereunder and the use of the proceeds thereof
will not (a) violate, result in a default under or conflict with any Requirement
of Law or any material Contractual Obligation, in any material respect, of the
Borrower or of any of the Restricted Subsidiaries or (b) violate any provision
of the charter or bylaws of the Borrower or the Restricted Subsidiaries and will
not result in a default under, or result in or require the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any such Requirement of Law or material Contractual Obligation
(other than pursuant to the Security Documents).
5.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower, any of
the Restricted Subsidiaries or against any of its or their respective properties
or revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby or (b) except as set forth on
Schedule 5.6, which could reasonably be expected to have a Material Adverse
Effect.
5.7 No Default. Neither the Borrower nor any of the Restricted
Subsidiaries is in breach of or default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
5.8 Ownership of Property; Intellectual Property. (a) Each of
the Borrower and the Restricted Subsidiaries has good record and indefeasible
title in fee simple to, or a valid leasehold interest in, all its real property,
and good title to, or a valid leasehold interest in, all its other material
property, and none of such property is subject to any Lien except as permitted
by Section 8.3. Schedule 5.24 (as supplemented from time to time) accurately
describes the location of all real property owned or leased by the Borrower or
any Restricted Subsidiary and the location, by State and County of all material
tangible personal property associated with Stations owned by the Borrower or any
Restricted Subsidiary.
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(b) The Borrower and the Restricted Subsidiaries have the
right to use all trademarks, tradenames, copyrights, technology, know-how or
processes ("Intellectual Property") that are materially necessary for the
conduct of the business of the Borrower or any of the Restricted Subsidiaries,
as applicable.
5.9 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of the Restricted Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
5.10 Taxes. (a) All United States federal income Tax Returns
of each Loan Party required by law to be filed have been filed and all taxes
shown by such returns or otherwise assessed, which are due and payable, have
been paid, except assessments which are being contested in good faith by
appropriate proceedings, and with respect to which adequate reserves are
maintained in accordance with GAAP. Each Loan Party has filed all other Tax
Returns that are required to have been filed by it pursuant to applicable
foreign, state, local or other law and has paid all taxes and other assessments
due pursuant to such returns or pursuant to any assessment received by any Loan
Party, except for such taxes and other assessments, if any, as are being
contested in good faith, for which the criteria for Customary Permitted Liens
have been satisfied, including, without limitation, for which adequate reserves
are maintained in accordance with GAAP and which could not reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Loan Parties in respect of any income and corporation tax
liability for any years not finally determined are adequate in accordance with
GAAP to meet any assessments or reassessments for additional tax for all years
not finally determined.
(b) All Taxes and other assessments and levies which the Loan
Parties were or are required to withhold or collect have been withheld and
collected and have been paid over or will be paid over when due to the proper
governmental authorities except to the extent the failure to withhold, collect
or pay could not reasonably be expected to have a Material Adverse Effect.
Neither the Internal Revenue Service nor any other taxing authority is now
asserting or, to the knowledge of Borrower, threatening to assert against any
Loan Party any deficiency or claim for additional Taxes or interest thereon or
penalties in connection therewith which could reasonably be expected to have a
Material Adverse Effect. No Loan Party is a party to any Tax allocation or
sharing arrangement. There are no Liens on any of the assets of any Loan Party
that arose in connection with any failure (or alleged failure) to pay any Taxes
except as permitted under Section 8.3.
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5.11 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or Regulation
U of the Board as now and from time to time hereafter in effect. If requested by
any Lender or the Agent, the Borrower will furnish to the Agent and each Lender
a statement to the foregoing effect in conformity with the requirements of FR
Form G-3 or FR Form U-1 referred to in said Regulation G or Regulation U, as the
case may be.
5.12 ERISA. Except as, in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect: (a) neither a Reportable
Event nor an "accumulated funding deficiency" (within the meaning of Section 412
of the Code or Section 302 of ERISA) has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Code; (b) no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period; (c) the present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits; (d) neither the Borrower
nor any Commonly Controlled Entity has had a complete or partial withdrawal from
any Multiemployer Plan, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any liability under ERISA if the Borrower or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made; and (e) no such Multiemployer
Plan is in Reorganization or Insolvent.
5.13 Investment Company Act; Other Regulations. No Loan Party
is (a) an "investment company" or a company "controlled by" an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder or (b) a "holding company" or
a "subsidiary" or "affiliate" of a "holding company" or a "public utility," as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, and the rules and regulations thereunder. None of the transactions
contemplated by this Agreement will violate or result in a violation of Section
7 of the Exchange Act or any regulations thereunder, including, without
limitation, Regulations G, T, U and X of the Federal Reserve Board. The making
of the Loans and the issue and acquisition of the Notes do not constitute
"purpose credit" within the meaning of Regulation G or U of the Federal Reserve
Board, and the Lenders are not required to obtain a statement from Borrower on
any Federal Reserve Board form with respect to the extension of credit
hereunder. Loan Parties do not intend to apply, nor will it apply, any part of
the proceeds of the Loans in any manner that is unlawful or would involve a
violation of the Foreign Assets Control Regulations or the Cuban Assets Control
Regulations of the United States Treasury Department.
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5.14 Restricted Subsidiaries. (a) Schedule 5.14(a) (as
supplemented from time to time) sets forth a true and complete list of (i) all
of the Restricted Subsidiaries and (ii) all of the issued and outstanding Equity
Interests (and related percentages of ownership) and the owners thereof, of the
Borrower and each Restricted Subsidiary. The outstanding shares of Equity
Interests of each Restricted Subsidiary and the Borrower have been duly
authorized and validly issued and are fully paid and non-assessable, and all of
the outstanding shares of each class of the Equity Interests of each Restricted
Subsidiary are owned, directly or indirectly, beneficially and of record, by the
Borrower, free and clear of all Liens other than the Liens created by the
Security Documents.
(b) Except for changes otherwise permitted by this Agreement,
the duly authorized Equity Interests of the Borrower consists of (i) 2,000
authorized shares of common stock, par value $.01 per share, which consists of
(a) 1,000 shares of Class A Common Stock of which 138.45 shares are outstanding
as of October 31, 1997, and fully-paid and non-assessable, and (b) 1,000 shares
of Class B Non-Voting Common Stock of which no shares are outstanding as of
October 31, 1997, and (ii) 250,000 authorized shares of Preferred Stock, $.01
par value per share, which consists of (a) 100,000 shares of 15% Series A Senior
Cumulative Redeemable Preferred Stock of which 84,843.03 shares are outstanding
as of October 31, 1997 and all of which are fully-paid and non-assessable, and
(b) 150,000 shares of 15% Series B Senior Cumulative Redeemable Preferred Stock
of which 124,467.10 shares are outstanding as of October 31, 1997 and all of
which are fully-paid and non-assessable. All the outstanding shares of Equity
Interests of each Loan Party are duly authorized, validly issued, fully paid and
nonassessable, and none of such shares has been issued in violation of any
preemptive or preferential Rights of any Person. No voting trusts, agreements or
other voting arrangements or any other agreements exist with respect to the
Equity Interests of any Loan Party to which any Loan Party, is a party, or of
which any Loan Party, has knowledge, other than those listed on Schedule
5.14(b). No outstanding subscription, contract, convertible or exchangeable
security, option, warrant, call or other Rights (whether absolute or contingent,
statutory or otherwise) obligating or permitting any Loan Party to issue, sell,
exchange or otherwise dispose of or to purchase, redeem or otherwise acquire
shares of, or securities convertible into or exchangeable for, Equity Interests
of any Loan Party exists except as set forth on Schedule 5.14(b). No Equity
Interest of any Loan Party is subject to any restriction on transfer thereof
except as set forth on Schedule 5.14(b) and except for restrictions set forth in
the Loan Documents and those imposed by federal or state securities Laws or
which may arise as a result of any Loan Party being subject to the
Communications Act. Pursuant to the Pledge Agreements, the Lenders at all times
will hold a valid and perfected first priority Lien on all the issued and
outstanding Equity Interests of each Loan Party (other than the Senior Preferred
Stock), on a fully diluted basis and on all warrants (other than the Allied
Warrant) and options to purchase such Equity Interests. Each Restricted
Subsidiary of the Borrower is, directly or indirectly, a Wholly Owned
Subsidiary.
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5.15 Insurance. Each Loan Party maintains with financially
sound, responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
covering its properties and businesses against such casualties and contingencies
and of such types and in such amounts (and with co-insurance and deductibles) as
is customary in the case of same or similar businesses.
5.16 Authorization Matters. Except as could not reasonably be
expected to result in a Material Adverse Effect:
(a) the Borrower and the Restricted Subsidiaries possess all
Authorizations necessary to own, operate and construct the Broadcast
Asset or otherwise for the operations of their businesses and are not
in violation thereof and all such Authorizations are in full force and
effect and no event has occurred that permits, or after notice or lapse
of time could permit, the revocation, termination or material and
adverse modification of any such Authorization;
(b) neither the Borrower nor any of the Restricted
Subsidiaries is in violation of any duty or obligation required by the
Communications Act of 1934, as amended, or any FCC rule or regulation
applicable to its or their operations;
(c) there is not pending or, to the best knowledge of the
Borrower, threatened, any action by the FCC to revoke, cancel, suspend
or refuse to renew any FCC License held by the Borrower or any of the
Restricted Subsidiaries and there is not pending or, to the best
knowledge of the Borrower, threatened, any action by the FCC to modify
adversely, revoke, cancel, suspend or refuse to renew any other
Authorization; and
(d) there is not issued or outstanding or, to the best
knowledge of the Borrower, threatened, any notice of any hearing,
violation or complaint against the Borrower or any of the Restricted
Subsidiaries with respect to the Authorizations of the Borrower or of
any of the Restricted Subsidiaries and the Borrower has no knowledge
that any Person intends to contest renewal of any Authorization.
5.17 Environmental Matters. Except as could not reasonably be
expected to result in a Material Adverse Effect:
(a) the facilities and properties owned by the Borrower or any
of its Subsidiaries (the "Owned Properties") do not contain, and, to
the knowledge of the Borrower to the extent not owned, leased or
operated during the past five years, have not contained during the past
five years, any Materials of Environmental Concern in amounts or
concentrations which constitute or constituted a violation of, or could
reasonably be expected to give rise to liability under, any
Environmental Law;
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(b) the facilities and properties leased or operated by the
Borrower or any of its Subsidiaries, but not owned by them (the "Leased
and Operated Properties"), to the knowledge of the Borrower, do not
contain and have not contained during the past five years, any
Materials of Environmental Concern in amounts or concentrations which
constitute or constituted a violation of, or could reasonably be
expected to give rise to liability under, any Environmental Law;
(c) the Owned Properties and all operations at the Owned
Properties are in compliance, and, to the knowledge of the Borrower to
the extent not owned, leased or operated during the past five years,
have in the last five years been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about
the Owned Properties or violation of any Environmental Law with respect
to the Owned Properties or the business operated by the Borrower or any
of its Subsidiaries (the "Business") which could interfere with the
continued operation of the Owned Properties or impair the fair saleable
value thereof;
(d) to the knowledge of the Borrower, the Leased and Operated
Properties and all operations at the Leased and Operated Properties are
in compliance, and, in the last five years been in compliance, with all
applicable Environmental Laws, and to the knowledge of the Borrower
there is no contamination at, under or about the Leased and Operated
Properties or violation of any Environmental Law with respect to the
Leased and Operated Properties or the Business operated by the Borrower
or any of its Subsidiaries which could interfere with the continued
operation of the Leased and Operated Properties or impair the fair
saleable value thereof;
(e) neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Owned
Properties or the Leased and Operated Properties (together, the
"Properties") or the Business, nor does the Borrower have any knowledge
that any such notice will be received or is being threatened;
(f) the Borrower has not transported or disposed of Materials
of Environmental Concern nor, to the Borrower's knowledge, have
Materials of Environmental Concern been transported or disposed of from
the Properties in violation of, or in a manner or to a location which
could reasonably be expected to give rise to liability to the Borrower
or any Subsidiary under, any Environmental Law, nor has the Borrower
generated any Materials of Environmental Concern nor, to the Borrower's
knowledge, have Materials of Environmental Concerns been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give
rise to liability to the Borrower or any Subsidiary under, any
applicable Environmental Law;
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(g) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower or any Subsidiary is
or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any applicable Environmental
Law with respect to the Properties or the Business; and
(h) the Borrower has not released, nor, to the Borrower's
knowledge, has there been any release or threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or
related to the operations of the Borrower or any Subsidiary in
connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could
reasonably be expected to give rise to liability under Environmental
Laws.
5.18 Accuracy of Information. (a) All material Information
made available to the Agent or any Lender by the Borrower pursuant to this
Agreement or any other Loan Document did not, as of the date such Information
was made available, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements were made.
(b) All pro forma financial information and projections made
available to the Agent or any Lender by the Borrower pursuant to this Agreement
or any other Loan Document have been prepared and furnished to the Agent or such
Lender in good faith and were based on estimates and assumptions that were
believed by the management of the Borrower to be reasonable in light of the then
current and foreseeable business conditions of the Borrower and the
Subsidiaries. The Agent and the Lenders recognize that such pro forma financial
information and projections and the estimates and assumptions on which they are
based may or may not prove to be correct.
5.19 Security Documents. The Security Documents are effective
to create in favor of the Agent, for the benefit of the Lenders, a legal, valid
and enforceable security interest in the Collateral described therein and
proceeds thereof and, after satisfaction of the conditions specified in Section
6.1(i) and the making of the filings referred to in Section 6.1(j), the Security
Documents shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of, the Borrower and the
Subsidiaries in such Collateral and the proceeds thereof (subject to Section
9-306 of the Uniform Commercial Code), as security for the Obligations, in each
case prior and superior in right to any other Person except to the extent
otherwise permitted by any of such Security Documents.
5.20 Solvency. As of the date on which this representation and
warranty is made or deemed made, each Loan Party is Solvent, both before and
after giving effect to the
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transactions contemplated hereby consummated on such date and to the incurrence
of all Indebtedness and other obligations incurred on such date in connection
herewith and therewith.
5.21 Labor Matters. There are no actual or overtly threatened
strikes, labor disputes, slow downs, walkouts, or other concerted interruptions
of operations by the employees of any Loan Party which could reasonably be
expected to have a Material Adverse Effect. Hours worked by and payment made to
employees of the Loan Parties have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters, other than
any such violations, individually or collectively, which could not reasonably be
expected to have a Material Adverse Effect. All payments due from any Loan Party
on account of employee health and welfare insurance have been paid or accrued as
a liability on its books, other than any such nonpayments which could not,
individually or collectively, reasonably be expected to have a Material Adverse
Effect.
5.22 Prior Names. (a) As of the Effective Date, neither the
Borrower nor any Restricted Subsidiary has used or transacted business under any
other corporate or trade name in the five-year period preceding the Effective
Date except as set forth on Schedule 5.22(a) hereto.
(b) Neither the Borrower nor any Restricted Subsidiary uses or
transacts business under any corporate or trade names other than those set forth
in Schedule 5.22(b) (as supplemented from time to time).
5.23 Chief Executive Office; Chief Place of Business. Schedule
5.23 (as supplemented from time to time) accurately sets forth the location of
the chief executive office and chief place of business (as such terms are used
in the Uniform Commercial Code of each state whose law would purport to govern
the attachment and perfection of the security interests granted by the Security
Documents) of the Borrower and each Restricted Subsidiary.
5.24 Real Property; Leases. As of the date hereof, Schedule
5.24 (as supplemented from time to time) sets forth a correct and complete
listing of (a) all real property owned by each Loan Party, (b) all leases and
subleases of real property leased by each Loan Party, and (c) all leases and
subleases of real property by each Loan Party with annual lease payments to be
received therefore in excess of $20,000. Each Loan Party has good and marketable
title to, or a valid and subsisting leasehold interest in, all its material real
property, subject to no Liens except those permitted in Section 8.3. Each Loan
Party enjoys peaceful and undisturbed possession of its owned and leased real
property and the improvements thereon and no Material Lease or other lease
material to the operation of any Loan Party's business contains any unusual
provisions that might adversely affect or impair such Loan Party's use and
enjoyment of the property covered thereby or the operation of such Loan Party's
business or which could reasonably be expected to have a Material Adverse
Effect. All Material Leases are in full force and effect and no default or
potential default exists thereunder which could reasonably be expected to have a
Material Adverse Effect.
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5.25 Ownership of Stations. Schedule 5.25 (as supplemented
from time to time) completely and correctly lists each radio station owned
directly or indirectly by any Loan Party (individually, a "Station" and
collectively, the "Stations"). No Loan Party owns any radio stations other than
the Stations.
5.26 Possession of Necessary Authorizations Each Loan Party
possesses all Necessary Authorizations (or rights thereto) used or to be used in
its business as presently conducted and as proposed to be conducted or necessary
to permit it to own its properties and to conduct its business as presently
conducted and as proposed to be conducted, except to the extent the failure to
so possess could not reasonably be expected to have a Material Adverse Effect,
free and clear of all Liens other than those permitted under Section 8.3. No
Loan Party is in violation of any Necessary Authorization and no event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any Necessary Authorization or right which
could reasonably be expected to have a Material Adverse Effect. The Necessary
Authorizations for the Stations are valid and in full force and effect
unimpaired by any act, omission or condition which could reasonably be expected
to have a Material Adverse Effect. The applicable Loan Parties have timely filed
all applications for renewal or extension of all Necessary Authorizations,
except to the extent that the failure to so file could not reasonably be
expected to have a Material Adverse Effect. Except for actions or proceedings
affecting the broadcasting industry generally or as set forth on Schedule 5.26,
no petition, action, investigation, notice of violation or apparent liability,
notice of forfeiture, orders to show cause, complaint or proceeding is pending
or, to the best knowledge of the Borrower, threatened before the FCC or any
other forum or agency with respect to any Loan Party or any of the Stations or
seeking to revoke, cancel, suspend or modify any of the Necessary
Authorizations. The Borrower does not know of any fact that is likely to result
in the denial of an application for renewal, or the revocation, modification,
nonrenewal or suspension of any of the Necessary Authorizations, or the issuance
of a cease-and-desist order, or the imposition of any administrative or judicial
sanction with respect to any of the Stations, which could reasonably be expected
to have a Material Adverse Effect.
5.27 FCC, Copyright, Patent and Trademark Matters. No Loan
Party is liable to any Person for copyright infringement under the Federal
Copyright Act or any state copyright Laws which could reasonably be expected to
have a Material Adverse Effect. To the best knowledge of the Loan Parties, each
Loan Party and each Station is in material compliance with all state and federal
laws relating to copyright, including the Copyright Revision Act of 1976, 17
U.S.C. ss. 101 et. seq., and have all performing arts licenses which are
materially necessary for the conduct of their business. To the best knowledge of
each Loan Party, no Loan Party owns any patents or trademarks that have been
registered with any Tribunal and no applications for registration are pending
with respect to any patents or trademarks owned by any Loan Party, except as set
forth in Schedule 5.27 (as supplemented from time to time).
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5.28 License Subsidiaries. All FCC Licenses and other
Authorizations relating to the Stations are held by a License Subsidiary. No
License Subsidiary (a) owns or holds any assets (including the ownership of
stock or any other interest in any Person) other than Operating Agreements and
FCC Licenses and other Authorizations relating to the Stations, (b) is engaged
in any business other than the holding, acquisition and maintenance of FCC
Licenses and other Authorizations, (c) has any investments in any other Person
other than the Borrower or (d) owes any Indebtedness (other than Guaranty
Obligations to the Senior Subordinated Note Holders and the Lenders with respect
to the Senior Subordinated Indebtedness and the Obligations, respectively) to
any Person other than the Borrower.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Effectiveness of this Agreement. The
effectiveness of this Agreement is subject to the satisfaction of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement duly executed and delivered by the Borrower; (ii) the Notes,
duly executed by the Borrower and payable to the order of each Lender,
(iii) a Pledge Agreement duly executed and delivered by the Borrower
and (iv) a Security Agreement and a Guaranty duly executed and
delivered by each Restricted Subsidiary.
(b) Closing Certificates. The Agent shall have received a
certificate (the "Closing Certificate") for each Loan Party, dated the
Effective Date, substantially in the form of Exhibit K, with
appropriate insertions and attachments (including the Amended and
Restated Certificate of Incorporation), in each case reasonably
satisfactory in form and substance to the Agent, executed by a
Responsible Officer and the Secretary or any Assistant Secretary of
each Loan Party that is a corporation, which certificate shall state
that the consent or approval thereby certified has not been amended,
modified, revoked or rescinded.
(c) Fees. The Agent shall have received:
(i) all fees and expenses required to be paid under
Section 4.3; and
(ii) all fees and expenses of counsel to the Borrower
in connection with this Agreement and the other Loan
Documents.
(d) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Kirkland & Ellis,
substantially in the form of Exhibit L; and
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(ii) the executed legal opinion of Davis Wright
Tremaine LLP, FCC counsel to the Borrower, substantially in
the form of Exhibit M.
(e) Financial Statements. The Lenders shall have received
audited consolidated financial statements of the Borrower and its
consolidated Subsidiaries for the 1996 fiscal year, which financial
statements shall have been prepared in accordance with GAAP and shall
be accompanied by an unqualified report thereon prepared by Arthur
Andersen L.L.P., and the unaudited consolidated financial statements of
the Borrower and its consolidated Subsidiaries dated as of June 30,
1997.
(f) Governmental and Third Party Approvals. All governmental
approvals and material third party approvals necessary in connection
with the financing contemplated hereby shall have been obtained and be
in full force and effect.
(g) No Material Adverse Information. The Lenders shall not
have become aware of any previously undisclosed materially adverse
information with respect to (i) the ability of the Loan Parties to
perform their respective obligations under the Loan Documents or in
connection with the transactions contemplated hereunder in respect of
recapitalization of the Borrower in any material respect or (ii) the
rights and remedies of the Lenders.
(h) No Material Default Under Other Agreements. There shall
exist no material breach or event of default (or condition which would
constitute such breach or an event of default with the giving of notice
or the passage of time) under any agreements relating to Equity
Interests, or any material financing agreements, lease agreements or
other material Contractual Obligation, to which the Borrower or any of
the Restricted Subsidiaries is a party or by which it is bound.
(i) Pledged Securities and Instruments of Transfer. The Agent
shall have received the certificates representing the shares of Equity
Interests (other than the Senior Preferred Stock) pledged pursuant to
each Pledge Agreement, accompanied by duly executed instruments of
transfer or assignments in blank for each such certificate.
(j) Actions to Perfect Liens. (i) All filing documents,
necessary or, in the opinion of the Agent, desirable to perfect or
continue to protect the Liens created by the Pledge Agreements and the
Security Documents shall have been executed and delivered by the
pledgors or grantors thereunder; (ii) all Collateral shall be free and
clear of other Liens except for Liens permitted by Section 8.3 and
other Liens approved by the Lenders; and (iii) the Agent shall have
received a fully executed Confirmation of Liens in the form attached as
Exhibit N (the "Confirmation of Liens").
(k) Material Adverse Change. There shall exist no material
adverse change in the financial condition or business operations of the
Borrower or the Restricted Subsidiaries since June 30, 1997.
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(l) Additional Documentation. The Agent shall have received an
executed counterpart copy of each material agreement delivered in
connection with Senior Subordinated Notes and the Senior Preferred
Stock, certified by a Responsible Officer of the Borrower as being true
and correct copies thereof.
(m) Lien Searches. The Agent shall have received the results
of a recent search by a Person satisfactory to the Agent, of the
Uniform Commercial Code, judgment and tax lien filings which may have
been filed with respect to personal property of the Borrower and the
Restricted Subsidiaries (including the personal property acquired in
connection with the Acquisition of WPHI-FM) in each of the
jurisdictions where such personal property is located or in which
financing statements will be filed to perfect the security interests
granted pursuant to the Security Documents, and such search shall
reveal no Liens relating to the personal property of the Borrower or
the Restricted Subsidiaries or to the Collateral (including all
personal property and/or Collateral acquired in connection with the
Acquisition of WPHI-FM) except for Liens which will be terminated on or
before the Effective Date, Liens referred to in Section 6.1(j), Liens
permitted by Section 8.3, and other Liens approved by the Lenders.
(n) Intentionally Deleted.
(o) Insurance. The Agent shall have received certificates of
insurance naming the Agent as loss payee for the benefit of the Lenders
and as additional insured for the benefit of the Lenders, as required
by Section 7.5(b).
(p) Cancellation of Intercompany Note. The Intercompany Note
shall have been canceled and a copy of the canceled Intercompany Note
shall be delivered to the Agent.
(q) Termination and Release of the Subordinated Guaranties and
the Subordinated Pledge Agreement; Cancellation of Liens. Evidence that
(i) the Subordinated Guaranties and the Subordinated Pledge Agreement
have been terminated and released by the holders of the Existing
Subordinated Notes; and (ii) that all Liens other than Liens permitted
under Section 8.3 shall have been canceled and released, including duly
executed releases and UCC-3 financing statements in recordable form and
otherwise in form and substance satisfactory to the Agent, as may be
necessary to reflect that the Liens granted to the Agent are first and
prior liens.
(r) Standstill Agreement. The Agent shall have received an
original fully executed copy of the Standstill Agreement.
(s) License Subsidiaries and Operating Agreements. The
Borrower shall have caused all Necessary Authorizations relating to the
Stations to have been transferred to one or more newly formed Wholly
Owned Restricted Subsidiaries of Borrower, which
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such Wholly Owned Restricted Subsidiaries shall have no Indebtedness
and no other assets other than the Necessary Authorizations and shall
otherwise be in compliance with the representations and warranties set
forth in Section 5.28. The Borrower and each License Subsidiary shall
have entered into an Operating Agreement and the Agent shall have
received a fully executed copy of each such Operating Agreement.
(t) Intentionally Deleted.
(u) FCC Consents. The Borrower shall have received all of the
Necessary Authorizations for the consummation of the transactions
contemplated herein and in any related agreements or documents and the
period for seeking reconsideration, review or appeal of such Necessary
Authorizations shall have expired and no such reconsideration, review
or appeal shall have been sought by any party.
(v) Perfection Certificate. The Agent shall have received a
Perfection Certificate, dated as of November 14, 1997, duly executed by
each Loan Party.
(w) Consent of Investors. The Agent shall have received a
consent from the Investors in form and substance satisfactory to the
Agent evidencing the Investors' consent to the Borrower's and the
Restricted Subsidiaries' execution, delivery and performance of the
Loan Documents to which they are a party.
6.2 Condition to Initial Extension of Credit under Tranche B
Facility. The agreement of each Lender to make the initial extension of credit
under the Tranche B Facility requested to be made by it is subject to the
Agent's receipt of a certificate from a Responsible Officer of the Borrower
certifying to the Lenders that (a) each of the conditions precedent set forth in
Sections 6.1 and 6.3 have been satisfied and continues to be satisfied on the
date of such extension of credit; and (b) that the Tranche A Facility is, or
after giving effect to Loans requested contemporaneously with such requested
extension of Credit, will be fully funded.
6.3 Conditions to All Extensions of Credit. The obligation
or agreement of each Lender to make any Loan or to issue any Letter of Credit
requested to be made or issued by it on any date (including, without limitation,
its initial extension of credit under the Tranche A Facility and/or the Tranche
B Facility) is subject to the satisfaction, immediately prior to or concurrently
with the making of such Loans or the issuing of such Letters of Credit, of the
following conditions precedent:
(a) Initial Conditions Satisfied. Each of the conditions
precedent set forth in Section 6.1, and with respect to extensions of
credit under the Tranche B Facility, in Section 6.2 shall have been
satisfied and shall continue to be satisfied on the date of such Loans.
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(b) No Material Litigation. Except as disclosed on Schedule
5.6, no litigation, inquiry, injunction or restraining order shall be
pending, entered or threatened in writing which could reasonably be
expected to have a Material Adverse Effect.
(c) No Material Adverse Effect. There shall not have occurred
any change, development or event which could reasonably be expected to
have a Material Adverse Effect.
(d) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to
the Loan Documents to which it is a party shall be true and correct in
all material respects on and as of such date as if made on and as of
such date, after giving effect to the Loans requested to be made or the
Letters of Credit to be issued on such date and the proposed use of the
proceeds thereof.
(e) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or will occur after giving
effect to the extension of credit requested to be made on such date and
the proposed use of the proceeds thereof.
(f) Notice of Borrowing; Application. The Borrower shall have
submitted a Notice of Borrowing in accordance with Section 2.3 and/or
an Application in accordance with Section 3.2 and certifying to the
matters set forth in Section 6.3(a) through and including (e).
(g) Borrowings Under Tranche B Facility. With respect to
extensions of credit made under the Tranche B Facility, the Agent shall
have received a certificate from a Responsible Officer to the Borrower
certifying to the Lenders that the proceeds of such borrowing shall be
used to make an escrow deposit in connection with a Permitted
Acquisition or to secure Capital Lease Obligations to the extent
permitted hereunder.
(h) Consent to Extensions of Credit. The Agent shall have
received a consent from at least two directors of the Borrower
representing the interests of the Investors as elected pursuant to
Article 8 of the Warrant Agreement (the "Independent Directors") for
each extension of credit requested hereunder until such time as the
Agent has received a written notice from at least two Independent
Directors that no such further consent is required.
(i) Compliance Certificate. With respect to the initial
extension of credit under the Tranche A Facility, if the Borrower has
not yet delivered a Compliance Certificate to the Agent pursuant to
Section 7.2(b), the Agent shall have received a Compliance Certificate
duly executed by a Responsible Officer of the Borrower and each of the
Restricted Subsidiaries covering the period from the Effective Date to
the date which is the most recently ended calendar month prior to the
initial extension of credit under this Agreement.
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Each borrowing by or issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the applicable conditions contained in
this Section 6.3 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any Commitment
remains in effect, any Loan or L/C Obligation or any other monetary obligation
under any other Loan Document shall be outstanding or is due and payable to any
Lender or the Agent hereunder or under any other Loan Document, the Borrower
shall and shall cause each of its Restricted Subsidiaries to:
7.1 Financial Statements. Furnish to the Agent for subsequent
distribution to each Lender:
(a) as soon as available, but in any event no later than March
31 of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheets of the Borrower and the Restricted
Subsidiaries as at the end of such year and the related audited
consolidated statements of income and shareholders' capital (deficit)
and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without
a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Arthur Andersen LLP or other
independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three fiscal quarterly periods
of each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower and the Restricted Subsidiaries as at the end of
such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as fairly presenting in all material respects the
financial condition of the Borrower and its Restricted Subsidiaries,
taken as a whole (subject to normal year-end audit adjustments and the
absence of footnotes); and
(c) within thirty (30) days after the end of each of the first
two months for each quarter (i) statements of operation comparing such
results to (A) the Budget for that period and (B) the results of the
statements of operation for the prior year, and (ii) a balance sheet
for such month, and (iii) a brief written discussion and analysis by
management of such statements, including a comparison of the results
versus the budgeted results and results for comparable periods in the
preceding fiscal year and an explanation for any variances therein.
All such financial statements (not including the Budget) shall be prepared in
accordance with GAAP (except for the absence of footnotes and year end
adjustment in the case of interim
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financials) applied consistently throughout the periods reflected therein and
with prior periods (except as approved by such accountants or officer, as the
case may be, and disclosed therein).
7.2 Certificates; Other Information. Furnish to the Agent for
subsequent distribution to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor they did not
become aware of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) or (b), a Compliance Certificate
executed by a Responsible Officer of the Borrower and each of the
Restricted Subsidiaries;
(c) without duplication of the financial statements delivered
pursuant to Section 7.1, within five days after the same are sent,
copies of all financial statements and reports which the Borrower sends
to all of the holders of the Senior Subordinated Notes, and within five
days after the same are filed, copies of all financial statements and
reports which the Borrower files with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(d) promptly, such additional financial and other information
as any Lender may from time to time reasonably request;
(e) on or before the end of each fiscal year (and in any event
within the month of December), (i) the budget for the Borrower and the
Restricted Subsidiaries, prepared on a monthly basis (the "Budget"),
for the next succeeding fiscal year setting forth in satisfactory
detail the projected revenues and expenses, including, without
limitation, Capital Expenditures, Broadcast Cash Flow, Corporate
Overhead Expense and Operating Cash Flow and the underlying assumptions
therefor; and
(f) within 10 days of any changes thereto, supplements to
Schedules 5.14(a), 5.22(b), 5.23, 5.24, 5.25 and 5.27.
7.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except (a) where the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or the relevant Restricted Subsidiary, as
the case may be or (b) where the failure to so pay, discharge or satisfy, could
not reasonably be expected to have a Material Adverse Effect.
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7.4 Conduct of Business and Maintenance of Existence, etc. (a)
Preserve, renew and keep in full force and effect its organizational existence
and take all reasonable action to maintain all material rights, privileges and
franchises necessary for the conduct of its business except as otherwise
permitted pursuant to Section 8.4.
(b) Comply with all Contractual Obligations and applicable
Requirements of Law, except to the extent that failure to comply therewith could
not reasonably be expected to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all material
property useful and necessary in its business in good working order and
condition (ordinary wear and tear excepted) consistent with customary practices
in the industry of the Borrower; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies engaged in the same or a similar business; and furnish to the
Agent certificates of insurance from time to time received by it for each such
policy of insurance including insurance policies evidencing the Borrower's
compliance with Section 7.5(b).
(b) The Borrower shall cause (i) the Agent to be named, in a
manner reasonably satisfactory to the Agent, (a) as lender loss payee for the
benefit of the Lenders under all policies of casualty insurance maintained by
the Borrower and the Restricted Subsidiaries with respect to Collateral and (b)
as an additional insured for the benefit of the Lenders on all policies of
liability insurance maintained by the Borrower and the Restricted Subsidiaries;
and (ii) all insurance policies to contain a provision that the policy may not
be canceled, terminated or modified without thirty (30) days' prior written
notice to the Agent.
7.6 Inspection of Property; Books and Records; Discussions.
Keep and maintain a system of accounting established and administered in
accordance with sound business practices and keep and maintain proper books of
record and accounts; and permit representatives of any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records during normal business hours and as often as may reasonably be
requested and upon reasonable notice and to discuss the business, operations,
properties and financial and other condition of the Borrower and the Restricted
Subsidiaries with officers and employees of the Borrower and the Restricted
Subsidiaries and with their independent certified public accountants; provided
that representatives of the Borrower designated by a Responsible Officer may be
present at any such meeting with such accountants.
7.7 Notices. Promptly after the Borrower obtains knowledge
thereof, give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of the Restricted Subsidiaries or
(ii) litigation, investigation or
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proceeding which may exist at any time between the Borrower or any of
the Restricted Subsidiaries and any Governmental Authority, which in
either case could reasonably be expected to have a Material Adverse
Effect;
(c) any litigation or proceeding affecting the Borrower or any
of the Restricted Subsidiaries (i) which could reasonably be expected
to result in an adverse judgment of $250,000 or more and which is not
covered by insurance or (ii) in which injunctive or similar relief is
sought which in the case of this clause (ii) could reasonably be
expected to materially interfere with the ordinary conduct of business
of the Borrower or any of the Restricted Subsidiaries;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows thereof: (i) the occurrence of
any Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) promptly after the filing or mailing thereof, and in any
event within five days thereafter, a copy of each material application,
statement, report, registration statement, notice or other filing which
is (i) filed with the FCC by or on behalf of any Loan Party or any
Affiliate of any Loan Party, or of which any Loan Party or any
Affiliate of any Loan Party has knowledge, with respect to or affecting
a Station owned directly or indirectly by any Loan Party, (ii) made
with the Securities and Exchange Commission or (iii) distributed to the
public shareholders or debtholders of the Borrower generally, and,
promptly on the request of any Lender, a copy of any other statement,
report, notice or other filing filed or made with (x) the FCC by or on
behalf of any Loan Party or any Affiliate of any Loan Party, or of
which any Loan Party or any Affiliate of any Loan Party has knowledge
or (y) any other Tribunal;
(f) promptly after such occurrence, and in any event within
five days thereafter, notice of any situation in which on-air
broadcasting operations of any Station are interrupted for more than 24
consecutive hours;
(g) promptly after any officer of any Loan Party becomes aware
thereof, and in any event within five days thereafter, information and
a copy of any notice received by any Loan Party from the FCC or other
Tribunal or any Person that concerns (i) any event or circumstance that
could reasonably be expected to materially adversely affect any
Necessary Authorization and (ii) any notice of abandonment, expiration,
revocation, material impairment, nonrenewal or suspension of any
Necessary Authorization, together with a written explanation of any
such event or circumstance or the circumstances
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surrounding such abandonment, expiration, revocation, material
impairment, nonrenewal or suspension;
(h) promptly after any officer of any Loan Party becomes aware
thereof, and in any event within five days thereafter, notice of any
default or breach of any term or provision by any Person in connection
with any LMA Agreement, any Material Lease or any other material
Contractual Obligation of such Loan Party, together with a written
explanation of the circumstances surrounding such default or breach and
what action any Loan Party plans to take with respect thereto; and
(i) any development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section (other than pursuant to clause (e)) shall
be accompanied by a statement of a Responsible Officer setting forth details of
the occurrence referred to therein and stating what action is proposed to be
taken with respect thereto.
7.8 Environmental Laws. (a) Comply with, and use reasonable
efforts to require compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and use
reasonable efforts to require that all tenants and subtenants obtain and comply
with and maintain, any and all licenses, approvals, notifications, registrations
or permits required by applicable Environmental Laws except, in each case, to
the extent that failure to do so could not be reasonably expected to have a
Material Adverse Effect.
(b) Comply with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws except to the extent that
the same are being contested in good faith by appropriate proceedings diligently
pursued or could not reasonably be expected to have a Material Adverse Effect.
7.9 Collateral. (a) To secure full and complete payment and
performance of the Obligations, the Borrower shall, and shall cause each of the
Restricted Subsidiaries to, grant and convey to and create in favor of, the
Agent for the ratable benefit of the Lenders a continuing first priority
(subject, except for Equity Interests, to any prior Liens permitted by Section
8.3) perfected Lien and security interest in, to and on all of the assets (other
than the Equity Interests of Unrestricted Subsidiaries) of the Borrower and such
Restricted Subsidiaries (except to the extent prohibited by law) including but
not limited to the following: (i) all of the Borrower's and such Restricted
Subsidiaries' present and future assets (other than Equity Interests in
Unrestricted Subsidiaries), including, without limitation, their equipment,
inventory, accounts receivable, instruments, general intangibles, intellectual
property and real estate; and (ii) all of the Equity Interests of each
Restricted Subsidiary owned by the Borrower or any other Restricted Subsidiary,
now owned or hereafter acquired by the Borrower or such other Restricted
Subsidiary.
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(b) With respect to any new Restricted Subsidiary created or
acquired after the Effective Date, (i) the Borrower, and/or any Restricted
Subsidiary owning the Equity Interests of such new Restricted Subsidiary, shall
promptly execute and deliver to the Agent such amendments to the Pledge
Agreements of the applicable Loan Party as the Agent deems necessary or
advisable in order to grant to the Agent, for the benefit of the Lenders, a
perfected first priority security interest in the Equity Interests of such new
Restricted Subsidiary, (ii) in the case of any such new Restricted Subsidiary,
such new Restricted Subsidiary shall promptly execute and deliver to the Agent a
Guaranty, Pledge Agreement, Security Agreement and, if necessary, an
Intellectual Property Security Agreement, (iii) the applicable Loan Party owning
Equity Interests of the new Restricted Subsidiary and such new Restricted
Subsidiary shall deliver any certificates representing the Equity Interests of
such new Restricted Subsidiary and any Restricted Subsidiary of such new
Restricted Subsidiary, respectively, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the applicable
Loan Party, (iv) the applicable Loan Party owning Equity Interests of the new
Restricted Subsidiary and such new Restricted Subsidiary shall take such other
actions as shall be necessary or advisable to grant to the Agent for the benefit
of the Lenders a perfected first priority security interest in the assets of,
and Equity Interests in, such new Restricted Subsidiary, including, without
limitation, the filing of such Uniform Commercial Code financing statements as
may be requested by the Agent, and (v) if requested by the Agent, the Borrower
shall cause to be delivered to the Agent legal opinions relating to the matters
described in the preceding clauses (i), (ii), (iii) and (iv), which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Agent.
(c) With respect to any newly acquired assets or transfers of
assets to the Borrower or a Restricted Subsidiary (other than Equity Interests
in Unrestricted Subsidiaries), promptly after acquiring or receiving any such
asset, execute and deliver or cause to be delivered to the Agent in a form
reasonably acceptable to the Agent (i) one or more mortgages (unless otherwise
agreed by the Agent), Pledge Agreements, Security Agreements and/or Intellectual
Property Security Agreements which grant to the Agent a first priority perfected
security interest in such assets (subject, except for Equity Interests, to any
prior Liens permitted by Section 8.3) and (ii) such additional agreements and
other documents as the Agent reasonably deems necessary to establish a valid,
enforceable and perfected first priority security interest in such assets
including but not limited to assets consisting of Intellectual Property
(subject, except for Equity Interests, to any Liens permitted by Section 8.3).
(d) Upon request of the Agent, promptly execute and deliver or
cause to be executed and delivered to the Agent in a form reasonably acceptable
to the Agent (i) one or more mortgages, Pledge Agreements, Security Agreements
and/or Intellectual Property Security Agreements which grant to the Agent a
first priority perfected security interest (subject, except for Equity
Interests, to any Liens permitted by Section 8.3) in such property of the
Borrower or a Restricted Subsidiary, including Equity Interests of direct or
indirect Restricted Subsidiaries, as shall be specified by the Agent and (ii)
such additional agreements and other documents as the Agent reasonably deems
necessary to establish a valid, enforceable and perfected first priority
security interest in such property or Equity Interests.
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7.10 Use of Proceeds. The Borrower shall use the proceeds of
the (a) Tranche A Loans and the Letters of Credit only to finance (i) working
capital of the Borrower and the Restricted Subsidiaries, (ii) Capital
Expenditures of the Borrower and the Restricted Subsidiaries, (iii) Permitted
Escrow Deposits up to $2,500,000 in the aggregate (including Permitted Escrow
Deposits made under the Tranche B Facility) at any time outstanding and to
secure Capital Lease Obligations permitted hereunder, and (iv) other lawful
corporate purposes of the Borrower and the Restricted Subsidiaries, other than
Acquisitions; and (b) Tranche B Loans only to finance Permitted Escrow Deposits
and to secure Capital Lease Obligations permitted thereunder.
7.11 New Restricted Subsidiaries. Immediately upon the
creation or acquisition thereof, the Borrower shall notify the Agent about any
newly created or acquired Restricted Subsidiary and shall provide the Agent with
the Loan Documents required pursuant to Section 7.9 and an updated Schedule
5.14.
7.12 Taxes. The Loan Parties shall file all necessary and
material Tax Returns and pay when due and any and all material Taxes.
Notwithstanding anything to the contrary contained in the Mortgages, the Loan
Parties shall not be in default of any Mortgage for the failure to pay any Taxes
due with respect to the property covered thereby so long as such Taxes are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP.
7.13 Further Assurances. Each Loan Party shall make, execute
or endorse, and acknowledge and deliver or file, or cause the same to be done,
all such notices, certifications, documents, instruments and agreements, and
shall take or cause to be taken such other actions as the Agent may, from time
to time, deem reasonably necessary or appropriate in connection with this
Agreement or any of the other Loan Documents and the obligation of such Loan
Party to carry out the terms and conditions of this Agreement and the other Loan
Documents to which it is a party, including, without limitation, each Loan Party
shall perform such acts and duly authorize, execute, acknowledge, deliver, file
and record such additional assignments, security agreements, pledge agreements,
deeds of trust, mortgages, financing statements, and other agreements,
documents, instruments and certificates as the Agent may deem reasonably
necessary or appropriate in order to create, perfect and maintain the Liens in
favor of the Agent for the ratable benefit of the Lenders in and to the
Collateral and preserve and protect the Rights of the Lenders hereunder, under
the other Loan Documents and in and to the Collateral. Each Loan Party
acknowledges that certain transactions contemplated by this Agreement and the
other Loan Documents, and certain actions which may be taken by the Agent or the
Lenders in the exercise of their Rights under this Agreement or any other Loan
Document, may require the consent of the FCC. If the Agent reasonably determines
that the consent of the FCC is required in connection with the execution,
delivery or performance of any of the aforesaid documents or any documents
delivered to the Agent or the Lenders in connection therewith or as a result of
any action which may be taken or be proposed to be taken pursuant thereto, then
each Loan Party, at its sole cost and expense, shall use its best efforts to
secure such consent and to cooperate with
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the Agent and the Lenders in any such action taken or proposed to be taken by
the Agent or any Lender.
7.14 Appraisals of Collateral. If at any time the Agent
reasonably determines that it must have current appraisals of any of the
Collateral to comply with any Law, upon request by the Agent, the Borrower shall
cooperate with the Agent to enable the Agent to obtain appraisals of the
Collateral, the cost of which shall be paid by the Borrower.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any Commitment
remains in effect, any Loan or L/C Obligation or any other monetary Obligation
under any other Loan Document is outstanding, or is due and payable to any
Lender or the Agent hereunder or under any other Loan Document, the Borrower
shall not, and the Borrower shall not permit any of the Restricted Subsidiaries
to:
8.1 Financial Condition Covenants.
(a) Capital Expenditures. Permit Capital Expenditures of the
Borrower and the Restricted Subsidiaries at any time during any period
set forth below to be greater than the amounts set forth opposite such
periods below:
Period Amount
------ ------
Effective Date through and including
December 31, 1997 $2,100,000
January 1, 1998 through and including
December 31, 1998 $1,000,000
January 1, 1999 and thereafter $ 750,000
Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures made by the Borrower and the Restricted Subsidiaries during
any relevant period is less than the Capital Expenditure limitation for such
applicable period set forth above, then the difference between such limitation
and the amount of Capital Expenditures actual expended shall be added to the
Capital Expenditure limitation for the next applicable period, provided that in
no event shall any such addition be used in determining any additions to any
subsequent period.
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(b) Interest Coverage Ratio. Permit the Interest Coverage
Ratio at the end of each fiscal quarter to be less than the ratio set
forth opposite such period below:
Period
------ -------
September 30, 1997 through and including 1.75 to 1.00
March 31, 1999
April 1, 1999 and thereafter 1.90 to 1.00
(c) Broadcast Cash Flow. Permit the Broadcast Cash Flow for
the most recently ended twelve month period at the end of each fiscal
quarter to be less than the following amounts set forth opposite such
fiscal quarter set forth below:
Quarter End Date
----------------
September 30, 1997 $10,800,000
December 31, 1997 $11,600,000
March 31, 1998 $11,662,000
June 30, 1998 $11,831,000
September 30, 1998 $12,004,000
December 31, 1998 $13,990,000
March 31, 1999 $14,279,000
June 30, 1999 $14,677,000
September 30, 1999 $15,091,000
December 31, 1999 $15,565,000
March 31, 2000 $15,800,000
June 30, 2000 $16,124,000
September 30, 2000 $16,460,000
Notwithstanding anything to the contrary contained herein, for purposes of
computing Broadcast Cash Flow for this Section 8.1(c), Operating Cash Flow shall
not include Operating Cash Flow attributable to station WPHI until the
computations required for the fiscal quarter ending December 31, 1998.
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8.2 Limitation on Indebtedness and Preferred Stock. Create,
incur, assume or suffer to exist any Indebtedness of the Borrower or any
Restricted Subsidiary of the Borrower or issue any Preferred Stock, except:
(a) Indebtedness under this Agreement or any other Loan
Document;
(b) intercompany Indebtedness by and among the Borrower and
any of its Wholly Owned Restricted Subsidiaries;
(c) in the case of the Borrower, Interest Hedge Agreements
entered into with the Lenders or any of them for the purpose of hedging
against interest rate fluctuations with respect to variable rate
Indebtedness of the Borrower or any of the Restricted Subsidiaries;
(d) (i) in the case of the Borrower, Indebtedness in respect
of the Senior Subordinated Indebtedness and (ii) in the case of the
Restricted Subsidiaries, Indebtedness in respect of the Senior
Subordinated Guaranties as in effect on the date hereof;
(e) in the case of the Borrower, Indebtedness (other than
Disqualified Stock) the net proceeds of which are used substantially
concurrently to refinance Indebtedness described in clause (d) above so
long as (i) such refinancing Indebtedness is in an aggregate principal
amount not greater than the aggregate principal amount of the
Indebtedness being refinanced plus the amount of any interest and
premiums required to be paid thereon and fees and expenses associated
therewith, (ii) such Indebtedness has a later final maturity and a
longer weighted average life than the Indebtedness being refinanced,
(iii) the interest rate applicable to such Indebtedness shall be a
market interest rate as of the time of the incurrence thereof, (iv) no
material terms applicable to such Indebtedness (including the
subordination provisions thereof) shall be more favorable to the
refinancing lenders than the terms that are applicable under the Senior
Subordinated Notes Indenture prior to such refinancing and (v) the
Guaranty Obligations of the Restricted Subsidiaries of such
Indebtedness shall be no more favorable to the refinancing lenders than
the Senior Subordinated Guaranties;
(f) Indebtedness of the Borrower incurred in compliance with
Section 4.03(a) of the Senior Subordinated Notes Indenture; provided
that (i) such Indebtedness is unsecured (except for up to $1,500,000 in
the aggregate at any time outstanding of Purchase Money Indebtedness
and/or Capital Lease Obligations) and (ii) any such Indebtedness
consisting of Disqualified Stock shall be non-voting stock,
subordinated to the Obligations to the same extent as the Senior
Preferred Stock and shall otherwise be subject to substantially the
same terms and conditions as the Senior Preferred Stock set forth in
the Subordination Agreement;
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(g) Indebtedness existing on the Effective Date and set forth
on Schedule 8.2; and
(h) Indebtedness of the Borrower or any Restricted Subsidiary
consisting of Permitted Sales Representations in each case incurred in
connection with the disposition of any assets of the Borrower or any
Restricted Subsidiary.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Customary Permitted Liens;
(b) Liens created pursuant to the Security Documents;
(c) any attachment, prejudgment or judgment Lien in existence
less than sixty consecutive calendar days after the entry thereof, or
with respect to which execution has been stayed, or with respect to
which payment in full above any applicable customary deductible is
covered by insurance or a bond; and
(d) Liens securing up to $1,500,000 in the aggregate at any
time outstanding of Purchase Money Indebtedness and Capital Lease
Obligations permitted under Section 8.2(f).
8.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation with any Person, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets to any Person, except:
(a) a Restricted Subsidiary (other than a License Subsidiary)
may merge into or be acquired by the Borrower if the Borrower is the
survivor thereof;
(b) a Restricted Subsidiary (other than a License Subsidiary)
may merge into or be acquired by a Wholly Owned Restricted Subsidiary
if the Wholly Owned Restricted Subsidiary is the survivor thereof; and
(c) the Borrower or any Restricted Subsidiary (other than a
License Subsidiary) may sell, lease, transfer or otherwise dispose of
any or all of its assets in a transaction permitted under Section 8.5.
Notwithstanding anything to the contrary contained in the foregoing, no License
Subsidiary shall own or hold any assets other than Operating Agreements and FCC
Licenses and other Necessary Authorizations relating to the Stations or engage
in any business other than the ownership (or holding) and maintenance of
Operating Agreements and FCC Licenses.
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8.5 Limitation on Sale of Assets. Convey, sell, lease, assign,
exchange, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, receivables and leasehold interests)
(including by way of a Sale and Leaseback Transaction) other than in the
ordinary course of business, or issue or sell Equity Interests of any of its
Restricted Subsidiaries, in each case, whether by a single transaction or a
series of related transactions, to any Person (each of the foregoing, a
"Disposition"), except:
(a) Dispositions of property or assets (other than Equity
Interests) between the Borrower and Wholly Owned Restricted
Subsidiaries or between Wholly Owned Restricted Subsidiaries provided
that in the case of the Borrower, such Disposition is less than
substantially all of its assets;
(b) the sale of the stock of any Unrestricted Subsidiary;
(c) other Dispositions of property or assets (other than
Equity Interests), provided that such Disposition is less than
substantially all of the assets of the Borrower or any Restricted
Subsidiary, as the case may be, and provided further that all of the
following conditions are satisfied: (i) the Borrower or such Restricted
Subsidiary receives consideration at the time of such Disposition at
least equal to the Fair Market Value of the assets subject to such
Disposition, as determined and approved by the Board of Directors of
the Borrower in the case of such Dispositions with a Fair Market Value
of $1,000,000 or more, and at least 80% of the consideration thereof
received by the Borrower or such Restricted Subsidiary is in the form
of cash, (ii) any such Disposition shall be on a non-recourse basis,
except that the Borrower or such Restricted Subsidiary may make
commercially reasonable representations, warranties and indemnities
with respect to such properties or assets that are normal and customary
in the business of the Borrower ("Permitted Sale Representations"),
(iii) no Default or Event of Default shall have occurred and be
continuing either before or after the consummation of such transaction
and (iv) the Borrower shall, to the extent required, pay the proceeds
to the Agent in accordance with Section 4.2(d) when and if due; and
(d) an Asset Swap permitted by Section 8.14.
Upon request by and at the expense of the Borrower, the Agent shall immediately
release any Liens arising under the Security Documents with respect to any
Collateral which is sold or otherwise disposed of in compliance with the terms
of Section 8.5(b).
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8.6 Limitation on Restricted Payments; Other Payment
Limitations. Make any Restricted Payments, except (a) the refinancing of the
Senior Subordinated Notes as permitted under Section 8.2(e); (b) repurchases of
Common Equity of the Borrower from any employee of the Borrower (other than a
Principal Shareholder) whose employment with the Borrower has ceased, provided
that the aggregate amount of such repurchases shall not exceed $500,000 in any
year and provided further that no Default or Event of Default then exists or
would result therefrom; and (c) the Borrower shall have the right at any time
using cash from operations (not proceeds from Loans) to redeem shares of the
Senior Preferred Stock, provided that (i) the outstandings under the Tranche A
Facility do not exceed $1,000,000 plus Letters of Credit then outstanding for 30
days both before and after giving effect to such redemption, and (ii) no Default
or Event of Default then exists both before and after giving effect to such
redemption.
8.7 Limitation on Acquisitions. Purchase or enter into any
agreement to purchase (including letters of intent to purchase) any stock,
bonds, notes, debentures or other securities of or any assets constituting all
or any significant part of a business unit of any Person (collectively,
"Acquisitions") without the prior written consent of the Lenders other than in
connection with Permitted Escrow Deposits.
8.8 Investments. Make any Investment in any Person, other
than:
(a) Permitted Investments; and
(b) provided no Default or Event of Default exists or would
result therefrom, Investments in Unrestricted Subsidiaries in an amount
not greater than the Equity Proceeds received by the Borrower from the
issuance or sale of Equity Interests in the Borrower made after the
Effective Date and permitted under Section 8.12; provided, however that
such Equity Proceeds must be utilized, if at all, for an Investment in
an Unrestricted Subsidiary within 30 days of such equity issuance.
8.9 Limitation on Transactions with Affiliates. (a) The
Borrower shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate of the Borrower or any Restricted Subsidiary (each
of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Borrower or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Borrower or such Restricted Subsidiary with a
non-Affiliated Person, (ii) such Affiliate Transaction is approved by a majority
of the disinterested members of the Borrower's Board of Directors and (iii) the
Borrower delivers to the Agent (A) with respect to any Affiliate Transaction
involving aggregate payments in excess of $1,000,000, an Officers' Certificate
certifying that such Affiliate Transaction complies with clauses (i) and (ii)
above and (B) with respect to any Affiliate Transaction (or series of related
transactions) with an aggregate value in excess of $5,000,000, an opinion from a
nationally recognized investment
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bank to the effect that the transaction is fair to the Borrower or the
Restricted Subsidiary, as the case may be, from a financial point of view.
(b) The provisions of paragraph (a) above shall not prohibit:
(i) employment arrangements (including customary
benefits thereunder) entered into by the Borrower or any of its
Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Borrower or such Restricted
Subsidiary;
(ii) transactions solely between or among the
Borrower and its Wholly Owned Restricted Subsidiaries or solely between
or among Wholly Owned Restricted Subsidiaries;
(iii) transactions permitted under Section 8.6;
(iv) any agreement as in effect on the Effective Date
and listed on Schedule 8.9 or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) and
any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Lenders in any
material respect than the original agreement as in effect on the
Effective Date;
(v) the existence of, or the performance by the
Borrower or any of its Restricted Subsidiaries of its obligations under
the terms of, any stockholders agreement (including any registration
rights agreement or purchase agreement related thereto) to which it is
a party on the Effective Date;
(vi) services provided to any Unrestricted Subsidiary
of the Borrower for fees approved by a majority of the disinterested
members of the Board of Directors of the Borrower;
(vii) subject to the terms of this Agreement,
including but not limited to Sections 4.2(e), 8.2, 8.5 and 8.12, the
issuance, sale or other disposition of any Equity Interest (other than
Disqualified Stock) of the Borrower, including any equity-related
agreements relating thereto such as registration rights and voting
agreements so long as such agreements do not result in such Equity
Interests being Disqualified Stock; and
(viii) the Borrower from entering into an LMA
Agreement concerning station WYCB-AM, Washington, D.C. with the
Unrestricted Subsidiary which owns such station, provided that the
Agent promptly receives a copy of such LMA Agreement.
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8.10 Limitation on Restrictions on Restricted Subsidiary
Distributions. Enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of the
Borrower to (a) pay dividends or make any other distributions in respect of any
Equity Interests of such Restricted Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Restricted Subsidiary of the Borrower, (b)
make loans or advances to the Borrower or any other Restricted Subsidiary of the
Borrower or (c) transfer any of its assets to the Borrower or any other
Restricted Subsidiary of the Borrower, except any encumbrance or restriction
existing under or by reason of:
(i) applicable Law;
(ii) any instrument governing Indebtedness or Equity
Interests of a Person acquired by the Borrower or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition); provided, however, that such
restriction is not applicable to any other Person or the properties or
assets of any other Person;
(iii) by reason of customary nonassignment provisions
in leases entered into in the ordinary course of business and
consistent with past practices;
(iv) Purchase Money Indebtedness for property
acquired in the ordinary course of business that only impose
restrictions on the property so acquired;
(v) this Agreement;
(vi) agreements relating to the financing of the
acquisition of real or tangible personal property acquired after the
Effective Date, provided that such encumbrance or restriction relates
only to the property that is acquired and, in the case of any
encumbrance or restriction that constitutes a Lien, such Lien
constitutes a Purchase Money Lien; or
(vii) any restriction or encumbrance contained in
contracts for sale of assets in respect of the assets being sold
pursuant to such contract.
8.11 Limitation on Lines of Business. Enter into any business,
either directly or through any Restricted Subsidiary other than the radio
broadcast business and activities directly related thereto (each, a "Permitted
Line of Business").
8.12 Limitation on Sale or Issuance of Equity Interests.
Issue, sell, assign, pledge or otherwise encumber or dispose of any shares of
Equity Interests of the Borrower or the Restricted Subsidiaries, except (a) the
Restricted Subsidiaries may issue or sell Equity Interests to the Borrower, (b)
the Borrower and the Restricted Subsidiaries may pledge the Equity Interests of
the Subsidiaries pursuant to the Pledge Agreements, (c) provided no Default or
Event of Default exists or would result therefrom, the Borrower may issue (i)
Disqualified Stock
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permitted under Section 8.2(f) and (ii) common stock so long as such common
stock (other than common stock issued in a Public Equity Offering) is pledged to
the Agent for the benefit of the Lenders pursuant to a Pledge Agreement in form
and substance substantially similar to the Shareholder Pledge Agreement
described in item (i) of the definition of "Pledge Agreements", (d) the issuance
of common stock to the Investors upon the exercise of their Warrants, so long as
such common stock is pledged to the Agent for the benefit of the Lenders as
required under the Warrantholders' Pledge, (e) the Borrower may issue the Allied
Warrant so long as the holder thereof agrees in writing that the Allied Warrant
may not be exercised until such holder assumes all the obligations and
liabilities under, and becomes a party to, the Standstill Agreement as an
"Investor" thereunder, and (f) the issuance of Series A 15% Cumulative
Redeemable Preferred Stock of Borrower, par value $0.01 to the holder of the
Allied Warrant not to exceed a liquidation value of $4,000,000 provided that
such holder has assumed all the obligations and liabilities under, and become a
party to, the Standstill Agreement as an "Investor" thereunder.
8.13 Limitation on Material Agreements. (a) No Loan Party will
enter into any amendment, modification or waiver, that is adverse in any
material respect to rights of the Lenders under the Loan Documents, of any term
or provision of the Senior Subordinated Debt Documents, the Subordination
Agreement, the Securities Purchase Agreement, the Warrant Agreement, the
Exchange Agreement, the Amended and Restated Certificate of Incorporation, the
Preferred Stockholders' Agreement, any other Preferred Stock Document or between
the Borrower and the holders of the Senior Subordinated Notes, without the prior
written consent of the Lenders other than waivers of compliance by any Loan
Party of the terms of any of such agreements.
(b) No Loan Party will, (i) enter into any LMA Agreement
(other than a LMA Agreement between the Borrower and the Unrestricted Subsidiary
which owns station WYCB-AM, Washington, D.C., provided the Agent promptly
receives a copy of such LMA Agreement), or (ii) except as required by the FCC,
agree to any extension or termination of or amendment, modification or waiver of
any material term of any such LMA Agreement, in each case without the prior
written consent of Lenders.
(c) No Restricted Subsidiary shall operate, manage or direct
the day-to-day operations of any Station unless it has entered into an Operating
Agreement with a License Subsidiary and such Operating Agreement is in full
force and effect.
8.14 Limitation on Asset Swaps. No Loan Party shall engage in
any Asset Swaps unless (i) at the time of entering into the agreement relating
to a proposed Asset Swap and immediately before and after the consummation of
such Asset Swap, no Default or Event of Default shall have occurred and be
continuing; (ii) at the time of entering into the agreement relating to the
proposed Asset Swap and after giving pro forma effect to such Asset Swap as if
it had occurred at the beginning of the applicable four-quarter period, the
Borrower would be permitted to incur at least $1.00 of additional Indebtedness
under Section 8.2(d) and under Section 4.03(a) of the Senior Subordinated Notes
Indenture; (iii) after giving pro forma effect to the proposed Asset Swap as if
such Asset Swap had occurred at the beginning of the four most
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recent full fiscal quarters ending immediately prior to the date of the proposed
Asset Swap, the ratio of (A) EBITDA of the Borrower and its Restricted
Subsidiaries on a consolidated basis for such four-quarter period to (B) the
Consolidated Cash Interest Expense of the Borrower and its Restricted
Subsidiaries for such four-quarter period exceeds 1.2 to 1.0; and (iv) the
respective Fair Market Values of the assets to be purchased and sold by any Loan
Party are substantially the same at the time of entering into the agreement
relating to a proposed Asset Swap.
8.15 Certain Intercompany Matters. Fail to (i) satisfy
customary formalities with respect to organizational separateness, including,
without limitation, (x) the maintenance of separate books and records and (y)
the maintenance of separate bank accounts in its own name; (ii) act solely in
its own name and through its authorized officers and agents, (iii) commingle any
money or other assets of any Unrestricted Subsidiary with any money or other
assets of the Borrower or any of the Restricted Subsidiaries; or (iv) take any
action, or conduct its affairs in a manner, which could reasonably be expected
to result in the separate organizational existence of the Borrower, each
Unrestricted Subsidiary and the Restricted Subsidiaries being ignored under any
circumstance.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder, on or
prior to the date which is five days (or, if later, three Business
Days) after any such interest or other amount becomes due in accordance
with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Sections 7.4,
7.7, 7.9, 7.10 and 7.11 or Section 8 of this Agreement or in the Pledge
Agreements; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the Agent shall have
given the Borrower notice thereof; or
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(e) (i) The Borrower or any of the Subsidiaries shall default
in making any payment of any principal of any Indebtedness (including,
without limitation, any Guarantee Obligation, but excluding the Loans
and Reimbursement Obligations) beyond the period of grace or cure, if
any, provided in the instrument or agreement under which such
Indebtedness was created; or (ii) the Borrower or any of the
Subsidiaries shall default in making any payment of any interest on any
such Indebtedness beyond the period of grace or cure, if any, provided
in the instrument or agreement under which such Indebtedness was
created; or (iii) the Borrower or any of the Subsidiaries shall default
in the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or beneficiary
of such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due or to be purchased or repurchased prior to
its stated maturity (or, in the case of any such Indebtedness
constituting a Guarantee Obligation, to become payable prior to the
stated maturity of the primary obligation covered by such Guarantee
Obligation); provided that a default, event or condition described in
clause (i), (ii) or (iii) of this paragraph (e) shall not constitute a
Default or an Event of Default under this Agreement unless, at the time
of such default, event or condition one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate
$750,000; or
(f) (i) The Borrower or any of the Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the Borrower or
any of the Subsidiaries shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Borrower
or any of the Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower or any of the
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or any of the Subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) the
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Borrower or any of the Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Majority
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Majority
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any of the Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance or indemnities) of
$1,000,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60
days after the entry thereof; or
(i) (i) Any material provision of the Loan Documents shall
cease, for any reason, to be in full force and effect, or the Borrower
or any other Loan Party shall so assert or (ii) the Lien created by any
of the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby; or
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(j) A Change of Control shall occur or the Borrower; or
(k) The occurrence of any of the following: (i) Borrower or
any Loan Party shall lose, fail to keep in force, suffer the
termination, suspension or revocation of or terminate, forfeit or
suffer an amendment to any FCC License or other material license at any
time held by it, the loss, termination, suspension or revocation of
which could reasonably be expected to have a Material Adverse Effect on
the operations of any Loan Party or any Loan Party's ability to perform
its obligations under this Agreement or the other Loan Documents; (ii)
any proceeding shall be brought by any Person challenging the validity
or enforceability of any Necessary Authorization of a Loan Party except
when such proceeding could not reasonably be expected to result in the
loss of such Necessary Authorization or to have a Material Adverse
Effect; (iii) appropriate proceedings for the renewal of any Necessary
Authorization shall not be commenced prior to the expiration thereof or
if such Necessary Authorization is not renewed or otherwise made
available for the use of the applicable Loan Party; (iv) any Loan Party
shall fail to comply with the Communications Act or any rule or
regulation promulgated by the FCC and such failure to comply results in
a fine in excess of $1,000,000; (v) the FCC shall materially and
adversely modify any Necessary Authorization or shall suspend, revoke
or terminate or shall commence proceedings to materially and adversely
modify, suspend, revoke or terminate any Necessary Authorization and
such proceedings shall not be dismissed or discharged within the
earlier of twelve months from the commencement of such proceeding or 30
days prior to any date set for any suspension, revocation or
termination; or (vi) any Contractual Obligation which is materially
necessary to the operation of the broadcasting operations of any Loan
Party shall be revoked or terminated and not replaced by a substitute
reasonably acceptable to the Majority Lenders within 30 days after such
revocation or termination; or
(l) Any breach or default shall occur under any of the Senior
Subordinated Debt Documents or the Senior Subordinated Indebtedness is
accelerated;
(m) The occurrence of any of the following: (i) the Borrower
shall redeem, or the Investors shall exercise any right to demand that
the Borrower redeem, any shares of the Senior Preferred Stock, except
as otherwise expressly permitted hereunder, (ii) the occurrence of a
Redemption Event under the Preferred Stockholders' Agreement (unless
waived, at any time prior to an Acceleration hereunder, by the
requisite Investors thereunder) or (iii) the occurrence of any other
event which entitles the Investors to cause a sale of the Borrower; or
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section 9 with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall
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immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Majority Lenders, the Agent may, or upon the request of the
Majority Lenders, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon such Commitments shall
immediately terminate; and (ii) with the consent of the Majority Lenders, the
Agent may, or upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith (an "Acceleration"), whereupon the same shall immediately become due
and payable. With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an Acceleration
pursuant to this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such
cash collateral account shall be applied by the Agent to the payment of drafts
drawn under such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other Obligations of the Borrower hereunder and under
the other Loan Documents. After all such Letters of Credit shall have expired or
been fully drawn upon, all Reimbursement Obligations shall have been satisfied,
all Loans shall have been paid in full and no other Obligations shall be due and
payable, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
SECTION 10. THE AGENT
10.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or any other Loan Document, the Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be
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entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS. NEITHER THE AGENT NOR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES SHALL BE
(I) LIABLE FOR ANY ACTION LAWFULLY TAKEN OR OMITTED TO BE TAKEN BY IT OR SUCH
PERSON UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
(EXCEPT FOR ITS OR SUCH PERSON'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR
BREACH OF THIS AGREEMENT) OR (II) RESPONSIBLE IN ANY MANNER TO ANY OF THE
LENDERS FOR ANY RECITALS, STATEMENTS, REPRESENTATIONS OR WARRANTIES MADE BY THE
BORROWER OR ANY OFFICER THEREOF CONTAINED IN THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR IN ANY CERTIFICATE, REPORT, STATEMENT OR OTHER DOCUMENT REFERRED TO
OR PROVIDED FOR IN, OR RECEIVED BY THE AGENT UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR FOR THE VALUE, VALIDITY, EFFECTIVENESS,
GENUINENESS, ENFORCEABILITY OR SUFFICIENCY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR FOR ANY FAILURE OF THE BORROWER TO PERFORM ITS OBLIGATIONS HEREUNDER
OR THEREUNDER. THE AGENT SHALL NOT BE UNDER ANY OBLIGATION TO ANY LENDER TO
ASCERTAIN OR TO INQUIRE AS TO THE OBSERVANCE OR PERFORMANCE OF ANY OF THE
AGREEMENTS CONTAINED IN, OR CONDITIONS OF, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR TO INSPECT THE PROPERTIES, BOOKS OR RECORDS OF THE BORROWER.
10.4 Reliance by the Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, facsimile,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
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10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender (except in the case
of a Default under Section 9(a)) or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Majority Lenders; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
10.6 Non-Reliance on the Agent and the Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
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10.7 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY THE AGENT
IN ITS CAPACITY AS SUCH (TO THE EXTENT NOT REIMBURSED BY THE BORROWER AND
WITHOUT LIMITING THE OBLIGATION OF THE BORROWER TO DO SO), RATABLY ACCORDING TO
THEIR RESPECTIVE SPECIFIED PERCENTAGES IN EFFECT ON THE DATE ON WHICH
INDEMNIFICATION IS SOUGHT (OR, IF INDEMNIFICATION IS SOUGHT AFTER THE DATE UPON
WHICH THE LOANS SHALL HAVE BEEN PAID IN FULL, RATABLY IN ACCORDANCE WITH THEIR
SPECIFIED PERCENTAGES IMMEDIATELY PRIOR TO SUCH DATE), FROM AND AGAINST ANY AND
ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY
TIME (INCLUDING, WITHOUT LIMITATION, AT ANY TIME FOLLOWING THE PAYMENT OF THE
LOANS) BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF, THE COMMITMENTS, THIS AGREEMENT, ANY OF THE OTHER
LOAN DOCUMENTS OR ANY DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY ACTION TAKEN OR
OMITTED BY THE AGENT UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING; PROVIDED
THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE THE PAYMENT OF
THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER.
10.8 The Agent in Its Individual Capacity. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the Agent
hereunder and under the other Loan Documents. With respect to the Loans made by
it, the Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
10.9 Successor Agent. (a) The Agent may resign as the Agent
upon 30 days' notice to the Lenders and the appointment of a successor Agent as
hereinafter provided. If the Agent shall resign as the Agent under this
Agreement and the other Loan Documents, then, unless an Event of Default shall
have occurred and be continuing (in which case, the Majority Lenders shall
appoint a successor), the Borrower shall appoint from among the Lenders a
successor Agent for the Lenders, which successor Agent shall be approved by the
Majority Lenders (which approval shall not be unreasonably withheld). If no
successor Agent shall have been so appointed by the Borrower (or in the case of
an Event of Default, by the Majority Lenders) and such successor Agent has not
accepted such appointment within 30 days after such
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resignation, then the resigning Agent may, on behalf of the Lenders, appoint a
successor Agent, which successor Agent hereunder shall be either a Lender or, if
none of the Lenders is willing to serve as successor Agent, a major
international bank having combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as the Agent hereunder by a successor
Agent, such successor Agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor Agent effective upon
such appointment and approval, and the former Agent's rights, powers and duties
as the Agent shall be terminated, without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Agent's resignation as the Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement and the
other Loan Documents.
(b) In the event that the Agent shall have breached any of its
material obligations to the Lenders hereunder, the Majority Lenders may remove
the Agent, effective on the date specified by them, by written notice to the
Agent and the Borrower. Upon any such removal, the Borrower, provided that no
Event of Default shall have occurred and be continuing (in which case the
Majority Lenders shall make the appointment), shall have the right to appoint a
successor Agent, which successor Agent shall be approved by the Majority Lenders
(which approval shall not be unreasonably withheld). If no successor Agent shall
have been so appointed by the Borrower (or in the case of an Event of Default,
by the Majority Lenders) and such successor Agent has not accepted such
appointment within 30 days after notification to the Agent of its removal, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which successor Agent hereunder shall be either a Lender or, if none of the
Lenders is willing to serve as successor Agent, a major international bank
having combined capital and surplus of at least $500,000,000. Such successor
Agent, provided that no Event of Default shall have occurred and be continuing,
shall be reasonably satisfactory to the Borrower. Upon the acceptance of any
appointment as the Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. The Borrower
and the Lenders shall execute such documents as shall be necessary to effect
such appointment. After any retiring Agent's removal hereunder as the Agent, the
provisions of this Section 10.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this Agreement
and the other Loan Documents. If at any time there shall not be a duly appointed
and acting Agent, the Borrower agrees to make each payment due hereunder and
under the Notes directly to the Lenders entitled thereto during such time.
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SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 11.1. The Majority Lenders and each relevant Loan Party may, or, with
the written consent of the Majority Lenders, the Agent and each relevant Loan
Party may, from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Majority Lenders or the Agent,
as the case may be, may specify in such instrument, any of the requirements of
this Agreement or the other Loan Documents or any Default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or extend the
scheduled date of maturity of any Loan or of any installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the expiration date
of any Commitment of any Lender, or make any change in the method of application
of any payment of the Loans specified in Section 4.2 or Section 4.8, (ii) waive,
extend or reduce any mandatory Commitment reduction pursuant to Section 4.2,
(iii) amend, modify or waive any provision of, this Section 11.1 or reduce any
percentage specified in the definition of Majority Lenders, or consent to the
assignment or transfer by any Loan Party of any of its rights and obligations
under this Agreement and the other Loan Documents, (iv) release the Collateral
except for any Collateral which is permitted to be disposed of pursuant to
Section 8.5, which Collateral may be released by the Agent pursuant to Section
8.5, (v) amend, modify or waive any condition precedent to any extension of
credit set forth in Section 6, in each case of (i), (ii), (iii), (iv) and (v)
above, without the written consent of all of the Lenders, (vi) amend, modify or
waive any provision of Section 10 without the written consent of the then Agent
or (vii) amend, modify or waive any provision of Section 3 without the written
consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Agent and all future holders
of the Notes. In the case of any waiver, the Loan Parties, the Lenders and the
Agent shall be restored to their former position and rights hereunder and under
the other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three Business Days after
being deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower, the Subsidiaries and the Agent, and as set
forth in Schedule 1.1 (or, with respect to
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any Lender that is an Assignee, in the applicable Assignment and Acceptance) in
the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto:
The Borrower: Radio One, Inc.
5900 Princess Garden Parkway
Lanham, Maryland 20706
Attention: Scott R. Royster,
Chief Financial Officer
Fax: (301) 306-9426
with a copy to:
Alfred C. Liggins, President
Fax: (301) 306-9426
The Agent/Issuing Lender: NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Whitney L. Busse
Fax: (214) 508-9390
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to Sections 2 or 3 shall not be effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Agent for all its reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent, (b) to pay or reimburse each
Lender and the Agent
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for all its costs and expenses reasonably incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to each Lender and of counsel to
the Agent, (c) without duplication of amounts payable pursuant to Sections 4.9
and 4.10, TO PAY, INDEMNIFY, AND HOLD EACH LENDER AND THE AGENT HARMLESS FROM,
ANY AND ALL RECORDING AND FILING FEES AND ANY AND ALL LIABILITIES WITH RESPECT
TO, OR RESULTING FROM ANY DELAY IN PAYING, STAMP, EXCISE AND OTHER TAXES, IF
ANY, WHICH MAY BE PAYABLE OR DETERMINED TO BE PAYABLE IN CONNECTION WITH THE
EXECUTION AND DELIVERY OF, OR CONSUMMATION OR ADMINISTRATION OF ANY OF THE
TRANSACTIONS CONTEMPLATED BY, OR ANY AMENDMENT, SUPPLEMENT OR MODIFICATION OF,
OR ANY WAIVER OR CONSENT UNDER OR IN RESPECT OF, THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS AND ANY SUCH OTHER DOCUMENTS, AND (D) WITHOUT DUPLICATION OF AMOUNTS
PAYABLE PURSUANT TO SECTIONS 4.9 AND 4.10, TO PAY, INDEMNIFY, AND HOLD EACH
LENDER, EACH ISSUING LENDER AND THE AGENT, AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AFFILIATES, ADVISORS, AGENTS AND CONTROLLING PERSONS
(EACH, AN "INDEMNITEE"), HARMLESS FROM AND AGAINST ANY AND ALL OTHER
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT
TO THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE AND ADMINISTRATION OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY SUCH OTHER DOCUMENTS OR THE USE OF
THE PROCEEDS OF THE LOANS (ALL THE FOREGOING IN THIS CLAUSE (D), COLLECTIVELY,
THE "INDEMNIFIED LIABILITIES"), PROVIDED, THAT IT IS THE INTENTION OF THE
BORROWER TO INDEMNIFY THE INDEMNIFIED PARTIES HEREUNDER AGAINST THEIR OWN
NEGLIGENCE, AND FURTHER PROVIDED THE BORROWER SHALL HAVE NO OBLIGATION HEREUNDER
TO ANY INDEMNITEE WITH RESPECT TO INDEMNIFIED LIABILITIES ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF OR BREACH OF THIS AGREEMENT BY SUCH
INDEMNITEE. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE REPAYMENT OF THE LOANS
AND ALL OTHER AMOUNTS PAYABLE HEREUNDER.
11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
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(b) Any Lender may, in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan or L/C Obligation owing to such Lender, any Commitment of
such Lender or any other interest of such Lender hereunder and under the other
Loan Documents; provided, that no participations shall be in an amount less than
$2,500,000 or a whole multiple of $100,000 in excess thereof or, if less than
$2,500,000, the entire amount of such Lender's applicable Commitment. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final scheduled maturity of the Loans, in
each case to the extent subject to such participation. The Borrower agrees that
if amounts outstanding under this Agreement are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 11.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 4.9, 4.10 and 4.11 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it were a Lender; provided that, in the case of Section 4.10, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in accordance with applicable law, at any
time and from time to time assign to any Person (an "Assignee") all or any part
of its rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
A, executed by such Assignee and such assigning Lender and delivered to the
Agent for its acceptance and recording in the Register (with a copy to the
Borrower) and upon payment to the Agent of a processing fee in the amount of
$3,000; provided that, (i) no such assignment shall be in an amount less than
$2,500,000 or a whole multiple of $100,000 in excess thereof or, if less than
$2,500,000, the entire amount of such Lender's applicable Commitment; (ii) no
such assignment shall be made without the prior consent of the Agent and the
Borrower (which consent shall not be unreasonably withheld or delayed) unless
such assignment is to another Lender or an Affiliate of a Lender, in which event
no such consent
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shall be required; and (iii) no such assignment may be made unless such
assigning Lender assigns an equal percentage of its interest in both the Tranche
A Facility and the Tranche B Facility. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement.
(d) Any Non-U.S. Lender that could become completely exempt
from withholding of any tax, assessment or other charge or levy imposed by or on
behalf of the United States or any taxing authority thereof ("U.S. Taxes") in
respect of payment of any Obligations due to such Non-U.S. Lender under this
Agreement if the Obligations were in registered form for U.S. federal income tax
purposes may request the Borrower (through the Agent), and the Borrower agrees
thereupon, to exchange any promissory note(s) evidencing such Obligations for
promissory note(s) registered as provided in paragraph (f) below and
substantially in the form of Exhibit O (an "Alternative Note"). Alternative
Notes may not be exchanged for promissory notes that are not Alternative Notes.
(e) Each Non-U.S. Lender that could become completely exempt
from withholding of U.S. Taxes in respect of payment of any Obligations due to
such Non-U.S. Lender if the Obligations were in registered form for U.S. Federal
income tax purposes and that holds Alternative Note(s) (an "Alternative
Noteholder") (or, if such Alternative Noteholder is not the beneficial owner
thereof, such beneficial owner) shall deliver to the Borrower prior to or at the
time such Non-U.S. Lender becomes an Alternative Noteholder a Form W-8
(Certificate of Foreign Status of the U.S. Department of Treasury) (or any
successor or related form adopted by the U.S. taxing authorities), together with
an annual certificate stating that (i) such Alternative Noteholder or beneficial
owner, as the case may be, is not a "bank" within the meaning of Section 881(c)
of the Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Company (within the meaning of Section 864(d)(4) of
the Code) and (ii) such Alternative Noteholder or beneficial owner, as the case
may be, shall promptly notify the Borrower if at any time such Alternative
Noteholder or beneficial owner, as the case may be, determines that it is no
longer in a position to provide such certification to the Borrower (or any other
form of certification adopted by the U.S. taxing authorities for such purposes).
(f) An Alternative Note and the Obligation(s) evidenced
thereby may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer of such Alternative Note and the
Obligation(s) evidenced thereby on the Register (and each Alternative Note shall
expressly so provide). Any assignment or transfer of all or part of such
Obligation(s) and the Alternative Note(s) evidencing the same shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Alternative Note(s) evidencing such Obligation(s), duly endorsed
by (or accompanied by a written instrument of assignment or transfer duly
executed by) the Alternative Noteholder thereof, and thereupon one
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or more new Alternative Note(s) in the same aggregate principal amount shall be
issued to the designated Assignee(s). No assignment of an Alternative Note and
the Obligation(s) evidenced thereby shall be effective unless it has been
recorded in the Register as provided in this Section 11.6(f).
(g) The Agent, on behalf of the Borrower, shall maintain at
the address of the Agent referred to in Section 11.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders (including Alternative
Noteholders) and the Commitments of, and principal amounts of the Loans owing
to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent and
the Lenders may (and, in the case of any Loan or other obligation hereunder not
evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(h) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee together with payment to the Agent of a
registration and processing fee of $3,000, the Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrower.
(i) Subject to Section 11.16, the Borrower authorizes each
Lender to disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee, subject to the Transferee agreeing to be bound by the
provisions of Section 11.16, any and all financial information in such Lender's
possession concerning the Borrower and the Subsidiaries which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Subsidiaries prior to becoming a party to this Agreement.
(j) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
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11.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 9(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount, to the
extent permitted by applicable law, any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Lender agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Lender, provided
that, to the extent permitted by applicable law, the failure to give such notice
shall not affect the validity of such set-off and application.
11.8 Counterparts; When Effective. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Agent. This Agreement shall become
effective as of May 19, 1997 (such date herein referred to as the "Effective
Date"), provided that (i) the Agent has received original counterparts hereof
executed by the Borrower, the Agent and each Lender and (ii) each of the
conditions precedent set forth in Section 6.1 have been satisfied.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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11.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.
11.12 VENUE; SERVICE OF PROCESS. THE LENDER, THE BORROWER AND
ITS SUBSIDIARIES, FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, HEREBY
IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS OF THE STATE OF TEXAS AND AGREE AND CONSENT THAT SERVICE OF PROCESS MAY
BE MADE UPON THEM IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THE LOAN DOCUMENTS, OR THE OBLIGATIONS BY SERVICE OF PROCESS AS PROVIDED BY
TEXAS LAW, IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS, OR THE
OBLIGATIONS BROUGHT IN DISTRICT COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION,
IRREVOCABLY WAIVE ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM, AGREE TO DESIGNATE AND MAINTAIN AN AGENT
FOR SERVICE OF PROCESS IN DALLAS, TEXAS, IN CONNECTION WITH ANY SUCH LITIGATION
AND TO DELIVER TO ADMINISTRATIVE LENDER EVIDENCE THEREOF, IRREVOCABLY CONSENT TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS SET FORTH HEREIN, AND
IRREVOCABLY AGREE THAT ANY LEGAL PROCEEDING AGAINST LENDERS ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS, OR THE OBLIGATIONS SHALL BE BROUGHT IN THE
DISTRICT COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF LENDERS TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER OR ANY OF ITS SUBSIDIARIES IN ANY JURISDICTION OR TO SERVE PROCESS
IN ANY MANNER PERMITTED BY APPLICABLE LAW.
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11.13 Acknowledgements. The Borrower and each Subsidiary
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any Subsidiary arising out
of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Agent and the Lenders, on
one hand, and the Borrower or any Subsidiary, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower, the
Subsidiaries and the Lenders.
11.14 WAIVERS OF JURY TRIAL. THE LENDERS, THE BORROWER AND ITS
SUBSIDIARIES, FOR THEMSELVES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, HEREBY
WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW, THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY DEALINGS WITH LENDERS
RELATING TO THE SUBJECT MATTER OF THE LOAN TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THE BORROWER AND ITS SUBSIDIARIES
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO LENDERS' AGREEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT LENDERS HAVE ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT LENDERS WILL CONTINUE TO RELY
ON THIS WAIVER IN RELATED FUTURE DEALINGS. THE BORROWER AND ITS SUBSIDIARIES
FURTHER WARRANT AND REPRESENT THAT THEY HAVE KNOWINGLY AND VOLUNTARILY WAIVED
THEIR JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, MODIFICATIONS,
RENEWALS, EXTENSIONS, RESTATEMENTS, REARRANGEMENTS, SUPPLEMENTS OR SUBSTITUTIONS
TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOANS OR THE NOTES. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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11.15 Maximum Interest Rate. Regardless of any provision
contained in any of the Loan Documents, Lenders shall never be entitled to
contract for, charge, take, reserve, receive, or apply, as interest on the
Obligations, or any part thereof, any amount in excess of the Highest Lawful
Rate, and, in the event any Lender ever contracts for, charges, takes, reserves,
receives, or applies as interest any such excess, it shall be deemed a partial
prepayment of principal and treated hereunder as such and any remaining excess
shall be refunded to the Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, the Borrower, its Subsidiaries, and Lenders shall, to the maximum extent
permitted under applicable Law, treat all Loans as but a single extension of
credit (and Lenders, the Borrower and the Borrower's Subsidiaries agree that
such is the case and that provision herein for multiple Loans and for one or
more Notes is for convenience only), characterize any nonprincipal payment as an
expense, fee, or premium rather than as interest, exclude voluntary prepayments
and the effects thereof, and "spread" the total amount of interest throughout
the entire contemplated term of the Obligation; provided that, if the Obligation
is paid and performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of existence thereof
exceeds the Highest Lawful Rate, Lenders shall refund such excess, and, in such
event, Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving, or receiving interest in excess of
the Highest Lawful Rate. To the extent the laws of the State of Texas are
applicable for purposes of determining the "Highest Lawful Rate," such term
shall mean the "weekly rate ceiling" from time to time in effect under Article
5069-1D, Title 79, Revised Civil Statutes of Texas, as amended, or, if permitted
by applicable law and effective upon the giving of the notices required by such
Article 5069-1D (or effective upon any other date otherwise specified by
applicable law), the "monthly ceiling," the "quarterly ceiling," or "annualized
ceiling" from time to time in effect under such Article 5069-1D, whichever that
Lenders shall elect to substitute for the "weekly rate ceiling," and vice versa,
each such substitution to have the effect provided in such Article 5069-1D; and
Lenders shall be entitled to make such election from time to time and one or
more times and, without notice to the Borrower, to leave any such substitute
rate in effect for subsequent periods in accordance with such Article 5069-1D.
Pursuant to Article 15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes
of Texas, 1925, as amended, the Borrower agrees that such Chapter 15 (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) shall not govern or in any manner apply to the Obligations.
11.16 Confidentiality. Each Lender agrees to keep confidential
all non-public information provided to it by or on behalf of the Borrower or any
of the Subsidiaries pursuant to this Agreement or any other Loan Document;
provided that nothing herein shall prevent any Lender from disclosing any such
information (i) to the Agent or any other Lender, (ii) to any Assignee or
Participant, (iii) to its employees, directors, agents, attorneys, accountants
and other professional advisors, (iv) upon demand of any Governmental Authority
having jurisdiction over such Lender, (v) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
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11.17 Amendment and Restatement. This Agreement constitutes an
amendment and restatement of the Existing Credit Agreement and as such
supersedes the Existing Credit Agreement (which Existing Credit Agreement
amended and restated the Greyhound Agreement) in its entirety; provided,
however, that in no event shall the Liens securing the Existing Credit Agreement
or the Greyhound Agreement be deemed affected hereby, it being the intent and
agreement of the Loan Parties that the Liens on the Collateral granted to secure
the obligations of the Loan Parties under the Existing Credit Agreement and the
Greyhound Agreement shall not be extinguished and shall remain legal, valid,
binding and enforceable Liens against the Collateral securing the obligations of
the Loan Parties under the Existing Credit Agreement and the Greyhound
Agreement, as amended, restated and superseded in their entirety hereby.
11.18 FINAL AGREEMENT. THIS WRITTEN AGREEMENT, THE NOTES AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS
BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOLLOW.]
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EXECUTED as of the day and year first mentioned.
RADIO ONE, INC., the Borrower
By:
--------------------------------
Alfred C. Liggins
President
NATIONSBANK OF TEXAS, N.A.,
for itself as a Lender and as Agent
By:
--------------------------------
Whitney L. Busse
Vice President
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Schedule 1.1
Commitments and Addresses of Lenders
TRANCHE A
FUNDING OFFICE OF AGENT:
- -----------------------
NationsBank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 75202
Attn: Mickey McLean
Fax: (214) 508-2515
Phone: (214) 508-9192
ABA #111000025
Account #1292000883
Attn: Corporate Credit Services
Ref: Radio One
OFFICE OF ISSUING LENDER:
- ------------------------
NationsBank of Texas, N.A.
901 Main Street, 9th Floor
Dallas, Texas 75202
Attn: L/C Department
Fax: (214) 508-1814 (confirmation 214-508-3638)
NAME AND ADDRESS OF LENDERS:
- ---------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------- -------------------------------- -------------------------
TRANCHE A
TRANCHE A SPECIFIED
NAME AND ADDRESS OF LENDER COMMITMENT PERCENTAGE
- ---------------------------------------------------- -------------------------------- -------------------------
NationsBank of Texas, N.A. $5,000,000 100%
901 Main Street, 64th Floor
Dallas, Texas 75202
Attn: Whitney L. Busse
Fax: (214) 508-9390
- ---------------------------------------------------- -------------------------------- -------------------------
</TABLE>
103
<PAGE>
TRANCHE B
FUNDING OFFICE OF AGENT:
- -----------------------
NationsBank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 75202
Attn: Mickey McLean
Fax: (214) 508-2515
Phone: (214) 508-9192
ABA #111000025
Account #1292000883
Attn: Corporate Credit Services
Ref: Radio One
NAME AND ADDRESS OF ISSUING LENDER:
- ----------------------------------
NationsBank of Texas, N.A.
901 Main Street, 9th Floor
Dallas, Texas 75202
Attn: L/C Department
Fax: (214) 508-1814 (confirmation 214-508-3638)
NAME AND ADDRESS OF LENDERS:
- ---------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------------------------------------- ------------------------ --------------------------
TRANCHE B
TRANCHE B SPECIFIED
NAME AND ADDRESS OF LENDER COMMITMENT PERCENTAGE
- --------------------------------------------------------------- ------------------------ --------------------------
NationsBank of Texas, N.A. $2,500,000 100%
901 Main Street, 64th Floor
Dallas, Texas 75202
Attn: Whitney L. Busse
Fax: (214) 508-9390
- --------------------------------------------------------------- ------------------------ --------------------------
</TABLE>
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<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
RADIO ONE LICENSES, INC.
ARTICLE I - Name
The name of the corporation is Radio One Licenses, Inc. (hereinafter
referred to as the "Corporation").
ARTICLE II - Registered Office
The post office address of the registered office of the Corporation in the
State of Delaware is 9 East Loockerman Street, Dover, Kent County, Delaware
19901. The name of the registered agent of the Corporation at that address is
National Registered Agents, Inc.
ARTICLE III - Purpose
The purpose of the Corporation is to acquire, operate, and maintain radio
stations and television stations and to engage in any other lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
ARTICLE IV - Capital Stock
Section IV.1. General. The total number of shares of capital stock (the
"Capital Stock") which the Corporation has authority to issue is 1,000 shares of
Common Stock, par value $.01 per share, which shall be entitled to one vote per
share on all matters presented for a vote of the stockholders of the
Corporation.
ARTICLE V - Existence
The Corporation is to have a perpetual existence.
ARTICLE VI - General Provisions
Section VI.1. Dividends. The Board of Directors of the Corporation shall
have authority from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves as working
capital or for any other purpose or purposes, and to abolish or add to any such
reserve or reserves from time to time as said Board may deem to be in the
interest of the Corporation; and said Board shall likewise have power to
determine in its discretion, except as herein otherwise provided, what part of
the assets of the Corporation available for dividends in
<PAGE>
excess of such reserve or reserves shall be declared in dividends and paid to
the stockholders of the Corporation.
Section VI.2. Issuance of Stock. The shares of all classes and series of
Capital Stock of the Corporation may be issued by the Corporation from time to
time for such consideration as from time to time may be fixed by the Board of
Directors of the Corporation, provided that shares having a par value shall not
be issued for a consideration less than such par value, as determined by the
Board. At any time, or from time to time, the Corporation may grant rights or
options to purchase from the Corporation any shares of its Capital Stock of any
class or series to run for such period of time, for such consideration, upon
such terms and conditions, and in such form as the Board of Directors of the
Corporation may determine. The Board of Directors of the Corporation shall have
authority, as provided by law, to determine that only a part of the
consideration which shall be received by the Corporation for the shares of its
Capital Stock having a par value be capital provided that the amount of the part
of such consideration so determined to be capital shall at least be equal to the
aggregate par value of such shares. The excess, if any, at any time, of the
total net assets of the Corporation over the amount so determined to be capital,
as aforesaid, shall be surplus. All classes and series of Capital Stock of the
Corporation shall be and remain at all times nonassessable.
The Board of Directors of the Corporation is hereby expressly authorized,
in its discretion, in connection with the issuance of any obligations or Capital
Stock of the Corporation (but without intending hereby to limit its general
power so to do in other cases), to grant rights or options to purchase Capital
Stock of the Corporation of any class or series upon such terms and during such
period as the Board of Directors of the Corporation shall determine, and to
cause such rights to be evidenced by such warrants or other instruments as it
may deem advisable.
Section VI.3. Inspection of Books and Records. The Board of Directors of
the Corporation shall have power from time to time to determine to what extent
and at what times and places and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred
by the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or the stockholders of the Corporation.
Section VI.4. Location of Meetings, Books and Records. Except as otherwise
provided in the Bylaws, the stockholders of the Corporation and the Board of
Directors of the Corporation may hold their meetings and have an office or
offices outside of the State of Delaware, and, subject to the provisions of the
laws of said State, may keep the books of the Corporation outside of said State
at such places as may, from time to time, be designated by the Board of
Directors.
Section VI.5. Board of Directors Meeting. The Board of Directors shall be
comprised of the number of directors specified in the Corporation's Bylaws, and
such directors shall be elected in the manner contemplated by such Bylaws.
ARTICLE VII - Amendments
2
<PAGE>
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation in
the manner now or hereinafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation.
ARTICLE VIII - Liability
Section VIII.1. Limitation of Liability.
(a) To the fullest extent permitted by the DGCL as it now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted as of the date this Amended and Restated Certificate of
Incorporation is filed with the State of Delaware), and except as otherwise
provided in the Corporation's Bylaws, no director of the Corporation shall be
liable to the Corporation or its stockholders for monetary damages arising from
a breach of fiduciary duty owed to the Corporation or its stockholders.
(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Section VIII.2. Right to Indemnification. Each person who was or is made
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the DGCL, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide for broader
indemnification rights than permitted as of the date this Amended and Restated
Certificate of Incorporation is filed with the State of Delaware), against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that except as provided in
Section 8.3 of this ARTICLE VIII with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section 8.2 of
this ARTICLE VIII shall be a contract right and shall include the obligation of
the Corporation to pay the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advance of expenses");
provided, however, that if and to the extent that the Board
3
<PAGE>
of Directors of the Corporation requires, an advance of expenses incurred by an
indemnitee in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section 8.2 or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same or lesser scope and effect as the foregoing indemnification of
directors and officers.
Section VIII.3. Procedure for Indemnification. Any indemnification of a
director or officer of the Corporation or advance of expenses under Section 8.2
of this ARTICLE VIII shall be made promptly, and in any event within forty-five
days (or, in the case of an advance of expenses, twenty days) upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this ARTICLE
VIII is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE VIII shall be enforceable by the director or officer in any court
of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his or her right to indemnification,
in whole or in part, in any such action shall also be indemnified by the
Corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for the advance of expenses where the undertaking
required pursuant to Section 8.2 of this ARTICLE VIII, if any, has been tendered
to the Corporation) that the claimant has not met the standards of conduct which
make it permissible under the DGCL for the Corporation to indemnify the claimant
for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
The procedure for indemnification of other employees and agents for whom
indemnification is provided pursuant to Section 8.2 of this ARTICLE VIII shall
be the same procedure set forth in this Section 8.3 for directors or officers,
unless otherwise set forth in the action of the Board of Directors of the
Corporation providing for indemnification for such employee or agent.
Section VIII.4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise against any
expense,
4
<PAGE>
liability or loss asserted against him or her and incurred by him or her in any
such capacity, whether or not the Corporation would have the power to indemnify
such person against such expenses, liability or loss under the DGCL.
Section VIII.5. Service for Subsidiaries. Any person serving as a director,
officer, employee or agent of another Corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (hereinafter a "subsidiary" for
this ARTICLE VIII) shall be conclusively presumed to be serving in such capacity
at the request of the Corporation.
Section VIII.6. Reliance. Persons who after the date of the adoption of
this provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE VIII in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE VIII shall apply to claims made against an indemnitee arising out of
acts or omissions which occurred or occur both prior and subsequent to the
adoption hereof.
Section VIII.7. Non-Exclusivity of Rights. The rights to indemnification
and to the advance of expenses conferred in this ARTICLE VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under this Amended and Restated Certificate of Incorporation or under any
statute, Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
Section VIII.8. Merger or Consolidation. For purposes of this ARTICLE VIII,
references to "the Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed into the Corporation in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this ARTICLE VIII with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE IX - Alien Ownership of Stock
Section IX.1. Applicability. This ARTICLE IX shall be applicable to the
Corporation so long as the provisions of Section 310 of the Communications Act
of 1934, as the same may be amended from time to time (the "Communications Act")
(or any successor, provisions thereto) are applicable to the Corporation. As
used herein, the term "alien" shall have the meaning ascribed thereto by the
Federal Communications Commission ("FCC") on the date hereof and in the future
as Congress or the FCC may change such meaning form time to time. If the
provisions of Section 310 of the Communications Act (or any successor provisions
thereto) are amended, the restrictions in this ARTICLE IX shall be amended in
the same way, and as so amended, shall apply
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to the Corporation. The Board of Directors of the Corporation may make such
rules and regulations as it shall deem necessary or appropriate to enforce the
provisions of this ARTICLE IX.
Section IX.2. Voting. Except as otherwise provided by law, not more than
twenty percent of the aggregate number of shares of Capital Stock of the
Corporation outstanding in any class or series entitled to vote on any matter
before a meeting of stockholders of the Corporation shall at any time be for the
account of aliens or their representatives or for the account of a foreign
government or representative thereof, or for the account of any corporation
organized under the laws of a foreign country.
Section IX.3. Stock Certificates. Shares of Capital Stock issued to or held
by or for the account of aliens and their representatives, foreign governments
and representatives thereof, and corporations organized under the laws of
foreign countries shall be represented by Foreign Share Certificates. All other
shares of Capital Stock shall be represented by Domestic Share Certificates. All
of such certificates shall be in such form not inconsistent with this Amended
and Restated Certificate of Incorporation as shall be prepared or approved by
the Board of Directors of the Corporation.
Section IX.4. Limitation on Foreign Ownership. Except as otherwise provided
by law, not more than twenty percent of the aggregate number of shares of
Capital Stock of the Corporation outstanding shall at any time be owned of
record by or for the account of aliens or their representatives or by or for the
account of a foreign government or representatives thereof, or by or for the
account of any corporation organized under the laws of a foreign country. Shares
of Capital Stock shall not be transferable on the books of the Corporation to
aliens or their representatives, foreign governments or representatives thereof,
or corporations organized under the laws of foreign countries if, as a result of
such transfer, the aggregate number of shares of Capital Stock owned by or for
the account of aliens and their representatives, foreign governments and
representatives thereof, and corporations organized under the laws of foreign
countries shall be more than twenty percent of the number of shares of Capital
Stock then outstanding. If it shall be found by the Corporation that Capital
Stock represented by a Domestic Share Certificate is, in fact, held by or for
the account of aliens or their representative, foreign governments or
representatives thereof, or corporations organized under the laws of foreign
countries, then such Domestic Share Certificate shall be canceled and a new
certificate representing such Capital Stock marked "Foreign Share Certificate"
shall be issued in lieu thereof, but only to the extent that after such issuance
the Corporation shall be in compliance with this ARTICLE IX; provided, however,
that if, and to the extent, such issuance would violate this ARTICLE IX, then,
the holder of such Capital Stock shall not be entitled to vote, to receive
dividends, or to have any other rights with regard to such Capital Stock to such
extent, except the right to transfer such Capital Stock to a citizen of the
United States.
Section IX.5. Transfer of Foreign Share Certificates. Any Capital Stock
represented by Foreign Share Certificates may be transferred either to aliens or
non-aliens. In the event that any Capital Stock represented by a certificate
marked "Foreign Share Certificate" is sold or transferred to a non-alien, then
such non-alien shall be required to exchange such certificate for a certificate
marked "Domestic Share Certificate." If the Board of Directors of the
Corporation reasonably determines that a Domestic Share Certificate has been or
is to be transferred to or for the account of
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aliens or their representatives, foreign governments or representatives thereof,
or corporations organized under the laws of foreign countries, the Corporation
shall issue a new certificate for the shares of Capital Stock transferred to the
transferee marked "Foreign Shares Certificate", cancel the old Domestic Share
Certificate, and record the transaction upon its books, but only to the extent
that after such transfer is complete, the Corporation shall be in compliance
with this ARTICLE IX.
Notwithstanding any other provision of this Amended and Restated
Certificate of Incorporation, the transfer or conversion of the Corporation=s
Capital Stock, whether voluntary or involuntary, shall not be permitted, and
shall be ineffective, if such transfer or conversion would (i) violate (or would
result in violation of) the Communications Act or any of the rules or regulation
promulgated thereunder or (ii) require the prior approval of the FCC, unless
such prior approval has been obtained.
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EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
RADIO ONE, INC.
ARTICLE I - Name
The name of the corporation is Radio One, Inc. (hereinafter referred to as
the "Corporation").
ARTICLE II - Registered Office
The post office address of the registered office of the Corporation in the
State of Delaware is 9 East Loockerman Street, Dover, Kent County, Delaware
19901. The name of the registered agent of the Corporation at that address is
National Registered Agents, Inc.
ARTICLE III - Purpose
The purpose of the Corporation is to acquire, operate, and maintain radio
stations and television stations and to engage in any other lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
ARTICLE IV - Capital Stock
Section IV.1. General. The total number of shares of capital stock which
the Corporation has authority to issue is 292,000 shares, consisting of: (i)
140,000 shares of 15% Series A Cumulative Redeemable Preferred Stock, par value
$.01 per share (the "Series A Preferred"), (ii) 150,000 shares of 15% Series B
Cumulative Redeemable Preferred Stock, par value $.01 per share (the "Series B
Preferred," and together with the Series A Preferred, the "Preferred Stock"),
(iii) 1,000 shares of Class A Common Stock, par value $.01 per share (the "Class
A Common"), and (iv) 1,000 shares of Class B Common Stock, par value $.01 per
share (the "Class B Common," and together with the Class A Common, the "Common
Stock"). The Preferred Stock and Common Stock are hereinafter sometimes
collectively referred to as "Capital Stock." Certain capitalized terms used
herein are defined in Section 4.4(c) of this ARTICLE IV below.
Section IV.2. Preferred Stock. Except as otherwise provided in this Section
4.2 of this ARTICLE IV or as otherwise required by applicable law, all shares of
Series A Preferred and Series B Preferred shall be identical in all respects and
shall entitle the holders thereof to the same rights and privileges and shall be
subject to the same qualifications, limitations and restrictions.
(a) Dividends.
<PAGE>
(i) General Obligation. To the extent permitted under the DGCL,
the Corporation shall pay preferential cumulative dividends to the holders of
the Preferred Stock as provided in this Section 4.2(a)(i) of this ARTICLE IV.
Except as otherwise provided herein, dividends on each share of Preferred Stock
(a "Preferred Share") shall accrue on a daily basis at the rate of 15% per annum
(the "Dividend Rate") on the sum of (A) the Liquidation Value thereof plus (B)
all unpaid accumulated dividends thereon, if any, from and including the date of
issuance of such Preferred Share to and including the date on which the
Liquidation Preference Amount of such Preferred Share is paid. Notwithstanding
the foregoing, if the Corporation does not redeem all of the issued and
outstanding Preferred Shares on the Mandatory Redemption Date (as defined in
Section 4.2(d)(i) of this ARTICLE IV) or, upon the occurrence of an Event of
Noncompliance (as defined in the Preferred Stockholders' Agreement) (such
failure to redeem or occurrence of an Event of Noncompliance, a "Noncompliance
Event"), the Majority Holders may elect, by written notice to the Corporation,
to have the Dividend Rate increase to 18% per annum (the "Noncompliance Dividend
Rate") and dividends shall accrue on each Preferred Share on a daily basis at
the Noncompliance Dividend Rate on the sum of (x) the Liquidation Value thereof
plus (y) all unpaid accumulated dividends thereon, if any, commencing on the
date of the occurrence of such Noncompliance Event (after the expiration of all
applicable cure periods) and continuing until (I) such Default is cured pursuant
to the terms of the Preferred Stockholders' Agreement or waived by the Majority
Holders or (II) the date on which the Liquidation Preference Amount of such
Preferred Share is paid. Dividends on Preferred Shares shall accrue whether or
not they have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
The date on which the Corporation initially issues any Preferred Share shall be
deemed to be its "date of issuance" regardless of the number of times transfer
of such Preferred Share is made on the stock records maintained by or for the
Corporation and regardless of the number of certificates which may be issued to
evidence such Preferred Share.
(ii) Special WPHI-FM Dividend. Notwithstanding the provisions of
Section 4.2(a)(i) of this ARTICLE IV, in the event the Corporation does not meet
any performance target listed below relating exclusively to the operation of
WPHI-FM, the Dividend Rate for each Preferred Share shall be increased to 17%
per annum (the "Retroactive Dividend Rate") and dividends shall accrue on each
Preferred Share on a daily basis at the Retroactive Dividend Rate on the sum of
(A) the Liquidation Value thereof plus (B) all unpaid accumulated dividends
thereon, if any, for the period commencing on the date of issuance of such
Preferred Share until (x) such time as the Corporation first meets a performance
target at a subsequent date or such noncompliance is waived by the Majority
Holders or (y) the date on which the Liquidation Preference Amount of such
Preferred Share is paid:
AS OF THE TWELVE-MONTH
PERIOD ENDING BROADCAST CASH FLOW ($)
------------------------------------ -----------------------
12/31/98 1,517
3/31/99 1,669
6/30/99 1,878
9/30/99 2,097
2
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AS OF THE TWELVE-MONTH
PERIOD ENDING BROADCAST CASH FLOW ($)
------------------------------------ -----------------------
12/31/99 2,346
3/31/00 2,446
6/30/00 2,583
9/30/00 2,727
12/31/00 2,891
3/31/01 2,987
6/30/01 3,121
9/30/01 3,261
12/31/01 3,419
3/31/02 3,451
6/30/02 3,494
9/30/02 3,539
12/31/02 3,590
3/31/03 3,623
6/30/03 3,669
9/30/03 3,716
12/31/03 3,770
and in each calendar quarter
thereafter for the immediately
prior twelve-month period
through the Mandatory
Redemption
Any right to receive dividends on a Preferred Share at the Retroactive Dividend
Rate shall transfer with each such Preferred Share.
(iii) Dividend Reference Date. To the extent not paid on December
31 of each year, beginning December 31, 1997 (the "Dividend Reference Date"),
all dividends which have accrued on each Preferred Share issued and outstanding
during the one-year period (or other period in the case of the initial Dividend
Reference Date) ending upon each such Dividend Reference Date shall be
accumulated and shall remain accumulated dividends with respect to such
Preferred Share until paid. All dividends paid on a Preferred Share shall be
applied first to, and to the extent of, unpaid dividends that have accrued (but
which have not been accumulated) and then to, and to the extent of, accumulated
dividends, if any.
(iv) Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the Corporation pays less than the
total amount of unpaid dividends accrued on the Preferred Shares then
outstanding, such payment shall be distributed ratably among the holders thereof
based upon the aggregate amount of accumulated and accrued but unpaid dividends
on the Preferred Shares held by each such holder.
(b) Liquidation. Upon any Liquidation of the Corporation, provided all
indebtedness for money borrowed of the Corporation (including, without
limitation, the Senior Indebtedness) has been finally and indefeasibly paid in
full in cash, each holder of Preferred Shares
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shall be entitled to be paid in cash, before and in preference to any
distribution or payment of any asset, capital, surplus or earnings of the
Corporation is made to the holders of other Capital Stock, an amount equal to
the aggregate Liquidation Preference Amount of the Preferred Shares held by such
holder, and the holders of Preferred Shares shall not be entitled to any other
payment in respect of their Preferred Shares. If upon any such Liquidation of
the Corporation, the funds to be distributed among the holders of the Preferred
Shares are insufficient to permit payment to such holders of the aggregate
Liquidation Preference Amount for such Preferred Shares in cash, then the entire
assets and funds of the Corporation legally available for distribution shall be
distributed ratably among the holders based on the aggregate Liquidation
Preference Amount of the Preferred Shares held by each such holder. The
Corporation shall provide written notice of any such Liquidation, not less than
60 days prior to the payment date stated therein, to each record holder of
Preferred Shares.
(c) Priority of Preferred Stock. So long as any Preferred Share remains
outstanding, neither the Corporation nor any Subsidiary of the Corporation shall
redeem, purchase or otherwise acquire directly or indirectly, or set apart funds
for the redemption, purchase or acquisition of, any other Capital Stock, nor
shall the Corporation directly or indirectly pay or declare any dividend or make
any distribution upon any other Capital Stock (other than a dividend payable
solely in Junior Securities); provided, however, notwithstanding the foregoing,
the Corporation may purchase Junior Securities in accordance with the provisions
of the Warrantholders' Agreement.
(d) Redemptions.
(i) Mandatory Redemption. On May 29, 2005 (the "Mandatory
Redemption Date"), the Company will be required, subject to applicable law, to
redeem all issued and outstanding Preferred Shares, together with any and all
accumulated and accrued but unpaid dividends thereon.
(ii) Redemptions at the Option of the Corporation. The Corporation
shall have the right (but not the obligation) to redeem issued and outstanding
Preferred Shares, subject to applicable law, as follows:
(A) the Corporation may at any time, and from time to time,
redeem all or a portion of the issued and outstanding shares of Series A
Preferred; provided, however, that upon the timely delivery of a Participation
Notice as set forth in clause (v) of this Section 4.2(d), any holder of shares
of Series B Preferred shall have the right to participate in such redemption and
the number of Preferred Shares to be redeemed from each holder of Series A
Preferred and each holder of Series B Preferred that has delivered a timely
Participation Notice shall be the number of Preferred Shares determined by
multiplying the total number of Preferred Shares the Corporation has elected to
redeem as specified in the Final Redemption Notice by a fraction, the numerator
of which shall be the total number of shares of Series A Preferred held by such
holder or the total number of shares of Series B Preferred specified in such
holder's timely delivered Participation Notice, as the case may be, and the
denominator of which shall be the sum of the total number of outstanding shares
of Series A Preferred and the number of shares of Series B Preferred that are
the subject of timely delivered Participation Notices;
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(B) the Corporation may at any time, and from time to time,
redeem issued and outstanding Preferred Shares having an aggregate Liquidation
Value of up to $2,000,000, provided that the Corporation has paid all
accumulated and accrued but unpaid dividends on all of the outstanding Preferred
Shares in full simultaneously with or prior to such redemption; and
(C) on or after June 6, 1999, the Corporation may at any
time, and from time to time, redeem all or any portion of the issued and
outstanding Preferred Shares.
(iii) Redemption at the Option of the Holders of Preferred Shares.
The Majority Holders shall have the right (but not the obligation) to require
the Corporation (and if the Majority Holders exercise such right, the
Corporation shall be obligated) to redeem issued and outstanding Preferred
Shares, subject to applicable law, as follows:
(A) if permitted by the terms of the Debt Agreements, upon
the consummation of an Initial Public Offering, the Majority Holders may require
the Company to apply an amount not to exceed the Net Cash Proceeds received by
the Corporation from the Initial Public Offering to redeem the maximum number of
Shares of Preferred Stock that may be redeemed given the amount elected by the
Majority Holders to be so applied; and
(B) after all outstanding indebtedness for money borrowed of
the Corporation (including, without limitation, the Senior Indebtedness) has
been finally and indefeasibly paid in full in cash and any commitment to fund
related thereto shall have been terminated, if a Redemption Event (as defined in
the Preferred Stockholders' Agreement) is existing, the Majority Holders may
require the Company to redeem all or any portion of the outstanding Preferred
Shares.
(iv) Redemption Payment. For each Preferred Share which is to be
redeemed, the Corporation shall pay to the holder thereof on the Redemption Date
(upon surrender by such holder at the Corporation's principal office of the
certificate representing such Preferred Share) an amount in immediately
available funds equal to the Liquidation Preference Amount. If the funds of the
Corporation legally available for redemption of Preferred Shares on any
Redemption Date are insufficient to redeem the total number of Preferred Shares
to be redeemed on such date, those funds which are legally available shall be
used to redeem the maximum possible number of Preferred Shares ratably among the
holders of the Preferred Shares to be redeemed based upon the aggregate
Liquidation Preference Amount held by each such holder. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of Preferred Shares, such funds shall immediately be used to redeem
the balance of the Preferred Shares which the Corporation has become obligated
to redeem on any Redemption Date but which it has not redeemed.
(v) Notice of Redemption on the Mandatory Redemption Date. After
September 1, 2004, and on or prior to November 29, 2004, the Corporation shall
give written notice (a "Mandatory Redemption Notice") by mail, postage prepaid,
overnight courier or facsimile to the holders of the then outstanding Preferred
Shares at the address of each such holder appearing on the books of the
Corporation or given by such holder to the Corporation, which notice shall set
forth the
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<PAGE>
Mandatory Redemption Date and the Liquidation Preference Amount for each
Preferred Share. The Mandatory Redemption Notice shall further call upon such
holders to surrender to the Corporation on or before the Mandatory Redemption
Date at the place designated in the notice such holder's certificate or
certificates representing the Preferred Shares to be redeemed on the Mandatory
Redemption Date or an indemnification and loss certificate therefor. On or
before the Mandatory Redemption Date, each holder of Preferred Shares to be
redeemed shall surrender the certificate evidencing such shares, or such
indemnification and loss certificate, to the Corporation.
(vi) Notice of Redemption at the Election of the Corporation. The
Corporation shall provide prior written notice (the "Redemption Notice") of any
redemption of Preferred Shares to each record holder of Preferred Shares not
more than 60 nor less than 30 days prior to the date on which a redemption of
Preferred Shares is expected to be made pursuant to Section 4.2(d)(ii), and
which shall set forth the series and number of Preferred Shares to be redeemed,
the date on which such redemption is to take place and the Liquidation
Preference Amount for each Preferred Share on such date. Such Redemption Notice
shall be sent by mail, postage prepaid, overnight courier or facsimile to the
address of each such holder appearing on the books of the Corporation or given
by such holder to the Corporation for the purpose of notice. The Redemption
Notice shall further call upon such holders to surrender to the Corporation or
before the applicable Redemption Date at the place designated in the Redemption
Notice such holder's certificate or certificates representing the shares to be
redeemed on the applicable Redemption Date or an indemnification and loss
certificate therefor. On or before the applicable Redemption Date, each holder
of Preferred Shares called for redemption shall surrender the certificate
evidencing such Preferred Shares, or such indemnification and loss certificate,
to the Corporation. With respect to any election by the Corporation to redeem
all or any portion of the Series A Preferred pursuant to Section 4.2(d)(ii)(A)
of this ARTICLE IV, (A) any holders of Series B Preferred that intend to
participate in such redemption shall provide written notice of such intention to
the Corporation (the "Participation Notice") within five days of receipt of a
Redemption Notice, and such Participation Notice shall set forth the number of
shares of Series B Preferred that such holder desires to have redeemed by the
Corporation, and (B) if the Corporation receives any timely Participation
Notices, the Corporation may elect either (a) to redeem the number of Preferred
Shares originally set forth in its Redemption Notice or (b) to redeem a greater
number of Preferred Shares. Upon making such election, the Corporation shall
provide written notice to each holder of Preferred Shares setting forth the
total number of Preferred Shares the Corporation has so elected to redeem and
the Series and number of Preferred Shares that shall be redeemed from each
holder of Series A Preferred and each holder of Series B Preferred that has
delivered a timely Participation Notice no later than two days prior to the
applicable Redemption Date (the "Final Redemption Notice").
(vii) Notice of Redemption at the Election of the Holders. With
respect to any election by the Majority Holders to cause the Corporation to
redeem all or any portion of the issued and outstanding Preferred Shares
pursuant to Section 4.2(d)(iii) of this ARTICLE IV, the Majority Holders shall
provide written notice of such election to the Corporation not more than 60 nor
less than 30 days prior to the date on which such redemption is to be made and
such notice shall set forth the number of Preferred Shares to be redeemed and
the date on which such redemption is to take place (the "Put Notice"). The
Corporation shall notify the record holders of Preferred Shares promptly of (A)
the commencement of the Initial Public Offering (and the amount of Net Cash
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<PAGE>
Proceeds received therefrom) and (B) the first date on which all outstanding
indebtedness for money borrowed of the Corporation (including, without
limitation, the Senior Indebtedness) has been finally and indefeasibly paid in
full in cash and any commitment to fund related thereto shall have been
terminated.
(viii) Determination of the Number of Each Holder's Preferred
Shares to be Redeemed. Except in redemptions pursuant to Section 4.2(d)(ii)(A)
of this ARTICLE IV, the number of Preferred Shares to be redeemed from each
holder thereof in redemptions hereunder shall be the number of Preferred Shares
determined by multiplying the total number of Preferred Shares to be redeemed by
a fraction, the numerator of which shall be the total number of Preferred Shares
then held by such holder and the denominator of which shall be the total number
of Preferred Shares then issued and outstanding. In case fewer than the total
number of Preferred Shares represented by any certificate are redeemed, a new
certificate representing the number of unredeemed Preferred Shares shall be
issued to the holder thereof without cost to such holder within three business
days after surrender of the certificate representing the redeemed Preferred
Shares.
(ix) Dividends After Redemption Date. No Preferred Share is
entitled to any dividends that accrue after the date on which the Liquidation
Preference Amount of such Preferred Share is paid to the holder thereof. On such
date all rights of the holder of such Preferred Share shall cease, and such
Preferred Share shall not be deemed to be issued and outstanding.
(x) Redeemed or Otherwise Acquired Preferred Shares. Any Preferred
Shares which are redeemed or otherwise acquired by the Corporation shall be
canceled and shall not be reissued, sold or transferred.
(xi) Other Redemptions or Acquisitions. Neither the Corporation
nor any Subsidiary shall redeem or otherwise acquire any Preferred Stock, except
as expressly authorized herein or pursuant to a purchase offer made pro rata to
all holders of Preferred Stock on the basis of the number of Preferred Shares
owned by each such holder.
(e) Voting Rights. Except as provided in ARTICLE VII of this Amended
and Restated Certificate of Incorporation or as otherwise required by applicable
law, the holders of Preferred Shares shall have no right to vote on any matters
to be voted on by the Corporation's stockholders.
(f) Restrictions and Limitations. For so long as any Preferred Share is
outstanding, without the written consent of the Majority Holders, the
Corporation shall not fail to comply with Sections 6.1, 6.3, 6.4, 6.7 and 6.11
of the Preferred Stockholders' Agreement.
Section IV.3. Common Stock. Except as otherwise provided in Section 4.3 of
this ARTICLE IV or as otherwise required by applicable law, all shares of Class
A Common and Class B Common shall be identical in all respects and shall entitle
the holders thereof to the same rights and privileges and shall be subject to
the same qualifications, limitations and restrictions.
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<PAGE>
(a) Voting Rights. At every meeting of the stockholders, except as
specifically otherwise required by law, the holders of Class A Common shall be
entitled to one vote per share on all matters presented for a vote of the
stockholders of the Corporation. Except to the extent provided in ARTICLE VII of
this Amended and Restated Certificate of Incorporation or as required by
applicable law, the holders of Class B Common shall have no right to vote on any
matter presented for a vote of the stockholders of the Corporation (including,
without limitation, the election or removal of directors of the Corporation),
and Class B Common shall not be included in determining the number of shares
voting or entitled to vote on such matters. The Board of Directors of the
Corporation shall have concurrent power with the holders of Class A Common to
adopt, amend or repeal the Bylaws of the Corporation. A consolidation or merger,
or the sale, lease, exchange, mortgage, pledge, or other disposition of all, or
substantially all, of the property or assets of the Corporation, if not made in
the usual and regular course of its business, shall require a resolution adopted
by a majority of the Board of Directors of the Corporation and the authorization
of an affirmative vote of at least two-thirds of the outstanding shares of Class
A Common.
(b) Dividends. As and when dividends are declared or paid with respect
to shares of Common Stock, whether in cash, property or securities of the
Corporation, the holders of Class A Common and the holders of Class B Common
shall be entitled to receive such dividends pro rata at the same rate per share
for each such class of Common Stock; provided that (i) if dividends are declared
or paid in shares of Common Stock, the dividends payable to the holders of Class
A Common shall be payable in shares of Class A Common and the dividends payable
to the holders of Class B Common shall be payable in shares of Class B Common
and (ii) if the dividends consist of other voting securities of the Corporation,
the Corporation shall make available to each holder of Class B Common, at such
holder's request, dividends consisting of non-voting securities (except as
otherwise required by law) of the Corporation which are otherwise identical to
the voting securities and which are convertible into such voting securities on
the same terms as the Class B Common is convertible into the Class A Common. The
rights of the holders of Common Stock to receive dividends are subject to the
provisions of the Preferred Stock.
(c) Reservation. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock Class A
Common and Class B Common in a quantity sufficient to provide for the conversion
of all outstanding shares of the Class A Common and Class B Common into Class B
Common and Class A Common, respectively.
(d) Conversion of Common Stock.
(i) General Provisions. Subject to the terms and conditions stated
herein, the holder of any shares of either Class A Common or Class B Common
shall have the right at any time, at such holder=s option, to convert all or a
portion of the shares of the class of Common Stock so held into the same number
of shares of the other class of Common Stock. Such right of conversion shall be
exercised (A) by giving written notice (the "Notice") to the Corporation at
least ten (10) days prior to the Conversion Date (as defined below) specified
therein that the holder elects to convert a stated number of shares of Class A
Common or Class B Common into shares of the other class of Common Stock on the
date specified in such Notice or on such later date following any Deferral
Period (as defined below) on which conversion may occur (the "Conversion Date")
and
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(B) by surrendering the certificate or certificates representing at least the
number of shares of Class A Common or Class B Common to be converted to the
Corporation at its principal office at any time during the usual business hours
on or before the Conversion Date, duly endorsed in blank by the owner of the
certificate so surrendered, together with a statement of the name or names (with
addresses) of the Person or Persons in whose name or names the certificate or
certificates for shares issued on conversion shall be registered. Promptly after
receipt of the Notice, the Corporation shall send written notice of such
holder=s intent to convert to each other registered holder of any shares of
Class A Common or Class B Common at such other holder=s address as shown on the
stock transfer records of the Corporation. The Corporation shall not convert or
directly or indirectly redeem, purchase or otherwise acquire any share of Class
A Common or take any other action affecting the voting rights of such share if
such action will increase the percentage of outstanding voting securities owned
or controlled by any Regulated Stockholder (other than any Regulated Stockholder
which requested that the Corporation take such action) and the effect thereof
would cause such Regulated Stockholder and its Affiliates to hold in the
aggregate 5% or more of the outstanding shares of Class A Common unless the
Corporation gives written notice (the "Deferral Notice") of such action to each
such Regulated Stockholder. The Corporation will defer making any such
conversion, redemption, purchase or other acquisition, or taking any such other
action, for a period of 30 days (the "Deferral Period") after giving the
Deferral Notice in order to allow each such Regulated Stockholder to determine
whether it wishes to convert or take any other action with respect to the Common
Stock it owns, controls or has the power to vote. If any such Regulated
Stockholder then elects to convert any shares of Class A Common into shares of
Class B Common, it shall notify the Corporation in writing within 20 days of the
issuance of the Deferral Notice, in which case the Corporation shall promptly
notify from time to time each other Regulated Stockholder holding shares of
Common Stock of each proposed conversion and the proposed transaction and each
Regulated Stockholder may notify the Corporation in writing of its election to
convert shares of Class A Common into Class B Common at any time prior to the
end of the Deferral Period. The Corporation shall effect the conversions
requested by all Regulated Stockholders in response to the Deferral Notice and
the notices issued pursuant to the immediately proceeding sentence at the end of
the Deferral Period.
(ii) Regulated Stockholders. No Regulated Stockholder shall
exercise its rights as a holder of shares of Class B Common to convert such
shares into shares of Class A Common, or otherwise acquire shares of Class A
Common, if, after giving effect to such exercise, such Regulated Stockholder and
its Affiliates would own 5% or more of the outstanding Class A Common; provided,
however, that the foregoing restrictions shall cease and terminate as to any
shares of Class B Common or any Regulated Stockholder, when, in the opinion of
counsel reasonably satisfactory to the Corporation, such restrictions are no
longer required in order to assure compliance with Regulation Y or when
Regulation Y shall cease to be in effect. The Corporation shall rely
conclusively on a certificate of a Regulated Stockholder as to whether or not a
conversion of shares of Class B Common into, or an acquisition of, shares of
Class A Common will be in compliance with the provisions of the immediately
preceding sentence, and, notwithstanding the immediately preceding sentence, to
the extent not inconsistent with Regulation Y, such conversion rights may be
exercised or shares of Class A Common may be so acquired in the event that: (A)
the Corporation shall vote to merge or consolidate with or into any other Person
and, after giving effect to such merger or consolidation, such Regulated
Stockholder and its Affiliates would not own 5%
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or more of the outstanding voting securities of the surviving Person; (B) such
Regulated Stockholder desires to sell shares of Class A Common into which all or
part of its shares of Class B Common are to be converted in connection with any
proposed purchase of Class A Common by another Person (other than a Regulated
Stockholder or an Affiliate thereof); or (C) such Regulated Stockholder intends
to sell shares of Class A Common into which all or part of its shares of Class B
Common are to be converted pursuant to a registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), which has been declared
effective.
(iii) Surrender of Certificates. Subject to the other provisions
of this Section 4.3 of this ARTICLE IV and of ARTICLE IX of this Amended and
Restated Certificate of Incorporation, promptly after (A) the Conversion Date
and (B) the surrender of such certificate or certificates representing the share
or shares of Class A Common or Class B Common to be converted, the Corporation
shall issue and deliver, or cause to be issued and delivered, to the holder
requesting conversion, registered in such name or names as such holder may
direct, a certificate or certificates for the number of shares of the class of
Common Stock issuable upon the conversion of such share or shares, together with
a certificate or certificates evidencing any balance of the shares of the class
surrendered to the Corporation but not then being converted. To the extent
permitted by law, such conversion shall be deemed to have been effected as of
the close of business on the later of the Conversion Date or the date upon which
the Corporation shall have received the certificate or certificates representing
the shares to be converted, and at such time the rights of the holder of such
share or shares as such holder shall cease, and the person or person in whose
name or names any certificate or certificates for shares shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of such shares of Class A Common or Class B Common, as the case may be.
(e) Listing. If the shares of Class A Common required to be reserved
for the purpose of conversion hereunder require listing on any national
securities exchange, before such shares are issued upon conversion, the
Corporation will, at its expense and as expeditiously as possible, use its
commercially reasonable best efforts to cause such shares to be listed or duly
approved for listing on such national securities exchange.
(f) No Charge. The issuance of certificates representing Common Stock
upon conversion of Class A Common or Class B Common as hereinabove set forth
shall be made without charge or any expense or issuance tax in respect thereof;
provided, however, that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
shares converted.
(g) No Interference. Except as otherwise provided in ARTICLE IX of this
Amended and Restated Certificate of Incorporation, the Corporation will not
close its books against the transfer of any share of Common Stock or of any of
the shares of Common Stock issued or issuable upon the conversion of such shares
of Common Stock in any manner which interferes with the timely conversion of any
of such shares.
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(h) Mergers, Consolidations. In the case of a merger or consolidation
which reclassifies or changes the shares of Common Stock, or in the case of the
consolidation or merger of the Corporation with or into another corporation or
corporations or the transfer of all or substantially all of the assets of the
Corporation to another corporation or corporations, each share of Class B Common
shall thereafter be convertible into the number of shares of stock or other
securities or property to which a holder of shares of Class A Common would have
been entitled upon such reclassification, change, consolidation, merger or
transfer, and, in any such case, appropriate adjustment (as determined in good
faith by the Corporation's Board of Directors) shall be made in the application
of the provisions herein set forth with respect to the rights and interests
thereafter of the holders of the Class B Common to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any shares of stock or other securities on property
thereafter deliverable upon the conversion of shares of Class B Common. In case
of any such merger or consolidation, the resulting or surviving corporation (if
not the Corporation) shall expressly assume the obligation to deliver, upon
conversion of the Class B Common, such stock or other securities or property as
the holders of the Class B Common remaining outstanding shall be entitled to
receive pursuant to the provisions hereof, and to make provisions for the
protection of the conversion rights provided for in this ARTICLE IV. The
Corporation shall not be party to any merger, consolidation or recapitalization
pursuant to which any Regulated Stockholder would be required to take (A) any
voting securities which would cause such holder to violate any law, regulation
or other requirement of any governmental body applicable to such Regulated
Stockholder, or (B) any securities convertible into voting securities which if
such conversion took place would cause such Regulated Stockholder to violate any
law, regulation or other requirement of any governmental body applicable to such
Regulated Stockholder other than securities which are specifically provided to
be convertible only in the event that such conversion may occur without any such
violation.
(i) Liquidation, Dissolution or Winding Up. Subject to the provisions
of the Preferred Stock, in the event of any Liquidation of the Corporation, all
remaining assets of the Corporation shall be distributed to holders of the
Common Stock pro rata at the same rate per share of each class of Common Stock
according to their respective holdings of shares of the Common Stock.
Section IV.4. Miscellaneous. Subject to the provisions of ARTICLE IX of
this Amended and Restated Certificate of Incorporation:
(a) Registration of Transfer. The Corporation shall keep at its
principal office a register for the registration of Capital Stock. Upon the
surrender of any certificate representing Capital Stock at such place, the
Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of shares as is
requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Capital Stock represented by such new certificate from the
date to which dividends have been fully paid on such Capital Stock represented
by the surrendered certificate. The issuance of new certificates shall be
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made without charge to the original holders of the surrendered certificates for
any issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such issuance.
(b) Replacement. Upon receipt of evidence reasonably satisfactory to
the Corporation (an affidavit of the registered holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of any class or series of Capital Stock, and in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class or series represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate, and dividends shall accrue on the Capital Stock
represented by such new certificate from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.
(c) Definitions. The following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person (it being understood that for purposes of this definition, the term
"control" (including with correlative meaning the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise).
"Broadcash Cash Flow" has the meaning given to such term in the
Preferred Stockholders' Agreement.
"Debt Agreements" means, collectively, the Indenture, the Senior Loan
Agreement, and any other agreement governing indebtedness for borrowed money of
the Corporation permitted by the Preferred Stockholders' Agreement.
"Indenture" means that certain Indenture, dated as of May 15, 1997,
pursuant to which the Corporation issued 12% Senior Subordinated Notes due 2004.
"Initial Public Offering" means the first sale by the Corporation of
Common Stock of the Corporation to the public in an offering pursuant to an
effective registration statement filed with the Securities and Exchange
Commission pursuant to the 1933 Act, as then in effect; provided that an Initial
Public Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Investors" means the New Investors and the Original Investors.
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"Junior Securities" means (i) any class or series of Capital Stock of
the Corporation, whether now existing or hereafter authorized, that is junior to
any of the Series A Preferred or the Series B Preferred in priority with respect
to dividends or distributions or upon Liquidation, and (ii) any rights,
warrants, options, convertible or exchangeable securities, exercisable for or
convertible or exchangeable into, directly or indirectly, any class or series of
capital stock described in clause (i) of this definition, whether at the time of
issuance or upon the passage of time or the occurrence of some future event.
"Liquidation" with respect to the Corporation, means the liquidation,
dissolution or winding up of the Corporation. Except as permitted under the
Preferred Stockholders' Agreement, a consolidation, merger or capital
reorganization of the Corporation (except (i) into or with a wholly-owned
subsidiary of the Corporation with requisite stockholder approval or (ii) a
merger in which the beneficial owners of the Corporation's outstanding Capital
Stock immediately prior to such transaction (assuming for this purpose that all
outstanding warrants, options and other securities convertible into Capital
Stock that are outstanding at such time have been exercised or converted, as
applicable) hold no less than fifty-one percent (51%) of the voting power of the
resulting entity) or a sale, transfer or other disposition of all or
substantially all of the assets of the Corporation shall be regarded as a
liquidation, dissolution or winding up of the affairs of the Corporation, and
shall constitute a Liquidation.
"Liquidation Preference Amount" means, with respect to a Preferred
Share, the Liquidation Value for such Preferred Share plus all accumulated and
accrued but unpaid dividends on such Preferred Share.
"Liquidation Value" of any Preferred Share shall be equal to $100.00.
"Majority Holders" means, collectively, the holders of a majority of
the issued and outstanding Preferred Shares as of the date of determination.
"Management Investors" means, collectively, Alfred C. Liggins,
Catherine L. Hughes, and Jerry A. Moore III.
"Net Cash Proceeds" means the gross cash proceeds actually received by
the Corporation from an Initial Public Offering, net of attorneys' fees,
accountants' fees, all discounts, underwriters' commissions, brokerage,
consultant or other customary fees and commissions, and all other reasonable
fees and expenses actually incurred by the Corporation in connection with such
Initial Public Offering.
"New Investors" means, collectively, Alta Subordinated Debt Partners
III, L.P., BancBoston Investments Inc. and Grant Wilson.
"Original Investors" means, collectively, Syncom Capital Corporation,
Alliance Enterprise Corporation, Greater Philadelphia Venture Capital
Corporation, Inc., Opportunity Capital Corporation, Capital Dimensions Venture
Fund, Inc., TSG Ventures Inc. and Fulcrum Venture Capital Corporation.
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"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a joint stock company, a limited liability company,
a trust, an unincorporated association and any other entity or organization.
"Preferred Stockholders' Agreement" means that certain Preferred
Stockholders' Agreement, dated as of May 14, 1997, by and among the Corporation,
the Original Investors, the New Investors and the Management Investors, as the
same may be amended from time to time.
"Redemption Date" as to any Preferred Share means the date specified in
any Redemption Notice or Put Notice, as applicable; provided, that no such date
shall be a Redemption Date unless the Liquidation Preference Amount is actually
paid in full on such date, and if not so paid in full, the Redemption Date shall
be the date on which such amount is fully paid.
"Regulated Stockholder" means any stockholder that is subject to the
provisions of Regulation Y and which holds shares of Common Stock of the
Corporation, so long as such stockholder shall hold, and only with respect to,
such shares of Common Stock or shares issued upon conversion of such shares.
"Regulation Y" means Regulation Y of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 225) or any successor to such regulation.
"Senior Indebtness" has the meaning given to such term in that certain
Standstill Agreement, effective as of May 19, 1997, among the Companies,
Liggins, Hughes, Moore, Syncom Capital Corporation, Alliance Enterprise
Corporation, Greater Philadelphia Venture Capital Corporation, Inc., Opportunity
Capital Corporation, Capital Dimensions Venture Fund, Inc., TSG Ventures Inc.,
Fulcrum Venture Capital Corporation, Alta Subordinated Debt Partners III, L.P.,
BancBoston Investments Inc., Grant M. Wilson, NationsBank of Texas, N.A., and
United States Trust Company of New York.
"Senior Loan Agreement" has the meaning given to such term in the
Preferred Stockholders' Agreement.
"Subsidiary" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of sufficient
securities to elect directors having a majority of the voting power of the board
of directors of such corporation.
"Warrantholders' Agreement" means that certain Warrantholders=
Agreement, dated as of June 6, 1995, by and among the Corporation, the
Subsidiaries of the Corporation party thereto, the Original Investors, the New
Investors and the Management Investors, as amended by the First Amendment to
Warrantholders' Agreement dated as of May 19, 1997, and as thereafter amended
from time to time.
ARTICLE V - Existence
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The Corporation is to have a perpetual existence.
ARTICLE VI - General Provisions
Section VI.1. Dividends. The Board of Directors of the Corporation shall
have authority from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves as working
capital or for any other purpose or purposes, and to abolish or add to any such
reserve or reserves from time to time as said Board may deem to be in the
interest of the Corporation; and said Board shall likewise have power to
determine in its discretion, except as herein otherwise provided, what part of
the assets of the Corporation available for dividends in excess of such reserve
or reserves shall be declared in dividends and paid to the stockholders of the
Corporation.
Section VI.2. Issuance of Stock. The shares of all classes and series of
Capital Stock of the Corporation may be issued by the Corporation from time to
time for such consideration as from time to time may be fixed by the Board of
Directors of the Corporation, provided that shares having a par value shall not
be issued for a consideration less than such par value, as determined by the
Board. At any time, or from time to time, the Corporation may grant rights or
options to purchase from the Corporation any shares of its Capital Stock of any
class or series to run for such period of time, for such consideration, upon
such terms and conditions, and in such form as the Board of Directors of the
Corporation may determine. The Board of Directors of the Corporation shall have
authority, as provided by law, to determine that only a part of the
consideration which shall be received by the Corporation for the shares of its
Capital Stock having a par value be capital provided that the amount of the part
of such consideration so determined to be capital shall at least be equal to the
aggregate par value of such shares. The excess, if any, at any time, of the
total net assets of the Corporation over the amount so determined to be capital,
as aforesaid, shall be surplus. All classes and series of Capital Stock of the
Corporation shall be and remain at all times nonassessable.
The Board of Directors of the Corporation is hereby expressly authorized,
in its discretion, in connection with the issuance of any obligations or Capital
Stock of the Corporation (but without intending hereby to limit its general
power so to do in other cases), to grant rights or options to purchase Capital
Stock of the Corporation of any class or series upon such terms and during such
period as the Board of Directors of the Corporation shall determine, and to
cause such rights to be evidenced by such warrants or other instruments as it
may deem advisable.
Section VI.3. Inspection of Books and Records. The Board of Directors of
the Corporation shall have power from time to time to determine to what extent
and at what times and places and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred
by the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or the stockholders of the Corporation.
Section VI.4. Location of Meetings, Books and Records. Except as otherwise
provided in the Bylaws, the stockholders of the Corporation and the Board of
Directors of the Corporation may
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hold their meetings and have an office or offices outside of the State of
Delaware, and, subject to the provisions of the laws of said State, may keep the
books of the Corporation outside of said State at such places as may, from time
to time, be designated by the Board of Directors.
Section VI.5. Board of Directors Meeting. The Board of Directors shall be
comprised of the number of directors specified in the Corporation's Bylaws, and
such directors shall be elected in the manner contemplated by such Bylaws.
ARTICLE VII - Amendments
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation in
the manner now or hereinafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation. Notwithstanding the foregoing or anything contained in this
Amended and Restated Certificate of Incorporation to the contrary, no amendment,
modification or waiver shall be binding or effective with respect to any
provision of (i) Section 4.2 of ARTICLE IV (or any definitions used therein) or
clause (i) of this ARTICLE VII without the prior written consent of the Majority
Holders at the time such action is taken, (ii) Section 4.3 of ARTICLE IV (or any
definitions used therein) or clause (ii) of this ARTICLE VII without the prior
written consent of the Majority Holders and holders of a majority of the Common
Stock outstanding at the time such action is taken, or (iii) ARTICLE VIII or
clause (iii) of this ARTICLE VII without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Class A Common of the
Corporation and the prior written consent of the Majority Holders; provided,
that no such action under clause (iii) of this ARTICLE VII shall change (A) the
redemption, conversion, voting or other rights of any class or series of
Preferred Stock without the prior written consent of the holders of a majority
of each such class or series of Preferred Stock then outstanding, (B) the
conversion or voting rights of any class of Common Stock without the prior
written consent of the holders of a majority of each class of Common Stock then
outstanding, and (C) the percentage required to approve any amendment,
modification or waiver described herein, without the prior written consent of
holders of that percentage of the class or series of Capital Stock then required
to approve such amendment, modification or waiver.
ARTICLE VIII - Liability
Section VIII.1. Limitation of Liability.
(a) To the fullest extent permitted by the DGCL as it now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted as of the date this Amended and Restated Certificate of
Incorporation is filed with the State of Delaware), and except as otherwise
provided in the Corporation's Bylaws, no director of the Corporation shall be
liable to the Corporation or its stockholders for monetary damages arising from
a breach of fiduciary duty owed to the Corporation or its stockholders.
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(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Section VIII.2. Right to Indemnification. Each person who was or is made
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the DGCL, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide for broader
indemnification rights than permitted as of the date this Amended and Restated
Certificate of Incorporation is filed with the State of Delaware), against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that except as provided in
Section 8.3 of this ARTICLE VIII with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section 8.2 of
this ARTICLE VIII shall be a contract right and shall include the obligation of
the Corporation to pay the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advance of expenses");
provided, however, that if and to the extent that the Board of Directors of the
Corporation requires, an advance of expenses incurred by an indemnitee in his or
her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of
such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this Section 8.2 or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same or lesser scope and effect
as the foregoing indemnification of directors and officers.
Section VIII.3. Procedure for Indemnification. Any indemnification of a
director or officer of the Corporation or advance of expenses under Section 8.2
of this ARTICLE VIII shall be made promptly, and in any event within forty-five
days (or, in the case of an advance of expenses, twenty days) upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this ARTICLE
VIII is required, and
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the Corporation fails to respond within sixty days to a written request for
indemnity, the Corporation shall be deemed to have approved the request. If the
Corporation denies a written request for indemnification or advance of expenses,
in whole or in part, or if payment in full pursuant to such request is not made
within forty-five days (or, in the case of an advance of expenses, twenty days),
the right to indemnification or advances as granted by this ARTICLE VIII shall
be enforceable by the director or officer in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for the advance of expenses where the undertaking required pursuant to Section
8.2 of this ARTICLE VIII, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the DGCL for the Corporation to indemnify the claimant for the amount claimed,
but the burden of such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. The procedure for indemnification of other employees and agents for
whom indemnification is provided pursuant to Section 8.2 of this ARTICLE VIII
shall be the same procedure set forth in this Section 8.3 for directors or
officers, unless otherwise set forth in the action of the Board of Directors of
the Corporation providing for indemnification for such employee or agent.
Section VIII.4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expenses, liability or loss under the DGCL.
Section VIII.5. Service for Subsidiaries. Any person serving as a director,
officer, employee or agent of another Corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (hereinafter a "subsidiary" for
this ARTICLE VIII) shall be conclusively presumed to be serving in such capacity
at the request of the Corporation.
Section VIII.6. Reliance. Persons who after the date of the adoption of
this provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE VIII in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE VIII shall apply to claims
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made against an indemnitee arising out of acts or omissions which occurred or
occur both prior and subsequent to the adoption hereof.
Section VIII.7. Non-Exclusivity of Rights. The rights to indemnification
and to the advance of expenses conferred in this ARTICLE VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under this Amended and Restated Certificate of Incorporation or under any
statute, Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
Section VIII.8. Merger or Consolidation. For purposes of this ARTICLE VIII,
references to "the Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed into the Corporation in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this ARTICLE VIII with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE IX - Alien Ownership of Stock
Section IX.1. Applicability. This ARTICLE IX shall be applicable to the
Corporation so long as the provisions of Section 310 of the Communications Act
of 1934, as the same may be amended from time to time (the "Communications Act")
(or any successor, provisions thereto) are applicable to the Corporation. As
used herein, the term "alien" shall have the meaning ascribed thereto by the
Federal Communications Commission ("FCC") on the date hereof and in the future
as Congress or the FCC may change such meaning form time to time. If the
provisions of Section 310 of the Communications Act (or any successor provisions
thereto) are amended, the restrictions in this ARTICLE IX shall be amended in
the same way, and as so amended, shall apply to the Corporation. The Board of
Directors of the Corporation may make such rules and regulations as it shall
deem necessary or appropriate to enforce the provisions of this ARTICLE IX.
Section IX.2. Voting. Except as otherwise provided by law, not more than
twenty percent of the aggregate number of shares of Capital Stock of the
Corporation outstanding in any class or series entitled to vote on any matter
before a meeting of stockholders of the Corporation shall at any time be for the
account of aliens or their representatives or for the account of a foreign
government or representative thereof, or for the account of any corporation
organized under the laws of a foreign country.
Section IX.3. Stock Certificates. Shares of Capital Stock issued to or held
by or for the account of aliens and their representatives, foreign governments
and representatives thereof, and corporations organized under the laws of
foreign countries shall be represented by Foreign Share Certificates. All other
shares of Capital Stock shall be represented by Domestic Share Certificates. All
of such certificates shall be in such form not inconsistent with this Amended
and Restated
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Certificate of Incorporation as shall be prepared or approved by the Board of
Directors of the Corporation.
Section IX.4. Limitation on Foreign Ownership. Except as otherwise provided
by law, not more than twenty percent of the aggregate number of shares of
Capital Stock of the Corporation outstanding shall at any time be owned of
record by or for the account of aliens or their representatives or by or for the
account of a foreign government or representatives thereof, or by or for the
account of any corporation organized under the laws of a foreign country. Shares
of Capital Stock shall not be transferable on the books of the Corporation to
aliens or their representatives, foreign governments or representatives thereof,
or corporations organized under the laws of foreign countries if, as a result of
such transfer, the aggregate number of shares of Capital Stock owned by or for
the account of aliens and their representatives, foreign governments and
representatives thereof, and corporations organized under the laws of foreign
countries shall be more than twenty percent of the number of shares of Capital
Stock then outstanding. If it shall be found by the Corporation that Capital
Stock represented by a Domestic Share Certificate is, in fact, held by or for
the account of aliens or their representative, foreign governments or
representatives thereof, or corporations organized under the laws of foreign
countries, then such Domestic Share Certificate shall be canceled and a new
certificate representing such Capital Stock marked "Foreign Share Certificate"
shall be issued in lieu thereof, but only to the extent that after such issuance
the Corporation shall be in compliance with this ARTICLE IX; provided, however,
that if, and to the extent, such issuance would violate this ARTICLE IX, then,
the holder of such Capital Stock shall not be entitled to vote, to receive
dividends, or to have any other rights with regard to such Capital Stock to such
extent, except the right to transfer such Capital Stock to a citizen of the
United States.
Section IX.5. Transfer of Foreign Share Certificates. Any Capital Stock
represented by Foreign Share Certificates may be transferred either to aliens or
non-aliens. In the event that any Capital Stock represented by a certificate
marked "Foreign Share Certificate" is sold or transferred to a non-alien, then
such non-alien shall be required to exchange such certificate for a certificate
marked "Domestic Share Certificate." If the Board of Directors of the
Corporation reasonably determines that a Domestic Share Certificate has been or
is to be transferred to or for the account of aliens or their representatives,
foreign governments or representatives thereof, or corporations organized under
the laws of foreign countries, the Corporation shall issue a new certificate for
the shares of Capital Stock transferred to the transferee marked "Foreign Shares
Certificate", cancel the old Domestic Share Certificate, and record the
transaction upon its books, but only to the extent that after such transfer is
complete, the Corporation shall be in compliance with this ARTICLE IX.
Notwithstanding any other provision of this Amended and Restated
Certificate of Incorporation, the transfer or conversion of the Corporation=s
Capital Stock, whether voluntary or involuntary, shall not be permitted, and
shall be ineffective, if such transfer or conversion would (i) violate (or would
result in violation of) the Communications Act or any of the rules or regulation
promulgated thereunder or (ii) require the prior approval of the FCC, unless
such prior approval has been obtained.
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Section 6. Chairman of the Board. The chairman shall preside at all
meetings of the board of directors and all meetings of the stockholders and
shall have such other powers and perform such duties as may from time to time be
assigned to him by the board of directors.
Section 7. The Chief Executive Officer. The chief executive officer of the
corporation shall have such powers and perform such duties as are specified in
these bylaws and as may from time to time be assigned to him by the board of
directors.
The chief executive officer shall have overall management of the business
of the corporation and its subsidiaries and shall see that all orders and
resolutions of the boards of directors of the corporation and its subsidiaries
are carried into effect. The chief executive officer shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation. The chief executive officer shall have general powers of
supervision and shall be the final arbitrator of all differences among officers
of the corporation and its subsidiaries, and such decision as to any matter
affecting the corporation and its subsidiaries subject only to the boards of
directors.
Section 8. The President. The president shall have such powers and perform
such duties as are specified in these bylaws and as may from time to time be
assigned to him by the board of directors.
The president shall have general and active management of the business of
the corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have general powers of supervision and shall be the final
arbitrator of all differences between officers of the corporation, and such
decision as to any matter affecting the corporation subject only to the board of
directors.
Section 9. Vice Presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties and
exercise the powers of the president and shall perform such other duties and
have such other powers as the board of directors may, from time to time,
determine or these bylaws may prescribe.
Section 10. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors; perform such other duties as may be
prescribed by the board of directors or president, under whose supervision he or
she shall be; shall have custody of the corporate seal of the corporation and
the secretary, or an assistant secretary, shall have authority to affix the same
to any
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instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature. The
assistant secretary, or if there be more than one, the assistant secretaries in
the order determined by the board of directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
Section 11. The Treasurer and Assistant Treasurer. The treasurer shall have
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors, taking
proper vouchers for such disbursements; and shall render to the president and
the board of directors, at its regular meeting or when the board of directors so
requires, an account of the corporation. If required by the board of directors,
the treasurer shall give the corporation a bond (which shall be rendered every
six years) in such sums and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of the office of treasurer and for the restoration to the corporation, in
case of death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in the possession
or under the control of the treasurer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these bylaws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
ARTICLE X - INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Right to Indemnification. Each person who was or is made party
or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
corporation or, while a director or officer of the corporation, is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the corporation to the fullest extent authorized by the Delaware General
Corporation Law ("DGCL"), as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the corporation to provide for broader indemnification rights than
permitted as of the date of these bylaws), against all expense,
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liability and loss (including attorneys' fees, judgments, fines, excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith and such indemnification shall continue
as to an indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that except as provided in Section 2 of this
ARTICLE V with respect to proceedings to enforce rights to indemnification, the
corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the corporation. The right
to indemnification conferred in this Section 1 of this ARTICLE V shall be a
contract right and shall include the obligation of the corporation to pay the
expenses incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "advance of expenses"); provided, however, that if
and to the extent that the board of directors of the corporation requires, an
advance of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Section 1 or otherwise. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same or lesser scope and effect as the foregoing
indemnification of directors and officers.
Section 2. Procedure for Indemnification. Any indemnification of a director
or officer of the corporation or advance of expenses under Section 1 of this
ARTICLE V shall be made promptly, and in any event within forty-five days (or,
in the case of an advance of expenses, twenty days) upon the written request of
the director or officer. If a determination by the corporation that the director
or officer is entitled to indemnification pursuant to this ARTICLE V is
required, and the corporation fails to respond within sixty days to a written
request for indemnity, the corporation shall be deemed to have approved the
request. If the corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of expenses where the undertaking required pursuant to
Section 1 of this ARTICLE V, if any, has been tendered to the corporation) that
the claimant has not met the standards of conduct which make it permissible
under the DGCL for the corporation to indemnify the claimant for the amount
claimed, but the burden of such defense shall be on the corporation. Neither the
failure of the corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the DGCL, nor an actual determination by the corporation (including
its board of directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of
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conduct. The procedure for indemnification of other employees and agents for
whom indemnification is provided pursuant to Section 1 of this ARTICLE V shall
be the same procedure set forth in this Section 2 for directors or officers,
unless otherwise set forth in the action of the board of directors of the
corporation providing for indemnification for such employee or agent.
Section 3. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss asserted against him or her and incurred by him or her in any
such capacity, whether or not the corporation would have the power to indemnify
such person against such expenses, liability or loss under the DGCL.
Section 4. Service for Subsidiaries. Any person serving as a director,
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the corporation (hereinafter a "subsidiary" for
purposes of this ARTICLE V) shall be conclusively presumed to be serving in such
capacity at the request of the corporation.
Section 5. Reliance. Persons who after the date of the adoption of these
bylaws become or remain directors or officers of the corporation or who, while a
director or officer of the corporation, become or remain a director, officer,
employee or agent of a subsidiary, shall be conclusively presumed to have relied
on the rights to indemnity, advance of expenses and other rights contained in
this ARTICLE V in entering into or continuing such service. The rights to
indemnification and to the advance of expenses conferred in this ARTICLE V shall
apply to claims made against an indemnitee arising out of acts or omissions
which occurred or occur both prior and subsequent to the adoption hereof.
Section 6. Non-Exclusivity of Rights. The rights to indemnification and to
the advance of expenses conferred in this ARTICLE V shall not be exclusive of
any other right which any person may have or hereafter acquire under these
bylaws or the corporation's certificate of incorporation or under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 7. Merger or Consolidation. For purposes of this ARTICLE V,
references to "the corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed into the corporation in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this ARTICLE V with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
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ARTICLE VI - CERTIFICATES OF STOCK
Section 1. Form. Subject to ARTICLE X of the certificate of incorporation,
every holder of stock in the corporation shall be entitled to have a
certificate, signed by, or in the name of the corporation by the president or a
vice-president, and the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him or her in the corporation. Where a
certificate is signed (l) by a transfer agent or an assistant transfer agent
other than the corporation or its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimile. In case any
officer or officers have signed a certificate or certificates, or whose
facsimile signature or signatures have been used on certificate or certificates,
shall cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used on such certificate or certificates had not ceased to be such officer
or officers of the corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled, and no new
certificate shall be issued in replacement until the former certificate for a
like number of shares shall have been surrendered or cancelled, except as
otherwise provided in Section 2 with respect to lost, stolen or destroyed
certificates.
Section 2. Lost Certificates. Subject to ARTICLE X of the certificate of
incorporation, the board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen, or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his or
her legal representative, to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 3. Fixing a Record Date. The board of directors may fix in advance
a record date for the determination of stockholders entitled to notice of, and
to vote at, any meeting of stockholders and any adjournment thereof;
stockholders entitled to consent to corporate action in writing without a
meeting; stockholders entitled to receive payment of any dividend or other
distribution or allotment of rights or entitled to exercise any rights in
respect to any change, conversion or exchange of stock; or, for the purpose of
any other lawful action, which record date may not precede the date on which the
resolution fixing such record date is adopted by the board of directors. The
record date for the
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determination of stockholders entitled to notice of, and to vote at, a meeting
of stockholders shall not be more than 60 days nor less than 10 days before the
date of such meeting. The record date for the determination of stockholders
entitled to consent to corporate action in writing without a meeting shall not
be more than 10 days after the date upon which the resolution fixing the record
date is adopted by the board of directors. The record date for the determination
of stockholders with respect to any other action shall not be more than 60 days
before the date of such action. If no record date is fixed: the record date for
determining stockholders entitled to notice of, and to vote at, a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting when no prior action by the board of directors is required by
the Delaware General Corporation Law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded; and, the record date for determining stockholders
with respect to any other action shall be the close of business on the day on
which the board of directors adopts the resolution relating thereto.
ARTICLE VII - GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, equalize dividends, repair or maintain any property of the
corporation, or for any other purpose, and the directors may modify or abolish
any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be
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deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned by Corporation. Voting securities in any
other corporation held by the corporation shall be voted by the president or the
vice president, unless the board of directors specifically confers authority to
vote with respect thereto upon some other person or officer. Any person
authorized to vote securities shall have the power to appoint proxies, with
general power of substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand upon oath
stating the purpose thereof, have the right during the usual hours of business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these bylaws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these bylaws is or becomes inconsistent with any provision of the certificate of
incorporation, the Delaware General Corporation Law or any other applicable law,
the provision of these bylaws shall not be given any effect to the extent of
such inconsistency but shall otherwise be given full force and effect.
ARTICLE VIII - AMENDMENTS
These bylaws may be amended, altered or repealed and new bylaws adopted at
any meeting of the board of directors by a majority vote, provided that the
affirmative vote of the holders of a majority of the shares of common stock of
the corporation then entitled to vote shall be required to adopt any provision
inconsistent with, or to amend or repeal any provision of, Section 1 or 3 of
ARTICLE III or this ARTICLE VIII. The fact that the power to adopt, amend, alter
or repeal the
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bylaws has been conferred upon the board of directors shall not divest the
stockholders of the same powers.
13
EXHIBIT 10.27
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment"), dated as
of December 31, 1997, is entered into by and among RADIO ONE, INC., a Delaware
corporation (the "Borrower"), and NATIONSBANK OF TEXAS, N.A., as Agent (in such
capacity, the "Agent") for the lenders (the "Lenders") from time to time parties
to the hereinafter described Credit Agreement and as a Lender under such Credit
Agreement. Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in such Credit Agreement.
RECITALS
A. The Borrower and NationsBank of Texas, N.A., as Agent and as the sole
initial Lender, entered into that certain Amended and Restated Credit
Agreement dated effective May 19, 1997 (as amended, modified,
restated, supplemented, renewed, extended, increased, rearranged or
substituted from time to time, the "Credit Agreement").
B. Borrower has requested that NationsBank of Texas, N.A., as Agent and
as Lender, amend the Credit Agreement in certain respects and, subject
to performance and observance in full of each of the covenants,
conditions and other terms set forth below, NationsBank of Texas,
N.A., as Agent and as Lender, is willing to agree to such amendments.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
Subject to the terms and conditions set forth herein, and in reliance upon
the representations of the Borrower herein contained, the Borrower and
NationsBank of Texas, N.A., as Agent and as Lender, hereby amend the Credit
Agreement as follows:
(a) DEFINITION AMENDED. The definition of "Permitted Investments" set forth
in Section 1.1 of the Credit Agreement is amended by (i) deleting the word "and"
at the end of clause (iii) thereof, (ii) replacing the punctuation mark "." at
the end of clause (iv) thereof with the punctuation mark and word "; and" and
(iii) adding the following new clause (v) at the end of such definition:
<PAGE>
" (v) loans and advances to employees of the Borrower or any of its
Restricted Subsidiaries for travel, entertainment and relocation expenses
in the ordinary course of business, in an aggregate principal amount for
the Borrower and its Restricted Subsidiaries for all loans and advances
described in this clause (v) not to exceed $50,000 at any time outstanding,
provided that the making of any such loan or advance is at the time
permitted under Section 4.05 of the Senior Subordinated Notes Indenture."
(b) AMENDMENT TO ARTICLE VII. Section 7.2 of the Credit Agreement is
amended by deleting subsection (e) thereof in its entirety and replacing it with
the following:
"(e) not later than 30 days after the beginning of each fiscal year
(or, with respect to fiscal year 1998, not later than 60 days after the
beginning of such fiscal year), the budget for the Borrower and the
Restricted Subsidiaries, prepared on a monthly basis (the "Budget") for
such fiscal year setting forth in satisfactory detail the projected
revenues and expenses, including, without limitation, Capital Expenditures,
Broadcast Cash Flow, Corporate Overhead Expense and Operating Cash Flow and
the underlying assumptions therefor; and"
SECTION 2. CONDITIONS PRECEDENT
The amendments to the Credit Agreement set forth above in Section 1 shall
not be effective until satisfaction in full of each of the following conditions
precedent, each in a manner satisfactory to the Agent:
(a) AMENDMENT TO PREFERRED STOCKHOLDERS' AGREEMENT. The parties to the
Preferred Stockholders' Agreement shall have duly executed and delivered a
written amendment, in form and substance satisfactory to the Agent and
substantially identical to the draft amendment previously reviewed by the Agent,
amending certain affirmative and negative covenants set forth therein, and the
Agent shall have been provided with a copy of such executed amendment.
(b) REPRESENTATIONS AND WARRANTIES. After giving effect to this First
Amendment, all representations and warranties made in this First Amendment, the
Credit Agreement and the other Loan Documents shall be true, correct and
complete in all material respects.
(c) FEES AND EXPENSES. Borrower shall have paid to the Agent an amount
equal to (i) the fees and expenses of the Agent's counsel incurred in connection
with the preparation, negotiation, execution and delivery of this First
Amendment and (ii) the other unpaid fees and expenses previously incurred by
such counsel in connection with the consummation, documentation and
administration of the transactions contemplated by the Credit Agreement.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce NationsBank of Texas, N.A., as Agent and as Lender, to
enter into this First Amendment, the Borrower represents and warrants that the
following statements are true, correct and complete on and as of the date of
this First Amendment:
(a) NO CONFLICTS WITH OTHER DOCUMENTS. The execution and delivery of this
First Amendment, the performance of the Credit Agreement as amended hereby and
the consummation of the transactions contemplated hereby will not conflict with,
violate or result in a default under any of the Senior Subordinated Debt
Documents, the Preferred Stock Documents or any other material agreement to
which the Borrower is a party or by which it or any of its properties or assets
are bound.
(b) NO DEFAULT. After giving effect to this First Amendment, no Default or
Event of Default exists under the Credit Agreement.
(c) ENFORCEABILITY. This First Amendment constitutes a legal, valid, and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with the terms hereof.
SECTION 4. MISCELLANEOUS
(a) RATIFICATION AND CONFIRMATION OF LOAN DOCUMENTS. Except as specifically
amended hereby, the Credit Agreement and other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed, and the execution,
delivery and performance of this First Amendment shall not, except as expressly
provided herein, operate as an amendment of any provision of the Credit
Agreement and other Loan Documents or a waiver of any right, power or remedy of
the Agent or the Lenders under the Credit Agreement or other Loan Documents.
(b) HEADINGS. Section and subsection headings in this First Amendment are
included herein for convenience of reference only and shall not constitute a
part of this First Amendment for any other purpose or be given any substantive
effect.
(c) APPLICABLE LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(d) COUNTERPARTS. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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<PAGE>
(e) FINAL AGREEMENT. THIS FIRST AMENDMENT, TOGETHER WITH THE CREDIT
AGREEMENT AND OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
RADIO ONE, INC.
By:
-----------------------------------
Name:
Title:
NATIONSBANK OF TEXAS, N.A., for itself
as a sole Lender and as Agent
By:
-----------------------------------
Whitney L. Busse
Vice President
EXHIBIT 10.28
AMENDMENT
THIS AMENDMENT (this "Amendment") is executed to be effective as of
December 31, 1997 (the "Effective Date") among ALTA SUBORDINATED DEBT PARTNERS
III, L.P., BANCBOSTON INVESTMENTS INC., GRANT M. WILSON, SYNCOM CAPITAL
CORPORATION, ALLIANCE ENTERPRISE CORPORATION, ALFRED C. LIGGINS, III, as
successor in interest to Greater Philadelphia Venture Capital Corporation, Inc.,
OPPORTUNITY CAPITAL CORPORATION, CAPITAL DIMENSIONS VENTURE FUND, INC., TSG
VENTURES L.P. and FULCRUM VENTURE CAPITAL CORPORATION (collectively, the
"Investors"), RADIO ONE, INC. (the "Company") and RADIO ONE LICENSES, INC., a
subsidiary of the Company, and ALFRED C. LIGGINS, CATHERINE L. HUGHES and JERRY
A. MOORE III (the "Management Stockholders"), with reference to that certain
Preferred Stockholders' Agreement (as amended, supplemented and otherwise
modified from time to time, the "Agreement") entered into as of May 14, 1997 by
and among the Investors, the Company, and the Management Shareholders.
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
R E C I T A L S:
WHEREAS, the Agreement imposes certain affirmative and negative
covenants on the Company;
WHEREAS, the Company seeks to amend several covenants of the Agreement
for calendar year 1997;
WHEREAS, after reviewing certain information provided by the Company
the Investors are willing to amend the Agreement to provide for modifications to
the covenants subject to performance and observance in full of each of the
covenants, conditions and other terms set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1. AMENDMENTS TO AGREEMENT
Subject to the terms and conditions set forth herein, and in reliance
upon the representations of the Company herein contained, the Agreement is
hereby amended as follows:
(a) Section 4.2 of the Agreement is hereby amended by
substituting the number "$2,155,000" - for the number "$1,800,000".
(b) Section 5.2 of the Agreement is hereby amended to delete
the section in its entirety and substitute the following:
1
<PAGE>
"Except for fiscal year 1998, not later than thirty
(30) days after the beginning of each fiscal year, senior
management will prepare and submit to the Board of Directors
of the Company, with a copy to each of the Investors, (a) a
monthly budget for such fiscal year of the Company, with
together with management's written discussion and analysis of
such budget and (b) five (5) year projections in similar form
to the projections delivered to each of the Investors prior to
the date hereof. The Company shall review its budget
periodically and shall advise the Investors of all material
changes therein and all material deviations therefrom."
(c) Section 6.4 of the Agreement is hereby amended to delete
subsection (c) in its entirety and substitute the following:
"(c) make any advance, loan, extension of credit or
capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person
(including without limitation any employees (except loans to
employees in the aggregate outstanding principal amount of
$50,000 at any one time) or Affiliates of the Company, except
that an amount not to exceed $155,000 related to management
fees and reimbursable expenses may be accrued from Radio One
of Atlanta, Inc., during fiscal year 1997 provided that such
amount is paid to the Company by Radio One of Atlanta, Inc.,
within sixty (60) days of the end of the fiscal year) or
entity, except for (i) capital expenditures as and to the
extent specifically permitted hereunder, (ii) cash and cash
equivalents, (iii) Permitted Investments (as defined in the
Indenture) and (iv) intercompany Indebtedness,"
(d) Appendix A of the Agreement is hereby amended to
substitute the phrase "$1.760 million" for the phrase "$1.3 million".
SECTION 2. REPRESENTATIONS AND WARRANTIES.
In order to induce the Investors to enter into this Amendment, Company
represents and warrants to the Investors that the representations and warranties
contained in Section 2 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as though made
on and as of such date, except for changes that were consented to in writing by
the Investors.
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<PAGE>
SECTION 3. MISCELLANEOUS
(a) RATIFICATION AND CONFIRMATION OF AGREEMENT. Except as specifically
amended hereby, the Agreement shall remain in full force and effect and is
hereby ratified and confirmed, and the execution, delivery and performance of
this Amendment shall not, except as expressly provided herein, operate as an
amendment of any provision of the Agreement or as a waiver of any right, power
or remedy of the Investors under the Agreement. Without limiting the generality
of the foregoing, the amendments set forth in Section 1 above shall be limited
precisely as set forth above, and nothing in this Amendment shall be deemed (i)
to constitute a waiver of compliance by the Company with respect to any other
provision or condition of the Agreement or (ii) to prejudice any right or remedy
that the Investors may now have or may have in the future under or in connection
with the Agreement.
(b) HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(c) APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(d) COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
RADIO ONE, INC.
By:
----------------------------------------------
Name:
Title:
RADIO ONE LICENSES, INC.
By:
----------------------------------------------
Name:
Title:
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management III,
L.P., its General Partner
By:
----------------------------------------------
Name: Brian W. McNeill
Title: General Partner
BANCBOSTON INVESTMENTS INC.
By:
-----------------------------------------------
Name: Lars A. Swanson
Title: Assistant Vice President
-----------------------------------------------
Grant M. Wilson, individually
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<PAGE>
SYNCOM CAPITAL CORPORATION
By:
----------------------------------------------
Name:
Title:
ALLIANCE ENTERPRISE CORPORATION
By:
----------------------------------------------
Name:
Title:
ALFRED C. LIGGINS, III
By:
----------------------------------------------
Name: Alfred C. Liggins, III
Title: Individual
OPPORTUNITY CAPITAL CORPORATION
By:
----------------------------------------------
Name:
Title:
CAPITAL DIMENSIONS VENTURE FUND, INC.
By:
----------------------------------------------
Name:
Title:
TSG VENTURES L.P.
By:
----------------------------------------------
Name:
Title:
5
<PAGE>
FULCRUM VENTURE CAPITAL CORPORATION
By:
------------------------------------------
Name:
Title:
MANAGEMENT STOCKHOLDERS
----------------------------------------------------
Alfred C. Liggins, individually
----------------------------------------------------
Catherine L. Hughes, individually
----------------------------------------------------
Jerry A. Moore III, individually
6
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Agreement") is entered into as
of October 23, 1997, by and among Greater Philadelphia Venture Capital
Corporation, Inc. ("Assignor") and Alfred C. Liggins ("Assignee").
WITNESSETH:
1. Assignment. Assignor for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and confessed, does hereby
CONVEY, ASSIGN, TRANSFER and SET OVER unto Assignee, and Assignee's successors
and assigns, all of Assignor's right, title and interest in and to
(collectively, the "Assigned Interests") (i) that certain Preferred
Stockholders' Agreement, made as of May 14, 1997, by and among the Investors
named therein (the "Investors"), Radio One, Inc., a Delaware corporation (the
"Company"). Radio One Licenses, Inc., a Delaware corporation ("ROL") and Alfred
C. Liggins, Catherine L. Hughes and Jerry A. Moore, III (hereinafter referred to
collectively as the "Management Stockholders") as amended from time to time (the
"Preferred Stockholders' Agreement") and (ii) that certain Warrantholders'
Agreement, dated as of June 6, 1995, among the Company, the Management
Stockholders and the Investors, as amended by that certain First Amendment to
Warrantholders' Agreement, dated as of May 19, 1997 and as otherwise amended
from time to time (the "Warrant Agreement"). The Preferred Stockholders'
Agreement and the Warrant Agreement are hereinafter sometimes collectively
referred to as, the "Assigned Documents". From and after the date hereof,
Assignee shall have all of the rights, liabilities and obligations of a "Series
A Preferred Investor" or an "Investor" (as such terms are defined in the Warrant
Agreement), as applicable, under the Assigned Documents, including the right to
vote or make any election allowed under the Assigned Documents, and Assignor
shall have no further rights thereunder.
2. Representations of Assignor. Assignor hereby represents and warrants to
Assignee as follows:
(a) Assignor is (i) the owner and holder of 2,359.67 shares of 15%
Series A Cumulative Redeemable Preferred Stock of the Company, par value
$.01 per share (the "Preferred Stock") and a warrant (the "Warrant") for
.97 shares of common stock in the Company (the "Securities"), (ii) a party
to the Assigned Documents with all rights thereunder in favor of a Series A
Preferred Investor, Investor or Original Investor, as the case may be, and
(iii) has full legal and equitable title to the Securities and has full
right and authority to transfer the Securities and to assign the Assigned
Interests, to Assignee. Assignor has the right to assign the Assigned
Documents as contemplated hereby and Assignor has in no way heretofore
encumbered Assignor's rights in connection with the Securities or the
Assigned Documents.
(b) No other person has any interest of any kind in the Securities or
in the Assigned Interests, and there is no security interest or other
encumbrance presently
1
<PAGE>
outstanding against the Securities (other than to NationsBank of Texas,
N.A. with respect to the Warrant).
(c) The Securities constitute the entire interest of Assignor in the
Company.
(d) To the best of Assignor's Knowledge, each of the Assigned
Documents is a valid and binding agreement of the parties thereto
enforceable against them in accordance with their respective terms, and no
breach or default exists with respect to either of them, and no event has
occurred which, after the giving of notice or the passage of time or
otherwise, will result in any such breach or default.
3. Warranty. Assignor hereby agrees that Assignor will warrant and defend
title to the Securities and the Assigned Interests against the claims of all
persons whomsoever claiming or to claim the same or any part thereof.
4. Indemnification. Assignor hereby agrees to indemnify, defend and hold
harmless Assignee and Assignee's heirs, legal representatives, successors and
assigns (collectively, the "Indemnified Parties") and individually, an
("Indemnified Party"), from and against, and to reimburse any Indemnified Party
with respect to, any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, attorneys' fees
and court costs) asserted against or incurred by any Indemnified Party by reason
or arising out of, Assignor's ownership of the Assigned Interests.
5. Further Assurances. In addition to the obligations required to be
performed hereunder by Assignor, Assignor further covenants and agrees that
Assignor shall do or cause to be done all such further acts and shall execute,
acknowledge and deliver, or shall cause to be executed, acknowledged and
delivered, any and all such further assignments, transfers, conveyances,
assurances, and other instruments as Assignee may reasonably require (i) for the
better assuring, assigning, transferring and conveying unto Assignee the
Securities and the Assigned Interests; and (ii) to protect the right, title and
interest of Assignee in and to, and Assignee's enjoyment of, the Securities and
the Assigned Interests; all such further acts, deeds, assignments, transfers,
conveyances, assurances and other instruments shall be effective as of and
retroactive to the effective date hereof.
6. Miscellaneous.
(a) Entire Agreement. This Agreement supersedes any prior
understandings or oral agreements among the parties respecting the subject
matter hereof and constitutes the entire understanding and agreement among
the parties with respect to the subject matter hereof. This Agreement may
be amended or modified only by written agreement executed by all parties
hereto.
(b) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
2
<PAGE>
(c) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives successors, partners, transferees and
assigns.
(d) Gender. Whenever the context of this Agreement requires, all words
of any gender herein shall be deemed to include each other gender, and all
singular words shall include the plural and vice versa.
(e) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all in the
aggregate shall constitute but one agreement.
[REMAINDER OR PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
3
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by Assignor and Assignee as
of the date first above written.
ASSIGNOR:
GREATER PHILADELPHIA VENTURE
CAPITAL CORPORATION, INC.
By: ______________________________
Name: ___________________________
Title: __________________________
ASSIGNEE:
----------------------------------
Alfred C. Liggins
4
AGREEMENT
This Agreement is made and entered into this 20th day of February, 1998 by
and between Radio One, Inc. (hereafter "Radio One"), and WUSQ License Limited
Partnership (hereafter "Partnership").
W I T N E S S E T H
WHEREAS, Radio One Licenses, Inc., a wholly-owned subsidiary of Radio One,
Inc., is the licensee of Class A FM broadcast station WMMJ, Bethesda, Maryland,
which operates on Channel 272 (102.3 MHz);
WHEREAS, Partnership is the licensee of Class B FM broadcast station
WUSQ-FM, Winchester, Virginia, which operates on Channel 273 (102.5 MHz);
WHEREAS, by the Second Report and Order, FCC 89-232, released August 18,
1989 (MM Docket No. 88-375), the Federal Communications Commission (hereafter
Commission or FCC) amended its rules to increase the maximum permitted effective
radiated power (hereafter ERP) for Class A FM broadcast stations from 3,000 to
6,000 watts;
WHEREAS, in the Second Report and Order, the Commission also increased the
minimum distance separation requirements for a Class A station which is a first
adjacent channel to a Class B station from 105 kilometers to 113 kilometers;
WHEREAS, the distance between the WMMJ and WUSQ-FM main transmitter sites
is approximately 105 kilometers;
WHEREAS, as a condition for the acceptance of applications to modify the
facilities of a Class A station for which the requirements of Section 73.207
will not be met, the FCC rules require that an exhibit be submitted
demonstrating the consent of a licensee such as Partnership which operates on a
first adjacent channel; and
WHEREAS, the purpose of this Agreement is to state the consent of
Partnership to a modification of the WMMJ facilities and an extension of WMMJ's
contour in the direction of WUSQ-FM; and
WHEREAS, Radio One and Partnership desire to cooperate with one another to
further the public interest.
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of
<PAGE>
which are hereby acknowledged, and intending to be legally bound hereby, the
parties agree as follows:
1. Cooperation by Partnership. Partnership hereby consents to Radio One
applying for an authorization from the FCC to modify WMMJ's facility to specify
maximum Class A facilities and thereby extend WMMJ's contour in the direction of
WUSQ-FM in substantially the manner specified in either Exhibit A-1 or Exhibit
A-2 hereto. Exhibit A-1 depicts a contour for WMMJ from a site known as the
"WKYS Site", located at the coordinates of 38(Degree) 56' 24"/77(Degree) 04' 54"
Exhibit A-2 depicts a contour for WMMJ from a site known as the "WMMJ Site"
located at the coordinates of 38(Degree) 56' 09"/77(Degree) 05' 33". The
application to be filed with the FCC specifying either the WKYS Site or the WMMJ
Site is hereinafter referred to as the "Contour Extension Application", and
shall be filed within ninety (90) days of the execution of this Agreement.
Partnership hereby consents to Radio One filing the attached Statement in
support of the Contour Extension Application. Partnership acknowledges that the
decision to pursue any modification of facilities of WMMJ is within the sole
discretion of Radio One. Partnership agrees that so long as this Agreement is in
effect, Partnership will cooperate with Radio One's effort to pursue the
proposed modification, will provide such further information concerning the
application(s) filed by Radio One to implement the change as the FCC may
reasonably require, including the filing of this Agreement if required, and will
not take action at any time which is inconsistent with such cooperation.
Notwithstanding Partnership's agreement to cooperate, the parties expressly
acknowledge that the burden of prosecuting the Contour Extension Application
shall remain at all times with Radio One.
2. Frequency Allocation Fee. In exchange for Partnership's cooperation and
agreement to undertake the obligations described herein, Radio One agrees to pay
to Partnership by certified check or wire transfer the total sum of Three
Hundred Seventy Five Thousand Dollars ($375,000) in the manner and at the times
described below:
(a) Simultaneously with the execution and delivery of this Agreement,
Radio One shall deliver the sum of One Hundred Twenty Five Thousand Dollars
($125,000) to an Escrow Agent. So long as this Agreement is in effect, Radio One
shall cause the Escrow Agent to send copies to Partnership of the monthly bank
statements evidencing the escrow deposit.
(b) Radio One shall direct that the Escrow Agent pay to Partnership
the sum of One Hundred Twenty Five Thousand Dollars ($125,000) by certified
check or wire transfer in one of the three circumstances described below:
2
<PAGE>
(i) Should the Contour Extension Application filed by Radio One
be granted by the Commission or the Commission's staff pursuant to delegated
authority and should that action become a Final Order, then the sum of One
Hundred Twenty Five Thousand Dollars ($125,000) (the "Partnership Payment")
shall be paid to Partnership within ten (10) business days of the date that the
action becomes a Final Order. For purposes of this Agreement the term "Final
Order" shall mean an action that has been taken by the FCC (including action
duly taken by the FCC's staff, pursuant to delegated authority) which shall not
have been reversed, stayed, enjoined, set aside, annulled or suspended, with
respect to which no timely request for stay, petition for reconsideration,
rehearing, appeal or certiorari or sua sponte action of the FCC with comparable
effect shall be pending, and as to which the time for filing any such request,
petition, appeal, certiorari or for the taking of any such sua sponte action by
the FCC shall have expired or otherwise terminated.
OR
(ii) Should the Contour Extension Application filed by Radio One
be granted by the Commission or the Commission's staff pursuant to delegated
authority, then Radio One in its sole discretion may waive the requirement that
the action shall have become a Final Order prior to making said payment. Should
Radio One decide to waive the requirement that the action become a Final Order,
then the Partnership Payment shall be paid to Partnership no later than two (2)
business days after the commencement of program test authority for the
facilities specified in the construction permit issued pursuant to the Contour
Extension Application filed by Radio One. For purposes of this provision, Radio
One's operation of the station pursuant to program test authority shall be
deemed a waiver of the Final Order requirement and the Partnership Payment shall
be due and payable as set forth above.
OR
(iii) Should the Contour Extension Application filed by Radio One
be granted by the Commission or the Commission's staff pursuant to delegated
authority, and if such a grant has conditions adverse to Radio One that are not
reasonably acceptable to Radio One, then Radio One may, in its sole discretion,
notify Partnership within ten (10) business days of the date of public notice of
such grant that Radio One either will appeal the grant and seek to modify or
remove the conditions or seek to have the construction permit cancelled. If
Radio One provides such notification to Partnership pursuant to this section and
such notification states that Radio One will appeal the grant, then the
Partnership Payment shall not be due until ten (10) business days after the
order modifying the grant in a manner reasonably
3
<PAGE>
acceptable to Radio One becomes a Final Order. If Radio One provides such
notification to Partnership pursuant to this section and such notification
states that Radio One will seek to have the construction permit cancelled, then,
subject to the following sentence, the Partnership Payment shall not be made,
provided, however, that this Agreement shall remain in effect until such
construction permit is cancelled by Final Order. Notwithstanding the foregoing,
if Radio One or any of its successors or assigns commences construction or
operation of the facilities contemplated by the construction permit referenced
in this paragraph, the Partnership Payment shall be due and payable immediately.
(c) In the event that the payment of One Hundred Twenty Five Thousand
Dollars ($125,000) has been made to Partnership pursuant to Section 2(b)(i) or
2(b)(ii) or 2(b)(iii) above, or Section 8 below then two additional payments of
One Hundred Twenty Five Thousand Dollars each shall be made by Radio One to
Partnership. The first such payment of $125,000 shall be made on the one year
anniversary of the date that the payment in Section 2(b) or Section 8 is made or
should have been made, whichever is earlier. The second such payment of $125,000
shall be made on the second anniversary of the date that the payment in Section
2(b) or Section 8 is made or should have been made, whichever is earlier.
(d) Partnership acknowledges that the consideration specified herein
in conjunction with the consideration specified in Section 7 is sufficient to
induce it to undertake the obligations specified in this Agreement and that it
shall not be entitled to receive any additional consideration for the
performance of its obligations hereunder.
3. Representations and Warranties.
(a) Representations and Warranties of Partnership. Partnership
represents and warrants to Radio One as follows:
(i) Agreements re WUSQ-FM. As of the date hereof, no agreements,
understandings or discussions are underway or contemplated regarding the sale of
WUSQ-FM, assignment of the FCC licenses or transfer of any ownership interest,
other than pro forma transfers or assignments that may be accomplished using FCC
Form 316, or any modification of the facilities of WUSQ-FM .
(b) Representations, Warranties and Agreements of Radio One. Radio One
represents and warrants to Partnership as follows:
(i) No Further Contour Extension or Interference. Radio One
agrees that, except as set forth in Exhibits A-1 and A-2, Radio One shall not
extend its contours in the direction of WUSQ-FM or otherwise modify its
facilities in a manner that would create
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<PAGE>
additional interference to WUSQ-FM, nor shall it seek FCC authorization for any
such modification or contour extension, without the prior consent of
Partnership.
4. Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective representatives, successors and
assigns. Except as provided for in Section 4(b), no party hereto may assign any
of its rights or delegate any of its duties hereunder without the prior written
consent of the other party, and any such attempted assignment or delegation
without such consent shall be void.
(b) Partnership agrees to include as a condition of any proposed
assignment, sale or transfer of ownership or control of Partnership's license
for WUSQ-FM a contractually binding provision that the assignee or transferee of
WUSQ-FM shall assume and become bound by this Agreement. Partnership agrees to
procure and deliver in writing to Radio One the agreement of the proposed
assignee or transferee that, upon consummation of the assignment or transfer of
control of the license for WUSQ-FM, the assignee or transferee will assume and
perform this Agreement in its entirety without limitation of any kind.
Partnership acknowledges that any such assignment, sale or transfer which does
not provide for such assumption will cause irreparable injury to Radio One for
which damages are not an adequate remedy. Therefore, Partnership agrees that
Radio One shall be entitled to seek an injunction or other appropriate equitable
relief, including specific performance, from any court of competent
jurisdiction. Partnership agrees to waive the defense in any such suit that
Radio One has an adequate remedy at law and to interpose no opposition, legal or
otherwise, as to the propriety of specific performance as a remedy.
5. Amendments; Waivers. The terms and conditions of this Agreement may be
changed, amended, modified, waived, discharged or terminated only by a written
instrument executed by both parties. The failure of any party at any time or
times to require performance of any provision of this Agreement shall in no
manner affect the right of such party at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision or term
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or of the breach of any other provision or term of this
Agreement.
6. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing (which shall
include notice by facsimile transmission) and shall be deemed to have been duly
made and received when personally served, or when delivered by Federal Express
or a
5
<PAGE>
similar overnight courier service, expenses prepaid, or, if sent by facsimile
communications equipment, delivered by such equipment, addressed as set forth
below:
(1) If to Partnership, then to:
Mr. William Banowsky
Executive Vice President
Capstar Broadcasting
600 Congress Avenue
Suite 1400
Austin, TX 78701
Mr. Joe Mathias
Capstar Broadcasting
3340 Peachtree Road NE
Suite 1800
Atlanta, GA 30326
with a copy given in the manner prescribed above to:
Michael Wortley, Esq.
Vinson & Elkins
3700 Trammell Crowe Center
2001 Ross Avenue
Dallas, TX 75201
(2) If to Radio One, then to:
Mr. Alfred Liggins
Radio One, Inc.
5900 Princess Garden Parkway
8th Floor
Lanham, MD 20706
with a copy given in the manner prescribed above to:
Linda J. Eckard, Esq.
Radio One, Inc.
5900 Princess Garden Parkway
8th Floor
Lanham, MD 20706
Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
section providing for the giving of notice.
7. Expenses. Radio One shall pay all of its expenses incurred in connection
with the obligations specified by this Agreement, including without limitation,
legal fees incurred in
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<PAGE>
connection herewith and the engineering studies in support of a modification of
WMMJ. Radio One shall also reimburse reasonable legal and engineering expenses
incurred by Partnership in reviewing and negotiating this Agreement. Radio One
shall make such payment within thirty (30) days of the execution of this
Agreement.
8. Termination of Agreement. This Agreement may be terminated by Radio One:
(a) if Partnership should materially default in the performance of its
obligations hereunder or (b) if at any time Radio One decides not to pursue the
Contour Extension Application, provided that if the Contour Extension
Application has been filed, no such termination shall be effective until the
Contour Extension Application has been dismissed by Final Order. This Agreement
may be terminated by Partnership if (a) Radio One materially defaults in the
performance of the obligations hereunder; or (b) Radio One fails to file the
Contour Extension Application within ninety (90) days of the execution of this
Agreement; or (c) the Partnership Payment has not been made by the date which is
twenty-one (21) months after the date that the Contour Extension Application is
filed ("Termination Date"). Partnership may not terminate this Agreement
pursuant to Section 8(c) unless Partnership has provided written notice to Radio
One. Such notice may be given at any time beginning on the 60th day prior to the
Termination Date. If Radio One pays the Partnership Payment within sixty (60)
days of receipt of the notice, then Partnership shall have no right to terminate
this Agreement. If this Agreement is properly terminated by Partnership, then
Partnership's consent shall be considered revoked and Radio One shall have no
authority to construct the facilities specified in the Contour Extension
Application even if the FCC has issued a construction permit for such
facilities. No payment shall be due Partnership upon Partnership's or Radio
One's proper termination of this Agreement and the $125,000 held by the Escrow
Agent, if it has not already been paid to Partnership, shall be returned to
Radio One. Notwithstanding the above sentence, Partnership's right to be
reimbursed for its expenses as provided in Section 7 shall survive termination
of this Agreement.
9. Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of Maryland.
10. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, such provision shall be fully severable, and in lieu
of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and
7
<PAGE>
be legal, valid and enforceable. This Agreement shall then be construed and
enforced as so modified.
11. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and supersedes all prior agreements, understandings,
inducements or conditions, express or implied, oral or written, relating to the
subject matter hereof, except as herein contained. The express terms hereof
control and supersede any course of performance and/or usage of trade
inconsistent with any of the terms hereof.
12. Execution; Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.
WUSQ License Limited Partnership
------------------------------
Name:
Title:
RADIO ONE, INC.
-----------------------------
Name: Alfred C. Liggins, III
Title: President
8
EXHIBIT 12.1
RADIO ONE, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 26, 1993, DECEMBER 25, 1994,
AND DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
------------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Net income (loss) ...................... $ 14 $ 1,223 $ (1,856) $ (3,609) $ (4,944)
Add:
Provision for income taxes.......... 92 30 -- -- --
Extraordinary item.................. 138 -- 468 -- 1,985
Fixed charges (a)................... 2,086 2,783 5,588 7,762 9,180
----------- ----------- ----------- ----------- -----------
Earnings available for fixed charges.... 2,330 4,036 4,200 4,153 6,221
Fixed charges (a)....................... 2,086 2,783 5,588 7,762 9,180
----------- ----------- ----------- ----------- -----------
Ratio of earnings to fixed charges...... 1.12 1.45 0.75 0.54 0.68
=========== =========== =========== =========== ===========
</TABLE>
- ----------
(a) Fixed charges represent interest expense, including amortization of
discounts and the component of rent expense believed by management to be
representative of the interest factor (one-third of rent expense).
Subsidiaries
Radio One Licenses, Inc., a Delaware corporation, is a restricted
subsidiary of Radio One, Inc. and does business under the following call
letters:
WKYS-FM
WMMJ-FM
WOL-AM
WYCB-AM
WERQ-FM
WOLB-AM
WWIN-FM
WWIN-AM
WPHI-FM
WYCB Acquisition Corporation, a Delaware corporation, and Broadcast
Holdings, Inc., a District of Columbia corporation, are unrestricted
subsidiaries of Radio One, Inc., and does business under the following call
letters:
WYCB-AM
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this form 10-K.
Arthur Andersen LLP
Baltimore, Maryland,
February 19, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE THREE YEARS IN THE
PERIOD ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1995 JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1995 DEC-31-1996 DEC-31-1997
<EXCHANGE-RATE> 1 1 1
<CASH> 0 1,708,000 8,500,000
<SECURITIES> 0 0 0
<RECEIVABLES> 0 7,185,000 9,626,000
<ALLOWANCES> 0 (765,000) (904,000)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 8,245,000 17,537,000
<PP&E> 0 5,648,000 7,819,000
<DEPRECIATION> 0 (2,641,000) (3,387,000)
<TOTAL-ASSETS> 0 51,777,000 79,225,000
<CURRENT-LIABILITIES> 0 7,475,000 3,287,000
<BONDS> 0 64,938,000 74,954,000
0 0 22,968,000
0 0 0
<COMMON> 0 1 0
<OTHER-SE> 0 (15,002,757) (21,984,000)
<TOTAL-LIABILITY-AND-EQUITY> 0 51,777,000 79,225,000
<SALES> 24,626,000 27,027,000 36,955,000
<TOTAL-REVENUES> 24,626,000 27,027,000 36,955,000
<CGS> (3,171,000) (3,325,000) (4,588,000)
<TOTAL-COSTS> (3,171,000) (3,325,000) (4,588,000)
<OTHER-EXPENSES> 17,643,000 19,982,000 26,831,000
<LOSS-PROVISION> 545,000 1,105,000 894,000
<INTEREST-EXPENSE> 5,289,000 7,252,000 8,910,000
<INCOME-PRETAX> (1,388,000) (3,609,000) (2,959,000)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (1,388,000) (3,609,000) (2,959,000)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> (468,000) 0 0
<CHANGES> 0 0 0
<NET-INCOME> (1,856,000) (3,609,000) (4,944,000)
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
