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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1999
----- ----------------------------
Class A Common Stock, $.01 Par Value 12,034,395
Class B Common Stock, $.01 Par Value 2,873,084
Class C Common Stock, $.01 Par Value 3,195,064
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RADIO ONE, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended June 30, 1999
TABLE OF CONTENTS
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Page
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PART I FINANCIAL INFORMATION
ITEM 1 Consolidated Financial Statements 3
Consolidated Condensed Balance Sheets as of 4
December 31, 1998 and June 30, 1999 (Unaudited)
Consolidated Statements of Operations for the 5
Three months and six months ended June 30, 1998 and 1999 (Unaudited)
Consolidated Statements of Cash Flows for the 6
Six months ended June 30, 1998 and 1999 (Unaudited)
Consolidated Statements of Changes in Stockholders' (Deficit) Equity for the 7
Year ended December 31, 1998 and the six months ended
June 30, 1999 (Unaudited)
Notes to Consolidated Financial Statements 8
ITEM 2 Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings 16
ITEM 2 Changes in Securities 16
ITEM 3 Defaults upon Senior Securities 16
ITEM 4 Submission of Matters to a Vote of Security Holders 16
ITEM 5 Other Information 16
ITEM 6 Exhibits and Reports on Form 8-K 17
SIGNATURE 18
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(See pages 4-10 -- This page intentionally left blank.)
3
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RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 1998, AND JUNE 30, 1999
ASSETS
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<CAPTION>
December 31, June 30,
1998 1999
---------------- ----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,455,000 $ 5,018,000
Trade accounts receivable, net of allowance for doubtful
accounts of $1,243,000 and $1,977,000, respectively 12,026,000 16,879,000
Prepaid expenses, deferred income taxes and other current
assets 1,160,000 1,592,000
---------------- ----------------
Total current assets 17,641,000 23,489,000
PROPERTY AND EQUIPMENT, net 6,717,000 15,349,000
INTANGIBLE ASSETS, net 127,639,000 200,181,000
OTHER ASSETS 1,859,000 4,757,000
---------------- ----------------
Total assets $ 153,856,000 $ 243,776,000
================ ================
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,190,000 $ 3,353,000
Accrued expenses 3,851,000 6,052,000
---------------- ----------------
Total current liabilities 5,041,000 9,405,000
DEFERRED INCOME TAX LIABILITY 15,251,000 14,943,000
LONG-TERM DEBT AND DEFERRED INTEREST:
Senior subordinated notes (net of $7,020,000 and
$5,042,000 unamortized discount, respectively) 78,458,000 80,436,000
Line of credit 49,350,000 16,000,000
Note payable and deferred interest 3,841,000 --
Other long-term debt 90,000 62,000
---------------- ----------------
Total liabilities 152,031,000 120,846,000
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
SENIOR CUMULATIVE REDEEMABLE PREFERRED STOCK:
Series A, $.01 par value, 140,000 shares authorized, 84,843
and no shares issued and outstanding 10,816,000 --
Series B, $.01 par value, 150,000 shares authorized,
124,467 and no shares issued and outstanding 15,868,000 --
STOCKHOLDERS' (DEFICIT) EQUITY:
Common stock - Class A, $.001 par value, 30,000,000 shares authorized, no
and 12,034,000 shares issued and
outstanding, respectively -- 12,000
Common stock - Class B, $.001 par value, 30,000,000
shares authorized, 1,572,000 and 2,873,000 shares
issued and outstanding, respectively 2,000 3,000
Common stock - Class C, $.001 par value, 30,000,000
shares authorized, 3,146,000 shares and 3,195,000
shares issued and outstanding, respectively 3,000 3,000
Additional paid-in capital - 152,933,000
Accumulated deficit (24,864,000) (30,021,000)
---------------- ----------------
Total stockholders' (deficit) equity (24,859,000) 122,930,000
---------------- ----------------
Total liabilities and stockholders' (deficit) equity $ 153,856,000 $ 243,776,000
================ ================
The accompanying notes are an integral part of these consolidated condensed balance sheets.
</TABLE>
4
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RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
(Unaudited)
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<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- ------------------------------------
1998 1999 1998 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Broadcast revenues including barter
revenues of $121,000, $274,000,
$294,000 and $572,000,
respectively $ 13,231,000 $ 24,083,000 $ 22,328,000 $ 37,473,000
Less: Agency commissions 1,726,000 3,046,000 2,800,000 4,619,000
--------------- --------------- --------------- ---------------
Net broadcast revenues 11,505,000 21,037,000 19,528,000 32,854,000
--------------- --------------- --------------- ---------------
OPERATING EXPENSES:
Program and technical 1,868,000 3,405,000 3,503,000 5,877,000
Selling, general and administrative 3,578,000 8,062,000 7,007,000 13,206,000
Corporate expenses 678,000 1,070,000 1,319,000 1,928,000
Stock based compensation -- -- -- 225,000
Depreciation and amortization 1,859,000 4,347,000 3,632,000 7,475,000
--------------- --------------- --------------- ---------------
Total operating expenses 7,983,000 16,884,000 15,461,000 28,711,000
--------------- --------------- --------------- ---------------
Broadcast operating income 3,522,000 4,153,000 4,067,000 4,143,000
INTEREST EXPENSE, including
amortization of deferred financing costs and
LMA fees 2,547,000 3,752,000 4,925,000 7,489,000
OTHER INCOME, net 156,000 78,000 286,000 141,000
--------------- --------------- --------------- ---------------
Income (loss) before provision
for income taxes 1,131,000 479,000 (572,000) (3,205,000)
PROVISION FOR INCOME TAXES -- 225,000 -- 476,000
--------------- --------------- --------------- ---------------
Net income (loss) $ 1,131,000 $ 254,000 $ (572,000) $ (3,681,000)
============= =============== ============= ===============
Net income (loss) applicable to common
stockholders $ 224,000 $ (217,000) $ (2,344,000) $ (5,157,000)
============= =============== ============= ===============
BASIC AND DILUTED INCOME (LOSS)
PER COMMON SHARE APPLICABLE
TO COMMON SHAREHOLDERS $ 0.02 $ (0.01) $ (0.25) $ (0.40)
============ ============== ============ ==============
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND
DILUTED 9,393,000 16,013,000 9,393,000 12,739,000
=============== =============== =============== ===============
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
5
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RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1999
(Unaudited)
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<CAPTION>
Six Months Ended
June 30,
-------------------------------------
1998 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (572,000) $ (3,681,000)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 3,632,000 7,475,000
Amortization of deferred financing costs, unamortized
discount and deferred interest 1,804,000 2,180,000
Noncash compensation to officer -- 225,000
Effect of change in operating assets and liabilities-
Trade accounts receivable (1,319,000) (3,160,000)
Prepaid expenses and other 166,000 (159,000)
Other assets (442,000) (98,000)
Accounts payable 223,000 2,059,000
Accrued expenses 804,000 1,143,000
---------------- ----------------
Net cash flows from operating activities 4,296,000 5,984,000
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,103,000) (2,119,000)
Deposits and payments for acquisitions, net of cash
received (32,529,000) (38,911,000)
Purchase of investments -- (1,000,000)
---------------- ----------------
Net cash flows from investing activities (33,632,000) (42,030,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt issuances 25,350,000 16,000,000
Repayment of debt (453,000) (69,476,000)
Repayment of Senior Cumulative Redeemable Preferred
Stock -- (28,160,000)
Proceeds from issuance of common stock, net of issuance
costs
-- 118,527,000
Deferred financing costs (630,000) (282,000)
---------------- ----------------
Net cash flows from financing activities 24,267,000 36,609,000
---------------- ----------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,069,000) 563,000
CASH AND CASH EQUIVALENTS, beginning of period 8,500,000 4,455,000
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of period $ 3,431,000 $ 5,018,000
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 3,104,000 $ 5,207,000
============== ==============
Income taxes $ -- $ 312,000
============== ==============
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
6
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RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(Unaudited)
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Common Common Common Additional
Stock Stock Stock Paid-In
Class A Class B Class C Capital
-------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, as of December 31, 1998 $ -- $ 2,000 $ 3,000 $ --
Net loss -- -- -- --
Preferred stock dividends earned -- -- -- --
Issuance of stock for acquisition 2,000 1,000 -- 34,191,000
Stock issued to an employee -- -- -- 225,000
Conversion of warrants 5,000 -- -- (5,000)
Issuance of common stock 5,000 -- -- 118,522,000
-------------- -------------- -------------- --------------
BALANCE, as of June 30,1999 $ 12,000 $ 3,000 $ 3,000 $ 152,933,000
============== ============== ============== ==============
Total
Accumulated Stockholders'
Deficit Equity
------- ------
BALANCE, as of December 31, 1998 $ (24,864,000) $ (24,859,000)
Net loss (3,681,000) (3,681,000)
Preferred stock dividends earned (1,476,000) (1,476,000)
Issuance of stock for acquisition -- 34,194,000
Stock issued to an employee -- 225,000
Conversion of warrants -- --
Issuance of common stock -- 118,527,000
--------------- ---------------
BALANCE, as of June 30,1999 $ (30,021,000) $ 122,930,000
=============== ===============
The accompanying notes are an integral part of this consolidated statement.
</TABLE>
7
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RADIO ONE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
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., WYCB Acquisition Corporation (Delaware
corporations), Broadcast Holdings, Inc. (a Washington, D.C., corporation), Bell
Broadcasting Company (a Michigan corporation), Radio One of Detroit, Inc.,
Allur-Detroit, Inc., Allur Licenses, Inc. (Delaware corporations), Radio One of
Atlanta, Inc. and its wholly owned subsidiaries, ROA Licenses, Inc., and Dogwood
Communications, Inc. (Delaware corporations), and its wholly owned subsidiary,
Dogwood Licenses, Inc. (a Delaware corporation) (collectively referred to as the
Company) were organized to acquire, operate and maintain radio broadcasting
stations. The Company owns and operates radio stations in the Washington, D.C.;
Baltimore, Maryland; Philadelphia, Pennsylvania; Detroit, Michigan; Kingsley,
Michigan; Atlanta, Georgia; Cleveland, Ohio; St. Louis, Missouri and Richmond,
Virginia, markets. The Company's operating results are significantly affected by
its market share in the markets that it has stations. The Company also operates
radio stations in Richmond, Virginia, through a time brokerage agreement (TBA).
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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Interim Financial Statements
The interim consolidated financial statements included herein for Radio One,
Inc. and subsidiaries have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. In
management's opinion, the interim financial data presented herein include all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations.
8
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Results for interim periods are not necessarily indicative of results to be
expected for the full year. It is suggested that these consolidated financial
statements be read in conjunction with the Company's December 31, 1998,
financial statement and notes thereto included in the Company's annual report on
Form 10-K.
2. INITIAL PUBLIC OFFERING:
The Company effected an initial public offering (IPO) of common stock during May
1999, in which it sold approximately 5.4 million shares of Class A common stock.
The Company realized approximately $119 million from the offering, after
deducting the expenses of the offering and used the proceeds to repay amounts
borrowed under its line of credit, redeem its preferred stock, repay the note
payable and deferred interest, fund planned acquisitions and for other general
corporate purposes.
3. EARNINGS PER SHARE:
The Company had certain senior cumulative redeemable preferred stock
outstanding, which paid dividends at 15% per annum. The Company accreted the
dividends on this preferred stock, which were payable when the preferred stock
was redeemed. In May 1999, the Company redeemed the outstanding preferred stock
with proceeds from the IPO. The earnings available for common stockholders for
the three and six months ended June 30, 1998 and 1999, is the net income (loss)
for each of the periods, less the accreted dividends of $907,000 and $471,000
for the three months ended June 30, 1998 and 1999, and $1,772,000 and $1,476,000
for the six months ended June 30, 1998 and 1999, respectively, on the preferred
stock.
The Company effected a 34,061 for one stock split, effective May 6, 1999, in
conjunction with the IPO. All share data included in the accompanying
consolidated financial statements and notes thereto are as if the stock split
had occurred prior to the periods presented.
Also, effective February 25, 1999, the Company converted certain Class A Common
Stock held by the principal stockholders to Class B Common Stock which have ten
votes per share, as compared to Class A which has one vote per share, and
certain of their Class A stock to Class C Common Stock. Class C Common Stock
will have no voting rights except as required by Delaware law. All share data
included in the accompanying consolidated financial statements and notes thereto
are as if the stock conversion had occurred prior to the periods presented.
Earnings per share are based on the weighted average number of common and
diluted common equivalent shares for stock options and warrants outstanding
during the period the calculation is made, divided into the earnings available
for common stockholders. Diluted common equivalent shares consist of shares
issuable upon the exercise of stock options and warrants, using the treasury
stock method. The weighted average number of shares outstanding for the three
months ended June 30, 1998 and 1999, and for the six months ended June 30, 1998
and 1999, is 9,393,000, 16,013,000, 9,393,000 and 12,739,000, respectively. The
warrants exercised concurrent with the closing of the IPO and the stock issued
to an employee in January 1999 have both been reflected in the calculation of
earnings per share as if the stock issued was outstanding for all periods
presented. As of June 30, 1999, there were approximately 207,000 stock options
outstanding from options granted in May 1999; however, the common stock
equivalents of these options are not included in the diluted earnings per share
as the stock options are antidilutive.
9
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4. ACQUISITIONS:
On March 30, 1999, the Company acquired all of the outstanding stock of Radio
One of Atlanta, Inc. (ROA), an affiliate of the Company, for approximately
3,277,000 shares of common stock. At the time of the ROA acquisition, ROA owned
approximately 33% of Dogwood Communications, Inc. (Dogwood). On March 30, 1999,
ROA acquired the remaining approximately 67% of Dogwood for $3.6 million. The
acquisition was accounted for using purchase accounting, with the portion of the
excess purchase price over the net book value of the assets acquired related to
the noncontrolling stockholders being stepped up and that portion of the excess
purchase price being recorded as goodwill. The remaining net book value of the
assets acquired was recorded at historical cost.
On April 30, 1999, the Company completed the acquisition of the assets of
WENZ-FM and WERE-AM in Cleveland, Ohio, for approximately $20 million. The
acquisition was financed with borrowings from the Company's line of credit.
On June 4, 1999, the Company completed the acquisition of the assets of WFUN-FM
in St. Louis, Missouri, for approximately $13.6 million. The acquisition was
financed with borrowings from the Company's line of credit and IPO proceeds.
On May 6, 1999, the Company entered into an asset purchase agreement to acquire
four stations in Richmond, Virginia, for approximately $34 million.
On May 26, 1999, the Company entered into an asset purchase agreement to acquire
WCAV-FM, located in the Boston, Massachusetts, metropolitan area for
approximately $10 million.
5. STOCK OPTION PLAN AND GRANTS:
During 1999, the Company adopted a Stock Option Plan and Restricted Stock Grant
Plan (the Plan) to enable directors, executives and other key employees to
acquire interests in the Company through ownership of common stock. On May 5,
1999, the Company granted options of approximately 207,000 shares of common
stock at $24.00 per share. The options expire in 10 years and vest over a period
of three to five years.
6. SUBSEQUENT EVENTS:
ACQUISITIONS
On July 1, 1999, the Company completed the acquisition of WKJS-FM and WSOJ-FM in
Richmond, Virginia, for approximately $12 million.
On July 15, 1999, the Company completed the acquisition of WDYL-FM in Richmond,
Virginia, for approximately $4.6 million.
10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the
unaudited consolidated financial statements and notes thereto included in this
Quarterly Report and the audited financial statements and Management's
Discussion and Analysis combined in the Company's Form 10-K filed for the year
ended December 31, 1998.
RESULTS OF OPERATIONS
Comparison of periods ended June 30, 1998 to the periods ended June 30, 1999
(all periods are unaudited - all numbers in 000s, except per share data).
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
June 30, 1998 June 30, 1999 June 30, 1998 June 30, 1999
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUE:
Broadcast revenue $ 13,231 $ 24,083 $ 22,328 $ 37,473
Less: Agency commissions 1,726 3,046 2,800 4,619
------------ ------------ ------------ -------------
Net broadcast revenue 11,505 21,037 19,528 32,854
------------ ------------ ------------ -------------
OPERATING EXPENSES:
Programming and technical 1,868 3,405 3,503 5,877
Selling, G&A 3,578 8,062 7,007 13,206
Corporate expenses 678 1,070 1,319 1,928
Stock-based compensation - - - 225
Depreciation & amortization 1,859 4,347 3,632 7,475
------------ ------------ ------------ -------------
Total operating expenses 7,983 16,884 15,461 28,711
------------ ------------ ------------ -------------
Operating income 3,522 4,153 4,067 4,143
INTEREST EXPENSE 2,547 3,752 4,925 7,489
OTHER INCOME, net 156 78 286 141
------------ ------------ ------------ -------------
Income (loss) before
provision for income taxes 1,131 479 (572) (3,205)
------------ ------------ ------------ -------------
PROVISION FOR INCOME TAXES - 225 - 476
============ ============ ============ =============
Net income (loss) $ 1,131 $ 254 $ (572) $ (3,681)
============ ============ ============ =============
PER SHARE DATA:
Net income (loss) per share $ 0.12 $ 0.02 $ (0.06) $ (0.29)
Preferred dividends per share 0.10 0.03 0.19 0.11
Net income (loss) per share
Applicable in common shareholders $ 0.02 $ (0.01) $ (0.25) $ (0.40)
After-tax cash flow per share 0.32 0.29 0.33 0.30
OTHER DATA:
Broadcast cash flow (a) $ 6,059 $ 9,570 $ 9,018 $ 13,771
Broadcast cash flow margin 52.7% 45.5% 46.2% 41.9%
EBITDA (b) $ 5,381 $ 8,500 $ 7,699 $ 11,843
EBITDA margin (b) 46.8% 40.4% 39.4% 36.0%
After-tax cash flow (c) $ 2,990 $ 4,601 $ 3,060 $ 3,794
Weighted average shares outstanding
- basic and diluted (d) 9,393 16,013 9,393 12,739
</TABLE>
11
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Net broadcast revenue increased to approximately $21.0 million for the
quarter ended June 30, 1999 from approximately $11.5 million for the quarter
ended June 30, 1998 or 82.6%. Net broadcast revenue increased to approximately
$32.9 million for the six months ended June 30, 1999 from approximately $19.5
million for the six months ended June 30, 1998 or 68.7%. This increase in net
broadcast revenue was the result of continuing broadcast revenue growth in the
Company's Washington, Baltimore and Philadelphia markets as the Company
benefited from historical ratings increases at certain of its radio stations,
improved power ratios at these stations as well as industry growth in each of
these markets. Additional revenue gains were derived from the Company's recent
acquisitions in Detroit and Cleveland and from the radio stations being operated
under a time brokerage agreement in Richmond, as well as the March, 1999
acquisition of the Company's former affiliate, Radio One of Atlanta, Inc.
Operating expenses excluding depreciation, amortization and stock-based
compensation increased to approximately $12.5 million for the quarter ended June
30, 1999 from approximately $6.1 million for the quarter ended June 30, 1998 or
104.9%. Operating expenses excluding depreciation, amortization and stock-based
compensation increased to approximately $21.0 million for the six months ended
June 30, 1999 from approximately $11.8 million for the six months ended June 30,
1998 or 78.0%. These increases in expenses were related to the Company's rapid
expansion within all of the markets in which it operates including higher costs
in Washington associated with improved programming on its morning shows as well
as start-up and expansion expenses in its newer markets of Detroit, Cleveland
and Richmond, in particular, as well as higher costs associated with operating
as a public company.
Broadcast operating income increased to approximately $4.2 million for
the quarter ended June 30, 1999 from approximately $3.5 million for the quarter
ended June 30, 1998. Broadcast operating income was flat at approximately $4.1
million for each of the six month periods ended June 30, 1999 and June 30, 1998.
This increase for the quarter and flatness for the six month period were
attributable to higher depreciation and amortization expenses associated with
the Company's several acquisitions made within the last year offset by higher
revenue as described above.
Interest expense increased to approximately $3.8 million for the
quarter ended June 30, 1999 from approximately $2.5 million for the quarter
ended June 30, 1998 or 52.0%. Interest expense increased to approximately $7.5
million for the six months ended June 30, 1999 from approximately $4.9 million
for the six months ended June 30, 1998 or 53.1%. These increases relate
primarily to interest incurred on borrowings under the Company's bank credit
facility to help fund the several acquisitions made by the Company within the
past year.
Other income decreased to $78,000 for the quarter ended June 30, 1999
from $156,000 for the quarter ended June 30, 1998 or 50.0%. Other income
decreased to $141,000 for the six months ended June 30, 1999 from $286,000 for
the six months ended June 30, 1998 or 50.1%. These decreases were primarily
attributable to lower interest income due to lower average cash balances as the
Company partially used its free cash balances to help fund acquisitions made
during the quarter as well as to help reduce its outstanding balance on its
senior bank credit facility, which stood at $16.0 million at June 30, 1999 as
compared to approximately $49.4 million at June 30, 1998.
Income before provision for income taxes decreased to approximately
$0.5 million for the quarter ended June 30, 1999 from approximately $1.1 million
for the quarter ended June 30, 1998 or 54.5%. Loss before provision for income
taxes increased to approximately $3.2 million for the six months ended June 30,
1999 from approximately $0.6 million for the six months ended June 30, 1998 or
433.3%. This decrease in income for the quarter and increase in the loss for the
six month period were primarily due to higher interest and depreciation and
amortization expenses as described above, partially offset by higher revenue.
Net income decreased to approximately $0.3 million for the quarter
ended June 30, 1999 from approximately $1.1 million for the quarter ended June
30, 1998 or 72.7%. Net loss increased to approximately $3.7 million for the six
months ended June 30, 1999 from approximately $0.6 million for the six months
ended June 30, 1998 or 516.7%. This decrease in income for the quarter and
increase in the loss for the six month period was due to the factors described
above as well as a tax provision for each of the second quarter and first six
month periods of 1999 associated with an estimate of the Company's effective tax
rate for all of 1999. In 1998, the Company used its remaining NOL and did not
incur a tax liability during the first six months of 1998.
12
<PAGE>
Broadcast cash flow increased to approximately $9.6 million for the
quarter ended June 30, 1999 from approximately $6.1 million for the quarter
ended June 30, 1998 or 57.4%. Broadcast cash flow increased to approximately
$13.8 million for the six months ended June 30, 1999 from approximately $9.0
million for the six months ended June 30, 1998 or 53.3%. These increases were
attributable to the increases in broadcast revenue partially offset by higher
operating expenses as described above.
Earnings before interest, taxes, depreciation, and amortization
(EBITDA), and excluding stock-based compensation expense, increased to
approximately $8.5 million for the quarter ended June 30, 1999 from
approximately $5.4 million for the quarter ended June 30, 1998 or 57.4%.
Earnings before interest, taxes, depreciation, and amortization (EBITDA), and
excluding stock-based compensation expense, increased to approximately $11.8
million for the six months ended June 30, 1999 from approximately $7.7 million
for the six months ended June 30, 1998 or 53.2%. These increases were
attributable to the increase in broadcast revenue partially offset by higher
operating expenses and higher corporate expenses partially associated with the
costs of operating as a public company.
After-tax cash flow increased to approximately $4.6 million for the
quarter ended June 30, 1999 from approximately $3.0 million for the quarter
ended June 30, 1998 or 53.3%. After-tax cash flow increased to approximately
$3.8 million for the six months ended June 30, 1999 from approximately $3.1
million for the six months ended June 30, 1998. These increases were
attributable to the increase in operating income partially offset by higher
interest charges associated with the financings of various acquisitions as well
as the provision for income taxes for 1999, as described above.
(a) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses (including stock-based compensation) and
depreciation and amortization of both tangible and intangible assets.
(b) "EBITDA" is defined as earnings before interest, taxes, depreciation,
amortization and stock-based compensation.
(c) "After-tax cash flow" is defined as income before income taxes and
extraordinary items plus depreciation, amortization and stock-based
compensation, less the current income tax provision.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
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 $4.5
million as of December 31, 1998. The Company's balance of cash and cash
equivalents was approximately $5.0 million as of June 30, 1999. This increase
resulted primarily from stronger cash flows from operating activities as well as
the Company's initial public offering on May 6, 1999 from which it raised
approximately $119.0 million, partially offset by the repayment of debt and
preferred stock with the proceeds from the initial public offering. At June 30,
1999 approximately $84.0 million remained available (based on various covenant
restrictions) to be drawn down from the Company's bank credit facility which was
increased to a $100.0 million facility in February 1999. 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 Company's bank
credit facility.
Net cash flow from operating activities increased to approximately $6.0
million for the six months ended June 30, 1999 from approximately $4.3 million
for the six months ended June 30, 1998 or 39.5%. This increase was primarily due
to a higher net loss due to higher interest charges associated with higher
average levels of debt outstanding, higher depreciation and amortization charges
associated with the various acquisitions made by the Company in the past year
and a higher provision for income taxes as compared to the first half of 1998.
Non-cash expenses of depreciation and amortization increased to approximately
$9.7 million for the six months ended June 30, 1999 from approximately $5.4
million for the six months ended June 30, 1998 or 79.6% due to various
acquisitions made by the Company within the past year.
Net cash flow used in investing activities increased to approximately
$42.0 million for the six months ended June 30, 1999 compared to approximately
$33.6 million for the six months ended June 30, 1998 or 25.0%. During the six
months ended June 30, 1999 the Company, through its Radio One of Atlanta, Inc.
subsidiary (which it acquired on March 30, 1999) acquired the remaining stock in
Dogwood Communications, Inc. which it did not already own, for approximately
$3.6 million, acquired radio stations WENZ-FM and WERE-AM in Cleveland, Ohio for
approximately $20 million, acquired radio station WFUN-FM in St. Louis, Missouri
for approximately $13.6 million, entered into a time brokerage agreement to
operate radio stations located in Richmond, Virginia and made a $1.0 million
investment in PNE Media, LLC. The Company also made escrow deposits on
anticipated acquisitions of additional radio stations in Richmond, Virginia and
Boston, Massachusetts. Also during the six months ended June 30, 1999 the
Company made purchases of capital equipment totaling approximately $2.1 million.
Net cash flow from financing activities was approximately $36.6 million
for the six months ended June 30, 1999. During the six months ended June 30,
1999, the Company completed its initial public offering of common stock and
raised net proceeds of approximately $119.0 million which was used to partially
repay outstanding balances on its bank credit facility and to repay all of the
Company's outstanding Senior Cumulative Redeemable Preferred Stock.
Additionally, the Company increased the size of its bank credit facility to
$100.0 million. During the six months ended June 30, 1999, the Company partially
used this bank credit facility to acquire its former affiliate, Radio One of
Atlanta, Inc. which, in turn, acquired the remaining stock of Dogwood
Communications, Inc. that it did not already own. The Company also acquired
radio stations located in Cleveland, Ohio and St. Louis, Missouri. Net cash flow
from financing activities was approximately $24.3 million for the six months
ended June 30, 1998. During the six months ended June 30, 1998, the Company used
its bank credit facility to acquire, through an unrestricted subsidiary, the
capital stock of Broadcast Holdings, Inc., the owner and operator of radio
station WYCB-AM, for approximately $3.8 million and to acquire Bell Broadcasting
Company, an owner and operator of radio stations in Detroit and Kingsley,
Michigan, for approximately $34 million.
As a result of the aforementioned, cash and cash equivalents increased
by approximately $0.6 million during the six months ended June 30, 1999 compared
to an approximate $5.1 million decrease during the six months ended June 30,
1998.
14
<PAGE>
YEAR 2000 COMPLIANCE
Radio One has commenced a process to ensure Year 2000 compliance of all
hardware, software, and ancillary equipment that are date dependent. This
process involves four phases:
Phase I Inventory and Data Collection. This phase involves an
identification of all systems that are date dependent. This
phase was completed during the first quarter of 1998.
Phase II Compliance Identification. This phase involves Radio One
identifying and beginning to replace critical systems that
cannot be updated or certified as compliant. We commenced this
phase in the first quarter of 1999 and completed the
substantial majority of this phase before the end of the
second quarter of 1999. To date, we have verified that our
accounting, payroll, and local wide area network hardware and
software systems are substantially compliant. In addition, we
have determined that most of our personal computers and PC
applications are compliant. We are currently reviewing our
security systems and other miscellaneous systems.
Phase III Test, Fix, and Verify. This phase involves testing all
systems that are date dependent and upgrading all
non-compliant systems. We expect to complete this phase during
the third quarter of 1999.
Phase IV Final Testing, New Item Compliance. This phase involves a
review of failed systems for compliance and re-testing as
necessary. We expect to complete this phase by the end of the
third quarter of 1999.
To date, we have no knowledge that any of our major systems are not Year
2000 ready or will not be Year 2000 ready by the end of the third quarter of
1999. We have not incurred significant expenditures and believe we will achieve
substantial Year 2000 readiness without the need to acquire significant new
hardware, software or systems. As part of our expansion over the past two years,
we have undertaken significant build-outs, upgrades and expansions to our radio
station studios, business offices and technology infrastructure. These
enhancement efforts are continuing in all of the markets in which we have
recently acquired radio stations and will expand into the new markets in which
we will be acquiring radio stations. We believe that most, if not all, of the
new equipment installed in conjunction with these recent build-outs is Year 2000
compliant. Based upon our experience to date, we estimate the remaining costs to
achieve Year 2000 readiness will be approximately $100,000, independent of the
costs associated with the previously-mentioned expansions which are being
undertaken in the normal course of our business development. All costs directly
related to preparing for Year 2000 readiness will be expensed as incurred. We
are not aware of any Year 2000 problems that would have a material effect on our
operations. We are also not aware of any non-compliance by our suppliers that is
likely to have material impact on our business. Nevertheless, we cannot assure
you that our critical systems, or the critical systems of our suppliers, will be
Year 2000 ready.
We do not intend to develop any contingency plans to address possible
failures by us or our vendors related to Year 2000 compliance. We do not believe
that such contingency plans are required because we believe that we and our
significant vendors will be Year 2000 compliant before January 2000.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time engaged in legal proceedings
incidental to its business. The Company does not believe that any legal
proceedings that it is currently engaged in, either individually or in
the aggregate, will have a material adverse effect on the Company.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a meeting held on April 28, 1999, the shareholders voted to approve
the election of Larry Marcus, Terry Jones, Alfred Liggins, Catherine
Hughes and Brian McNeill as members of the Board of Directors.
At a meeting held on May 5, 1999, the shareholders voted to approve the
proposed stock option grant (pursuant to the Company's Stock Option
Plan) to employees.
ITEM 5. OTHER INFORMATION
On April 30, 1999, the Company completed the acquisition of radio
stations WENZ-FM and WERE-AM in Cleveland, Ohio from Clear Channel
Broadcasting, Inc., for approximately $20 million.
On May 6, 1999, the Company entered into an Asset Purchase Agreement
with Sinclair Telecable, Inc., and Commonwealth Broadcasting, LLC to
acquire all of their radio stations in the Richmond, Virginia market
for approximately $34 million. The Company also on that date entered
into a Time Brokerage Agreement that commenced on June 1, 1999.
On May 6, 1999, the Company completed an initial public offering of
7,150,000 shares of Class A Common Stock (including the exercise of the
underwriters' over-allotment of 650,000 shares) at an offering price of
$24.00 per share. Of the 7,150,000 shares sold, 5,432,840 shares were
sold by the Company and 1,717,160 shares were sold by selling
shareholders. The Class A Common Stock is listed on the NASDAQ National
Market under the symbol ROIA.
On May 26, 1999, the Company entered into an asset purchase agreement
with KJI Broadcasting, LLC to acquire WCAV-FM, located in Brockton,
Massachusetts and broadcasting in the Boston Metropolitan area, for
approximately $10 million.
On June 4, 1999, the Company completed the acquisition of WFUN-FM
located in Bethalto, Illinois and broadcasting in the St. Louis,
Missouri market, from Arch Broadcasting, L.P., for approximately $13.6
million.
On July 1, 1999, the Company completed the acquisition of WKJS-FM and
WSOJ-FM in the Richmond, Virginia market, from FM 100, Inc., for
approximately $12 million.
On July 15, 1999, the Company completed the acquisition of WDYL-FM in
the Richmond, Virginia market, from Hoffman Communications, Inc., for
approximately $4.6 million.
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
(a) The following exhibits are filed as part of this registration
statement.
3.1 Certificate of Incorporation of Radio One, Inc. (as of May 6,
1999) (incorporated by reference to Radio One's Amendment to
its Registration Statement on Form S-1 filed on May 4, 1999
(File No. 333-74351; Film No. 99610524)).
3.2 Amended and Restated By-laws of Radio One, Inc. (as of May 5,
1999).
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 (incorporated by reference to Radio One's Annual
Report filed on Form 10-K for the period ended December 31,
1997 (File No. 333-30795; Film No. 98581327)).
4.2 First Supplemental Indenture dated as of June 30, 1998, to
Indenture dated as of May 15, 1997, by and among Radio One,
Inc., as Issuer and United States Trust Company of New York,
as Trustee, by and among Radio One, Inc., Bell Broadcasting
Company, Radio One of Detroit, Inc., and United States Trust
Company of New York, as Trustee (incorporated by reference to
Radio One's Current Report on Form 8-K filed July 13, 1998
(File No. 333-30795; Film No. 98665139)).
4.3 Second Supplemental Indenture dated as of December 23, 1998,
to Indenture dated as of May 15, 1997, by and among Radio One,
Inc., as Issuer and United States Trust Company of New York,
as Trustee, by and among Radio One, Inc., Allur-Detroit, Allur
Licenses, Inc., and United States Trust Company of New York,
as Trustee (incorporated by reference to Radio One's Current
Report on Form 8-K filed January 12, 1999 (File No. 333-30795;
Film No. 99504706)).
4.8 Standstill Agreement dated as of June 30, 1998, among Radio
One, Inc., the subsidiaries of Radio One, Inc., United States
Trust Company of New York and the other parties thereto
(incorporated by reference to Radio One's Quarterly Report on
Form 10-Q for the period ended June 30, 1998 (File No.
333-30795; Film No. 98688998)).
4.9 Stockholders Agreement dated as of March 2, 1999, among
Catherine L. Hughes and Alfred C. Liggins, III.
10.1(a) Amendment to Office Lease dated January 22, 1999, between
National Life Insurance Company and Radio One, Inc. for
premises located at 5900 Princess Garden Parkway, Lanham,
Maryland.
10.7(a) Second Amendment to the Warrantholders' Agreement dated as of
May 3, 1999, among Radio One, Inc., Radio One Licenses, Inc.
and the other parties thereto.
10.45(a) Asset Purchase Agreement dated as of May 6, 1999, relating to
the acquisition of WCDX-FM, licensed to Mechanicsville,
Virginia, WPLZ-FM, licensed to Petersburg, Virginia, WJRV-FM
licensed to Richmond, Virginia, and WGCV-AM licensed to
Petersburg, Virginia.
10.45(b) Time Brokerage agreement dated May 6, 1999, among Radio One,
Inc. and Sinclair Telecable, Inc., Commonwealth Broadcasting,
L.L.C and Radio One, Inc.
10.52 Asset Purchase Agreement dated as of May 24, 1999, relating to
the acquisition of WCAV-FM, licensed to Brockton,
Massachusetts.
10.53 Time Brokerage agreement dated May 24, 1999, among Radio One,
Inc. and Radio Station WCAV-FM, Brockton, Massachusetts.
10.54 Agreement and Plan of Warrant Recapitalization dated as of
February 25, 1999, among Radio One, Inc., Radio One Licenses,
Inc. and the other parties thereto.
27 Financial data schedule (Edgar version only)
17
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
/s/ Scott R. Royster
------------------------------------------------
August 12, 1999 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
18
Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
OF
RADIO ONE, INC.
(AS OF MAY 5, 1999)
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.
<PAGE>
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 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 presence of stockholders entitled to
cast at least a majority of the votes that all stockholders are entitled to cast
on a matter to be acted upon at a meeting of the stockholders shall constitute a
quorum for the purposes of consideration and action on the matter, 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 a majority of the votes cast by
all stockholders entitled to vote and, if any stockholders are entitled to vote
as a class, the vote of a majority of the votes cast by the stockholders
entitled to vote as a class, whether such stockholders are present in person or
represented by proxy at the meeting, 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.
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<PAGE>
ARTICLE III - DIRECTORS
Section 1. Number, Election and Term of Office. The board of
directors shall be five (5) in number, including the Class A Directors (as
hereinafter defined); 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 board of
directors shall include two directors elected by the holders of the Class A
Common Stock by class vote pursuant to the amended and restated certificate of
incorporation of the corporation (the "Class A Directors"). The directors shall
be elected at the annual meeting of stockholders, except for the Class A
Directors and 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. The Class A Directors shall be
elected at each annual meeting of stockholders commencing with the annual
meeting of stockholders to be held in 2000.
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
vote of a majority of the votes cast by all stockholders entitled to vote at an
election of directors, except that the Class A Directors may be removed only by
the vote of the holders of a majority of the shares of Class A Common Stock, and
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 vote of a majority of the votes cast by all
stockholders 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 resulting from the
resignation or removal of a Class A Director may be filled only by the vote of
the holders of a majority of the shares of Class A Common Stock; and provided,
further, 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-
<PAGE>
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
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corporation and the secretary, or an assistant secretary, shall have authority
to affix the same to any 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 V - 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
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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, 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
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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 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
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surviving corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.
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 canceled, and
no new certificate shall be issued in replacement until the former certificate
for a like number of shares shall have been surrendered or canceled, 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
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directors. The record date for the 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
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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 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.
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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 and of any series or class
of preferred stock then outstanding 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 bylaws has been conferred upon the board of directors shall not
divest the stockholders of the same powers.
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Exhibit 4.9
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STOCKHOLDERS AGREEMENT
Dated as of March 2, 1999
Among
CATHERINE L. HUGHES
AND
ALFRED C. LIGGINS, III
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 1. Definitions.....................................................................................1
Section 2. Voting Arrangements.............................................................................5
(a) ELECTION OF DIRECTORS...........................................................................5
(b) REMOVAL OF DIRECTORS............................................................................6
(c) VACANCIES.......................................................................................6
(d) RIGHTS UNIMPAIRED...............................................................................6
(e) APPOINTMENT OF PROXY............................................................................6
(f) OTHER VOTING RIGHTS.............................................................................7
(g) REGULATORY SAVINGS PROVISION....................................................................7
Section 3. Disposition of Incapacitated Principal Stockholder's Shares.....................................7
Section 4. Restrictions on Transfer........................................................................7
(a) RESTRICTIONS ON TRANSFER........................................................................7
(b) CERTAIN PERMITTED TRANSFERS.....................................................................8
(c) RIGHT OF FIRST REFUSAL..........................................................................8
(d) OPINION OF COUNSEL..............................................................................9
Section 5. Legends.........................................................................................9
(a) STOCKHOLDERS AGREEMENT LEGEND...................................................................9
Section 6. Sale of the Company.............................................................................9
Section 7. Participation Rights...........................................................................10
Section 8. Deadlocks......................................................................................10
(a) DEFINITION.....................................................................................10
(b) INITIATION OF AUCTION..........................................................................10
(c) AUCTION PROCEDURE..............................................................................11
(d) DETERMINATION OF FINAL PURCHASE PRICE..........................................................11
(e) CONSUMMATION OF SALE AND TRANSFER..............................................................11
Section 9. Transfers in Violation of Agreement............................................................11
Section 10. Amendment and Waiver...........................................................................11
Section 11. Severability...................................................................................11
Section 12. Entire Agreement...............................................................................12
Section 13. Successors and Assigns; Third Party Beneficiary................................................12
</TABLE>
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<TABLE>
<S> <C> <C>
Section 14. Counterparts...................................................................................12
Section 15. Remedies.......................................................................................12
Section 16. Notices........................................................................................12
Section 17. Governing Law..................................................................................12
Section 18. Descriptive Headings...........................................................................12
Section 19. Termination....................................................................................12
EXHIBIT A
FORM OF JOINDER
TO
STOCKHOLDERS AGREEMENT.........................................................................14
</TABLE>
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "AGREEMENT") is dated as of
March 2, 1999 among CATHERINE L. HUGHES, an individual whose business address is
5900 Princess Garden Parkway, 8th Floor, Lanham, Maryland 20706 ("HUGHES" or a
"PRINCIPAL STOCKHOLDER"), ALFRED C. LIGGINS, III, an individual whose business
address is 5900 Princess Garden Parkway, 8th Floor, Lanham, Maryland 20706
("LIGGINS" or a "PRINCIPAL STOCKHOLDER"), and each other person or entity who
hereafter executes a counterpart of this Agreement (or otherwise agrees to be
bound by the provisions hereof) (the Principal Stockholders and each such other
person or entity are sometimes referred to herein individually as a
"STOCKHOLDER" and collectively as the "STOCKHOLDERS").
The parties hereby agree as follows:
SECTION 1 DEFINITIONS. For purposes of this Agreement, the
following terms have the indicated meanings:
"APPROVED SALE" is defined in Section 6.
"AUTHORIZATION DATE" is defined in Section 4(c).
"BENEFICIAL OWNERSHIP" means possession of the power and
authority, either singly or jointly with another, to vote or dispose of or to
direct the voting or disposition of shares of Common Stock.
"BENEFICIAL OWNER" in respect of shares of Common Stock shall
mean the person or persons who possess Beneficial Ownership of such Common
Stock.
"BOARD" means the Company's Board of Directors.
"CLASS A COMMON STOCK" means the Company's Class A common
stock, par value $.01 per share.
"CLASS B COMMON STOCK" means the Company's Class B common
stock, par value $.01 per share.
"CLASS C COMMON STOCK" means the Company's Class C common
stock, par value $.01 per share.
"CLASS B DIRECTORS" means those members of the Board as to the
election or removal of which holders of the Class B Common Stock may exercise
voting rights.
"COMMON STOCK" means the Class A Common Stock, the Class B
Common Stock and the Class C Common Stock.
<PAGE>
"COMPANY" means Radio One, Inc., a Delaware corporation.
"COMPANY SALE" means a transaction with one or more
independent third parties pursuant to which such party or parties (i) acquire
(whether by merger, consolidation or transfer or issuance of capital stock)
capital stock of the Company (or any surviving or resulting corporation)
possessing the voting power to elect a majority of the board of directors of the
Company (or such surviving or resulting corporation) or (ii) acquire all or
substantially all of the Company's assets determined on a consolidated basis.
"DEADLOCK" is defined in Section 8(a).
"FAIR MARKET VALUE" as of any date means (a) with respect to
publicly traded Common Stock, the average market trading price of such Common
Stock over the preceding twenty (20) trading days, and (b) with respect to
non-publicly traded Common Stock, the per share fair market value of such Common
Stock as of such date, as determined in good faith by the Board based on such
factors as the Board may deem appropriate; provided that a Principal Stockholder
may request, at his or her own expense, an independent appraisal of such Common
Stock by a nationally recognized investment banking firm acceptable to the other
Principal Stockholder, which such acceptance shall not be unreasonably withheld.
"FINAL AUCTION PRICE" is defined in Section 8(c).
"FINAL PURCHASE PRICE" is defined in Section 8(d).
"HUGHES" is defined in the preface.
"INCAPACITATED" means, with respect to an individual, that (1)
such individual is under a legal disability (under the laws of such individual's
domicile), (2) such individual has been certified in writing to be unable to
manage his or her financial affairs by the principal physician attending to such
individual's care, and the Stockholders and the Company may rely upon written
notice of that determination without any duty to inquire into the authenticity
of the certification or any of the facts upon which it is based, or (3) such
individual's whereabouts are unknown and such individual has not been able to be
located by an officer of the Company or a member of the Board for at least
ninety (90) days.
"INITIAL AUCTION DATE" is defined in Section 8(b).
"INITIAL OFFER" is defined in Section 8(c).
"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.
"LIGGINS" is defined in the preface.
2
<PAGE>
"OPTION PLAN" means that certain Management Stock Option Plan
adopted by the Board as of March 2, 1999, as the same may be amended or
supplemented from time to time.
"OPTIONS" means options to purchase shares of Common Stock
granted by the Company pursuant to the Option Plan.
"OTHER STOCKHOLDERS" is defined in Section 6.
"PERMITTED TRANSFER" is defined in Section 4(b).
"PERMITTED TRANSFEREE" shall be, if the Stockholder is an
individual:
(A) the estate (or a revocable trust that is a substitute of an
estate) of the Stockholder or any legatee, heir or
distributees thereof;
(B) the spouse or former spouse of the Stockholder;
(C) any parent or grandparent and any lineal descendant (including
any adopted child) of any parent or grandparent of the
Stockholder or of the Stockholder's spouse or former spouse;
(D) any guardian or custodian (including a custodian for purposes
of the Uniform Gift to Minors Act or Uniform Transfers to
Minors Act) for, or any executor, administrator, conservator
and/or other legal representative of, the Stockholder and/or
any Permitted Transferee or Permitted Transferees thereof;
(E) a trust (including a voting trust), and any savings or
retirement account, such as an individual retirement account
for purposes of federal income tax laws, whether or not
involving a trust, principally for the benefit of such
Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof, including any trust in respect of which
such Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof has any general or special power of
appointment or general or special non-testamentary power or
special testamentary power of appointment limited to any
Permitted Transferee or Permitted Transferees;
(F) any corporation, partnership or other business entity if
Substantial Beneficial Ownership thereof is held by such
Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof;
(G) any Principal Stockholder and/or any Permitted Transferee or
Permitted Transferees of a Principal Stockholder; and
(H) the Company.
A "Permitted Transferee" shall be, if the Stockholder is a
corporation, partnership or other business entity:
3
<PAGE>
(A) any employee benefit plan, or trust thereunder or therefor,
sponsored by the Stockholder;
(B) any trust (including any voting or liquidating trust)
principally for the benefit of the Stockholder and/or any
Permitted Transferee or Permitted Transferees thereof;
(C) any corporation, partnership or other business entity if
Substantial Beneficial Ownership thereof is held by such
Stockholder and/or any Permitted Transferee or Permitted
Transferees thereof;
(D) the stockholders of the corporation, partners of the
partnership or other owners of equity interests in any other
business entity, who receive such shares, by way of dividend
or distribution (upon dissolution, liquidation or otherwise),
provided that such transfer will not result in Beneficial
Ownership of any of such shares by any person who did not have
the power to control such corporation, partnership or business
entity at the time such corporation, partnership or business
entity first acquired Beneficial Ownership of such shares of
Class B Common (other than by any person who qualifies as a
Permitted Transferee pursuant to any other provision of this
paragraph);
(E) the Company; and
(F) any Principal Stockholder and/or any Permitted Transferee or
Permitted Transferees of a Principal Stockholder.
"PERSON" means any individual, corporation, partnership, firm,
joint venture, association, limited liability company, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or other
legal entity.
"PRINCIPAL STOCKHOLDER" is defined in the preface.
"SALE NOTICE" is defined in Section 7.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING PRINCIPAL STOCKHOLDER" is defined in Section 7.
"STOCKHOLDER" is defined in the preface.
"STOCKHOLDER SHARES" means (i) all shares of Common Stock
acquired by the Stockholders, including all shares of Common Stock acquired
pursuant to the exercise of Options, and (ii) all shares of Common Stock or
other securities issued or issuable directly or indirectly with respect to the
securities referred to in clause (i) by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. Stockholder Shares shall cease to be such
when they have been sold (x) pursuant to
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a registered public offering under the Securities Act or (y) to the public
pursuant to Rule 144 under the Securities Act, or any successor provision.
"SUBSTANTIAL BENEFICIAL OWNERSHIP" in respect of any
corporation, partnership or other business entity shall mean possession of the
power and authority, either singly or jointly with another, to vote or dispose
of or to direct the voting or disposition of at least 80% of each class of
equity ownership interest in such corporation, partnership or other business
entity.
"TRANSFER" means, with respect to any Stockholder Shares, the
gift, sale, assignment, transfer, pledge, hypothecation or other disposition
(whether for or without consideration and whether voluntary, involuntary or by
operation of law) of such Stockholder Shares or any interest therein; provided,
however, that "Transfer" does not include: (i) any pledge, assignment,
hypothecation, encumbrance or similar disposition of Stockholder Shares for
security as collateral security for obligations of the Company, either
Stockholder, or affiliates of the Company under or in connection with that
certain Amended and Restated Credit Agreement among the Company, the lenders
from time to time party thereto (the "Lenders"), NationsBank, N.A., as
Administrative Agent for the Lenders, First Union National Bank, as Syndication
Agent for the Lenders, and Credit Suisse First Boston, as Documentation Agent
for the Lenders, as such Credit Agreement may be amended, modified, restated,
supplemented, renewed, extended, increased, rearranged, and/or substituted from
time to time, or (ii) any sale or foreclosure of and such pledge, assignment,
hypothecation, encumbrance or similar disposition for security.
"TRANSFER NOTICE" is defined in Section 4(c).
"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.
"VESTED OPTIONS" means Options that are exercisable by the
holder thereof on the date of determination.
SECTION 2. VOTING ARRANGEMENTS.
(a) ELECTION OF DIRECTORS. Each Stockholder agrees that such
Person will vote, or cause to be voted, all voting securities of the Company
over which such Person has the power to vote or direct the voting, and will take
all other necessary or desirable action within such Person's control, to cause
the authorized number of directors for the Board to be at least five persons and
no more than seven persons, and to elect or cause to be elected to the Board and
cause to be continued in such office, Hughes, Liggins and the individual or
individuals designated by mutual agreement of the Principal Stockholders to fill
the remainder of Board seats to be filled by Class B Directors, including the
seat that would otherwise be filled by a Principal Stockholder if such Principal
Stockholder is unwilling or unable to serve on the Board, or has been removed
from the Board as the result of such Principal Stockholder's being
Incapacitated; provided, however, that if either Principal Stockholder is
Incapacitated, the other Principal Stockholder shall have the sole power to
exercise the designation rights granted to the Principal Stockholders pursuant
to this paragraph.
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(b) REMOVAL OF DIRECTORS. If at any time the Principal
Stockholders shall notify the other Stockholders of their mutual desire to
remove, with or without cause, any Class B Director from the Board, all such
Persons so notified will vote, or cause to be voted, all voting securities of
the Company over which they have the power to vote or direct the voting, and
shall take all such other actions promptly as shall be necessary or desirable to
cause the removal of such Class B Director; provided, however, that if either
Principal Stockholder is Incapacitated, the other Principal Stockholder shall
have the sole power to exercise the removal rights granted to the Principal
Stockholders pursuant to this paragraph, including, without limitation,
requiring the removal of the Incapacitated Principal Stockholder.
(c) VACANCIES. If at any time any Class B Director ceases to
serve on the Board (whether due to resignation, removal or otherwise), then the
Principal Stockholders shall be entitled to designate a successor director to
fill the vacancy created thereby on the terms and subject to the conditions of
Section 2(a) above. Each Stockholder agrees that he, she or it will vote, or
cause to be voted, all voting securities of the Company over which such Person
has the power to vote or direct the voting, and shall take all such other
actions as shall be necessary or desirable to cause the successor designated by
the Principal Stockholders to be elected to fill such vacancy.
(d) RIGHTS UNIMPAIRED. Nothing in this Agreement shall be
construed to impair any rights that the stockholders of the Company may have to
remove any director. No removal for cause of an individual designated pursuant
to this Section 2 shall affect the right of the Principal Stockholders to
designate a different individual pursuant to Section 2 to fill the directorship
from which such individual was removed.
(e) APPOINTMENT OF PROXY. IN ORDER TO SECURE THE OBLIGATIONS
OF EACH AND EVERY STOCKHOLDER TO VOTE ALL COMMON SHARES HELD BY SUCH STOCKHOLDER
IN ACCORDANCE WITH ALL OF THE PROVISIONS OF THIS AGREEMENT, EACH STOCKHOLDER
HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS EACH OF CATHERINE L. HUGHES AND
ALFRED C. LIGGINS, III AS SUCH STOCKHOLDER'S TRUE AND LAWFUL ATTORNEY, AGENT AND
PROXY, WITH FULL POWER OF SUBSTITUTION, TO ATTEND MEETINGS OF STOCKHOLDERS OF
THE COMPANY HELD FROM TIME TO TIME, AND TO VOTE ON SUCH STOCKHOLDER'S BEHALF AND
IN SUCH STOCKHOLDER'S NAME, PLACE, AND STEAD, OR TO EXECUTE WRITTEN CONSENTS IN
LIEU OF SUCH MEETINGS, THE NUMBER OF VOTES THAT SUCH STOCKHOLDER WOULD BE
ENTITLED TO CAST IF ACTUALLY PRESENT OR WITH RESPECT TO WHICH SUCH STOCKHOLDER
WOULD BE ENTITLED TO EXECUTE A WRITTEN CONSENT, IN CONNECTION WITH ANY ELECTION
OF DIRECTORS (IN ACCORDANCE WITH THIS SECTION 2) OR ANY COMPANY SALE (IN
ACCORDANCE WITH SECTION 6). THE POWERS GRANTED HEREIN WILL BE DEEMED TO BE
COUPLED WITH AN INTEREST, WILL BE IRREVOCABLE AND WILL SURVIVE THE DEATH,
INCOMPETENCY, DISABILITY OR DISSOLUTION OF ANY STOCKHOLDER.
(f) OTHER VOTING RIGHTS. In the event that a Principal
Stockholder is Incapacitated, the other Principal Stockholder shall have the
right, in addition to the other rights granted pursuant to this Section 2, to
vote, or cause to be voted, all voting securities of the Company
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over which such Incapacitated Principal Stockholder would otherwise have the
power to vote or direct the voting, as to all matters presented for a vote of
the Company's stockholders.
(g) REGULATORY SAVINGS PROVISION. If at any time the
possession by a Principal Stockholder of the voting power represented by the
voting securities held by such Principal Stockholder, or over which such
Principal Stockholder has the power to vote or direct the voting, differs from
the voting power required or permitted to be held by such Principal Stockholder,
or requires a consent or waiver that at such time has not been obtained, under
any Law applicable to such Principal Stockholder or the Company, then (i) if
such voting power exceeds the amount permitted to be held by such Principal
Stockholder, or with respect to which such a consent or waiver has been
obtained, the other Principal Stockholder shall have the sole power to vote, or
cause to be voted, the number of voting securities of the Company representing
such excess voting power and over which the first Principal Stockholder would
otherwise have the power to vote or direct the voting, as to all matters
presented for a vote of the Company's stockholders, and (ii) if such voting
power is less than the amount required to be held by such Principal Stockholder,
such Principal Stockholder shall have the sole power to vote, or cause to be
voted, as to all matters presented for a vote of the Company's stockholders,
that number, and only that number of voting securities of the Company
representing sufficient voting power to eliminate such shortfall and over which
the other Principal Stockholder would otherwise have the power to vote or direct
the voting. In all cases, the provisions of this Section 4(g) shall be applied
only to the extent and for the period necessary to bring the Principal
Stockholders and the Company into compliance with applicable Law, and shall not
operate to cause either Principal Stockholder not to be in compliance with
applicable Law. In the exercise of voting rights provided by this Section 4(g),
each Principal Stockholder shall remain subject to the other provisions of this
Agreement.
SECTION 3 DISPOSITION OF INCAPACITATED PRINCIPAL STOCKHOLDER'S
SHARES.
In the event that a Principal Stockholder is Incapacitated,
the other Principal Stockholder shall have the right to direct the disposition
of all Stockholder Shares held by the Incapacitated Principal Stockholder,
including, without limitation, the right to purchase such Stockholder Shares;
provided, however, that any Transfer of any such Stockholder Shares shall be for
a consideration equal to the Fair Market Value of such Stockholder Shares.
SECTION 4 RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. No Stockholder may Transfer any
Stockholder Shares, except (i) in a Permitted Transfer or (ii) to any other
Person, subject to the provisions of Section 4(c), if applicable.
(b) CERTAIN PERMITTED TRANSFERS. Section 4(a) shall not apply
to Transfers ("PERMITTED TRANSFERS") of Stockholder Shares (i) to a Permitted
Transferee of a Principal Stockholder; provided that, in connection with any
such Transfer, each such Permitted Transferee not already a party to this
Agreement executes a Joinder Agreement substantially in the form attached hereto
as Exhibit A and thereby becomes a party to this Agreement, or (ii) pursuant to
Sections 3, 6, 7 or 8. Notwithstanding the provisions of clause (i) of the first
sentence of this Section 4(b), neither of the Principal Stockholders shall sell,
assign or otherwise transfer any interest in any
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shares of Class B Common Stock to the spouse or former spouse of such Principal
Stockholder, or to any parent or grandparent or any lineal descendant (including
any adopted child) of any parent or grandparent of such Principal Stockholder's
spouse or former spouse (unless such lineal descendant is also a lineal
descendant (including any adopted child) of such Principal Stockholder),
including by gift, will, intestate succession or other operation of law, unless,
as a condition of such transfer (a) such Principal Stockholder retains all
voting power with respect to such Class B Common Stock so long as such Principal
Stockholder is living, and (b) the estate of such Principal Stockholder, in the
case of the death of the Principal Stockholder, or the transferee of such
interest agrees (I) not to exercise any voting power with respect to such Class
B Common Stock and (II) to cause such Class B Common Stock to be converted into
shares of single vote or non-voting Common Stock of the Company upon the death
of such Principal Stockholder.
(c) RIGHT OF FIRST REFUSAL. Notwithstanding the provisions of
Section 4(a), a Stockholder may Transfer shares of Class C Common Stock so long
as at least ninety (90) days prior to making any such Transfer, such Stockholder
delivers a written notice (the "TRANSFER NOTICE") to each of the Principal
Stockholders. The Transfer Notice will disclose in reasonable detail the
identity of the prospective transferee(s) and the terms and conditions of the
proposed Transfer. Such Stockholder shall not consummate any such Transfer until
thirty (30) days after the Transfer Notice has been delivered to the Principal
Stockholders (the "AUTHORIZATION DATE"). The Principal Stockholders may elect to
purchase any or all of the shares of Class C Common Stock to be transferred upon
the same terms and conditions as those set forth in the Transfer Notice, by
delivering a written notice of such election to such Stockholder within thirty
(30) days after the receipt of the Transfer Notice by the Principal
Stockholders. If the aggregate number of shares of Class C Common Stock which
the Principal Stockholders have elected to purchase is greater than the number
of shares of Class C Common Stock specified in the Transfer Notice, then each
Principal Stockholder will be entitled to purchase the number of shares of Class
C Common Stock equal to the product of (i) the quotient determined by dividing
the number of shares of Class C Common Stock elected to be purchased by such
Principal Stockholder by the aggregate number of shares of Class C Common Stock
elected to be purchased by both Principal Stockholders, multiplied by (ii) the
number of shares of Class C Common Stock specified in the Transfer Notice. If
the Principal Stockholders have not elected to purchase all of the shares of
Class C Common Stock specified in the Transfer Notice, such Stockholder may
Transfer the remaining shares of Class C Common Stock to the prospective
transferee(s) as specified in the Transfer Notice, at a price and on terms no
more favorable to the transferee(s) thereof than specified in the Transfer
Notice, during the 90-day period immediately following the Authorization Date.
Any shares of Class C Common Stock not so transferred within such 90-day period
must be reoffered to the Principal Stockholders in accordance with the
provisions of this Section 4(c).
(d) OPINION OF COUNSEL. No holder of Stockholder Shares may
Transfer any such stock (other than pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company, if
the Company so requests, an opinion of counsel reasonably acceptable in form and
substance to the Company that registration under the Securities Act is not
required in connection with such transfer.
SECTION 5 LEGENDS.
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(a) STOCKHOLDERS AGREEMENT LEGEND. The certificates
representing Stockholder Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF March 2, 1999 AMONG RADIO ONE, INC.
AND CERTAIN STOCKHOLDERS THEREOF, A COPY OF WHICH MAY BE OBTAINED
WITHOUT CHARGE BY THE HOLDER HEREOF AT THE PRINCIPAL PLACE OF BUSINESS
OF RADIO ONE, INC. DISPOSITION OF THIS CERTIFICATE OR THE SECURITIES
REPRESENTED HEREBY OR ANY RIGHTS OR INTERESTS THEREIN IN VIOLATION OF
SUCH STOCKHOLDERS AGREEMENT SHALL BE NULL AND VOID.
SECTION 6 SALE OF THE COMPANY. If the Principal Stockholders
mutually approve a Company Sale (an "APPROVED SALE"), the other holders of
Stockholder Shares (the "OTHER STOCKHOLDERS") shall consent to and raise no
objections against such Approved Sale (and shall waive any rights of appraisal
arising in connection therewith) and shall fully cooperate with and take all
necessary and desirable actions in connection with the consummation of such
Approved Sale, including without limitation (a) executing a purchase and sale
agreement and any other agreement reasonably necessary to effectuate such
Approved Sale in the form to be entered into by the Principal Stockholders, (b)
amending the Company's Certificate of Incorporation, (c) merging, combining or
consolidating the Company with any other Person, (d) reorganizing,
recapitalizing, liquidating, dissolving or winding-up the Company, (e)
exchanging or splitting stock of the Company or (f) selling, leasing or
exchanging all or substantially all of the property and assets of the Company
and its subsidiaries on a consolidated basis. If the Approved Sale is structured
as a sale of stock, the Other Stockholders shall agree to sell all of their
shares of Common Stock and rights to acquire shares of Common Stock on the terms
and conditions approved by the Board and the Principal Stockholders. The
obligations of the Other Stockholders with respect to any Approved Sale are
subject to the conditions that (a) upon the consummation of such Approved Sale,
all of the holders of Common Stock will receive the same form and amount of
consideration per share of Common Stock, or if any holders are given an option
as to the form and amount of consideration to be received, all holders will be
given the same option and (b) no stockholder shall be required to incur
indemnification obligations (whether several or joint and several) which are in
excess of the net proceeds received by such Stockholder in connection with such
Approved Sale. In the event that a Principal Stockholder is Incapacitated, any
Company Sale that is approved by the Principal Stockholder that is not
Incapacitated shall be deemed to be an Approved Sale for all purposes hereof,
and all references to the Principal Stockholders in this paragraph shall be
deemed to exclude the Incapacitated Principal Stockholder.
SECTION 7 PARTICIPATION RIGHTS. Not less than twenty (20) days
prior to any proposed Transfer of Stockholder Shares by a Principal Stockholder
(the "SELLING PRINCIPAL STOCKHOLDER"), the Selling Principal Stockholder shall
deliver to the other Principal Stockholder (so long as such other Principal
Stockholder is not Incapacitated) a written notice (the "SALE NOTICE")
specifying in reasonable detail the identity of the proposed transferee(s) and
the terms and conditions of the proposed Transfer. Provided that the other
Principal Stockholder is not Incapacitated and has not elected to exercise the
right of first refusal provided in Section 4(c) with respect to the Transfer
specified in the Sale Notice, such other Principal Stockholder may elect to
participate in the proposed
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Transfer by delivering to the Selling Principal Stockholder a written notice of
such election within the 10-day period following delivery of the Sale Notice. If
the other Principal Stockholder elects to participate in such Transfer, the
Selling Principal Stockholder and such other Principal Stockholder will be
entitled to sell in such proposed Transfer, at the same price and on the same
terms, a number of shares of each class of Common Stock specified in the Sale
Notice equal to the product of (i) the quotient determined by dividing the
number of shares of such class of Common Stock then held by the Selling
Principal Stockholder or such other Principal Stockholder, as the case may be,
by the aggregate number of shares of such class of Common Stock then held by the
Selling Principal Stockholder and such other Principal Stockholder, multiplied
by (ii) the number of shares of such class of Common Stock to be sold in such
proposed Transfer. For purposes of this Section 7, the amount of Common Stock
held by a Principal Stockholder shall be deemed to include all shares of Common
Stock acquirable pursuant to the exercise of Vested Options then held by such
Principal Stockholder. Notwithstanding the foregoing, this Section 7 shall not
apply to (i) Transfers pursuant to Rule 144 under the Securities Act (or any
successor provision), (ii) Transfers pursuant to Section 4, or (v) Transfers
pursuant to Section 6.
SECTION 8 DEADLOCKS.
(a) DEFINITION. For purposes hereof, a "DEADLOCK" shall be
deemed to have occurred if, after having tried on a good-faith basis to do so
for a period of at least ninety (90) days after delivery by one Principal
Stockholder to the other Principal Stockholder of a written notice requesting
the commencement of such good faith efforts, the Principal Stockholders are
unable to reach mutual agreement with respect to either (i) the individual or
individuals to fill one or more of the Board seats to be filled by Class B
Directors, other than Hughes or Liggins, or (ii) a Company Sale proposed by one
of the Principal Stockholders.
(b) INITIATION OF AUCTION. Upon the occurrence of a Deadlock,
either Principal Stockholder may, by written notice delivered to the other
Principal Stockholder, initiate a bidding process to determine which Principal
Stockholder shall acquire all of the other Principal Stockholder's Stockholder
Shares. Such bidding process shall begin on the date (the "INITIAL AUCTION
DATE") mutually agreed to by the Principal Stockholders, which date shall be not
later than thirty (30) days after delivery of the notice referred to in the
preceding sentence. Such bidding process shall in all events proceed in two
stages: first, the Principal Stockholders shall determine a market valuation for
the corporation, taken as a whole, through the competitive bidding procedures
described in paragraph (c) below and second, the purchase price for the winning
bidder to purchase all of the losing bidder's Stockholder Shares shall be
determined based on the formula set forth in paragraph (d) below.
(c) AUCTION PROCEDURE. On the Initial Auction Date, each
Principal Stockholder shall initiate the bidding process by delivering
simultaneously to the other Principal Stockholder a written offer (the "INITIAL
OFFER") which sets forth its valuation of the outstanding Common Stock of the
Company, taken as a whole. The higher of the valuations shall constitute the
initial bid. Such initial bid and each subsequent valuation must be met in turn,
within forty-eight (48) hours following delivery thereof, by either acceptance
or delivery of a written counteroffer. Each counteroffer after the initial bid
must be in a minimum amount equal to the lesser of (a) the amount that is five
percent (5%) higher than the preceding bid (on a percentage basis) and (b) the
amount
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that is $10,000.00 higher than the preceding bid. Any failure to respond within
forty-eight (48) hours of delivery of a bid as provided above shall be deemed to
constitute an irrevocable and unconditional acceptance of that bid. This bidding
process shall continue until one Principal Stockholder accepts the other
Principal Stockholder's latest valuation, either affirmatively or by failing to
make a counteroffer (such final valuation, the "FINAL AUCTION PRICE").
(d) DETERMINATION OF FINAL PURCHASE PRICE. The final purchase
price (the "FINAL PURCHASE PRICE") payable by the winning bidder for all of the
losing bidder's Stockholder Shares shall be the amount equal to the product of
(x) the Final Auction Price and (y) the percentage of the outstanding Common
Stock of the Company represented by the Stockholder Shares held by the losing
bidder.
(e) CONSUMMATION OF SALE AND TRANSFER. The sale and transfer
of the losing bidder's Stockholder Shares to the winning bidder shall be
consummated as soon as practicable after the determination of the Final Auction
Price, subject to receipt of necessary governmental, regulatory and antitrust
approvals. Each Principal Stockholder shall cooperate with the other to take all
actions necessary to conclude the sale and transfer contemplated hereunder.
SECTION 9. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer
or attempted Transfer of any Stockholder Shares in violation of this Agreement
shall be void, and the Company shall not be obligated to record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
SECTION 10. AMENDMENT AND WAIVER. Except as otherwise provided
herein, no amendment or waiver of any provision of this Agreement shall be
effective against the Stockholders unless such amendment or waiver is approved
in writing by the Principal Stockholders other than any Incapacitated Principal
Stockholder. The failure of any party to enforce any provision of this Agreement
shall not be construed as a waiver of such provision and shall not affect the
right of such party thereafter to enforce each provision of this Agreement in
accordance with its terms.
SECTION 11. SEVERABILITY. If any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
SECTION 12. ENTIRE AGREEMENT. Except as otherwise expressly
set forth herein, this document embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
SECTION 13. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Stockholders and their respective permitted
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successors and assigns so long as such Stockholders and their respective
permitted successors and assigns hold Stockholder Shares. The Company is and
shall be an intended third party beneficiary of this Agreement.
SECTION 14. COUNTERPARTS. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 15. REMEDIES. The Company and the Stockholders shall
be entitled to enforce their rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that the Company or any Stockholder may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
SECTION 16. NOTICES. Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or sent via
facsimile, or mailed first class mail (postage prepaid) or sent by reputable
overnight courier service (charges prepaid) to the Principal Stockholders at
their respective addresses set forth in the preface to this Agreement, and to
any subsequent holder of Stockholder Shares subject to this Agreement at such
address as indicated by the Company's records, or at such address or to the
attention of such other Person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally or sent via facsimile (against receipt
therefor), three days after deposit in the U.S. mail and one day after deposit
with a reputable overnight courier service.
SECTION 17. GOVERNING LAW. The corporate law of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and not
the law of conflicts, of Maryland.
SECTION 18. DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
SECTION 19. TERMINATION. Notwithstanding anything herein to
the contrary, this Agreement shall terminate upon a Company Sale.
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IN WITNESS WHEREOF, the parties have executed this
Stockholders Agreement as of the date first above written.
------------------------------------
Catherine L. Hughes
------------------------------------
Alfred C. Liggins, III
<PAGE>
EXHIBIT A
FORM OF JOINDER
TO
STOCKHOLDERS AGREEMENT
This Joinder (this "Agreement") is made as of the date written
below by the undersigned (the "Joining Party") in favor of and for the parties
to the Stockholders Agreement, dated as of March 2, 1999 (the "Stockholders
Agreement"). Capitalized terms used but not defined herein shall have the
meanings given such terms in the Stockholders Agreement.
The Joining Party hereby acknowledges, agrees and confirms
that, by his or her execution of this Joinder, the Joining Party will be deemed
to be a party to the Stockholders Agreement and shall have all of the
obligations of a Stockholder thereunder as if he or she had executed the
Stockholders Agreement. The Joining Party hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Stockholders Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
as of the date written below.
---------------------------------------------
Name:
Date:
Exhibit 10.1(a)
LEASE AMENDMENT
This Lease Amendment is dated January 22, 1999 by and between National Life
Insurance Company ("Landlord") and Radio One, Inc. ("Tenant").
WITNESSETH
WHEREAS, the parties hereto entered into a Standard Office Lease dated the 3rd
of February 1997 for the Premises known as Suites 100, 720 and 800 of Lanham
Centre at 5900 Princess Garden Parkway, Lanham Maryland ("Lease"); and
WHEREAS, Tenant desires to lease additional space in Lanham Centre.
NOW, THEREFORE, in consideration of the mutual convenants herein contained and
other good and valuable consideration, it is agreed between Landlord and Tenant
that the Lease is hereby modified as follows.
1. PREMISES AND TERM: The Premises shall be increased, effective February
1, 1999, to include Suite 150, containing approximately 4,371 rentable
square feet.
2. ADDITIONAL BASE RENT: The base rent defined in the Lease is increased
monthly by the following:
February 1, 1999 -- December 31, 1999 $5,114.07 per month
January 1, 2000 -- December 31, 2000 $5,318.05 per month
January 1, 2001 -- December 31, 2001 $5,532.96 per month
January 1, 2002 -- December 31, 2002 $5,751.51 per month
January 1, 2003 -- December 31, 2003 $5,980.99 per month
January 1, 2004 -- December 31, 2004 $6,221.39 per month
January 1, 2005 -- December 31, 2005 $6,472.72 per month
January 1, 2006 -- December 31, 2006 $6,731.34 per month
January 1, 2007 -- December 31, 2007 $6,997.24 per month
January 1, 2008 -- December 31, 2008 $7,277.72 per month
January 1, 2009 -- December 31, 2009 $7,569.12 per month
January 1, 2010 -- December 31, 2010 $7,871.44 per month
January 1, 2011 -- December 31, 2011 $8,188.34 per month
3. USE: Suite 150 shall be used only for General Office and/or Reception
uses and/or Broadcast Studio use. In the event Tenant uses Suite 150
for Broadcast Studio use, the electric service to such broadcast
studio(s) shall be routed through the electric submeter for the
existing Broadcast Suite and the electric cost of such Broadcast Studio
use in Suite 150 shall be included with the cost of electricity for the
Broadcast Suite and roof top antennas as provided in Paragraph 11.2 of
the Lease.
4. CONDITION AT COMMENCEMENT: Suite 150 shall be delivered to Tenant upon
lease execution in "as is" condition in accordance with Paragraph
6.3(b) of the Lease.
5. LANDLORD CONTRIBUTION TO TENANT'S CONSTRUCTION: Landlord will
contribute $52,452.00 toward Tenant's construction of improvements in
Suite 150, payable upon completion and issuance of a Certificate of
Occupancy and delivery to Landlord of an acceptable final lien waiver.
Tenant shall comply with all the provisions of Paragraph 7.3 and 7.6 in
the construction of its improvements to Suite 150.
6. REAL ESTATE TAXES: The percentage in Paragraph 1.11 of the Lease is
amended to 27.79% effective February 1, 1999.
7. LANDLORD'S NOTICE ADDRESS: Paragraph 23 is amended to replace the
notice address for the Landlord with:
National Life Insurance Company
Equity Real Estate Department
One National Life Drive
Montpelier, VT 05604
All other terms and conditions of the Lease remain in full force and effect.
IN WITNESS OF THIS LEASE AMENDMENT, Landlord and Tenant have properly executed
it as on the dates set out below.
LANDLORD: NATIONAL LIFE INSURANCE COMPANY
By: /s/ Richard D. MacKinnon
-----------------------------------
Richard D. MacKinnon
Vice President, Equity Real Estate
Date: 2/3/99
------------
TENANT: RADIO ONE, INC.
By: /s/ Alfred Liggins
-----------------------------------
Alfred Liggins
President
Date:
------------
<PAGE>
Amendment to Lease Amendment
National Life Insurance Company ("Landlord") and Radio One, Inc.
("Tenant") entered into that certain Lease Amendment dated January 22, 1999 with
respect to Tenant's lease of Suite 150 in Lanham Centre at 5900 Princess Garden
Parkway, Lanham, Maryland (the "Leased Premises"). Paragraph 5 of said Lease
Amendment provides that Landlord will contribute $52,452.00 to Tenant in
connection with certain improvements to be made to the Leased Premises; but such
contribution is to be made upon completion of such work, and upon the
satisfaction of certain other conditions.
Landlord hereby waives the conditions, and has paid Tenant $52,452.00
in complete satisfaction of its contribution obligations under paragraph 5 of
the Lease Amendment. Tenant hereby acknowledges receipt of $52,452.00 from
Landlord in complete satisfaction of Landlord's obligations under paragraph 5 of
the Lease Amendment, and further agrees that neither Landlord nor any successor
landlord (including but not limited to Cadle's Lanham Centre, LLC, the contract
purchaser of Lanham Centre) has any liability to Tenant under paragraph 5 of the
Lease Amendment.
All other terms of the Lease remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Lease
Amendment in counterparts (each of which will be considered an original) this
29th day of July, 1999.
RADIO ONE, INC. NATIONAL LIFE INSURANCE
COMPANY
/s/ Alfred C. Liggins
- ------------------------------ --------------------------------
By: Alfred C. Liggins By: Richard D. Mackinnon
-------------------------- -----------------------------
Its: President Its: Vice President, Equity
-------------------------- Real Estate
-----------------------------
ACKNOWLEDGED:
CADLE'S LANHAM CENTRE, LLC
- -----------------------------
By: Rick Parsinger
-------------------------
Its: Manager
-------------------------
Exhibit 10.7(a)
SECOND AMENDMENT TO THE
WARRANTHOLDERS' AGREEMENT
This Second Amendment to the Warrantholders' Agreement (this
"Amendment") is made as of this 3rd day of May, 1999, by and among Radio One,
Inc., a Delaware corporation (the "Company"), Catherine L. Hughes, Alfred C.
Liggins and Jerry A. Moore III (collectively, the "Management Stockholders"),
the investors listed on the signature pages hereto as Series B Preferred
Investors (the "Series B Preferred Investors"), and the investors listed on the
signature pages hereto as Series A Preferred Investors (the "Series A Preferred
Investors") (the Series B Preferred Investors and the Series A Preferred
Investors being collectively referred to herein as the "Investors" and each
individually as an "Investor," and the Investors and the Management Stockholders
being collectively referred to herein as the "Securityholders" and each
individually as a "Securityholder").
W I T N E S S E T H
WHEREAS, the Company, Radio One Licenses, Inc., the Management
Stockholders and the Investors are parties to a Warrantholders' Agreement, dated
as of June 6, 1995, as amended by the First Amendment to the Warrantholders'
Agreement dated as of May 19, 1997, and the Agreement and Plan of Warrant
Recapitalization dated as of February 25, 1999 (as so amended, the
"Warrantholders' Agreement");
WHEREAS, the Company, the Management Stockholders and the Investors
wish to further amend the Warrantholders' Agreement in order to facilitate the
public offering and sale by the Company of shares of the Company's Common Stock
contemplated by the Form S-1 Registration Statement filed on March 12, 1999, as
subsequently amended (the "Common Stock Registration Statement"), and the public
offering and sale by the Company of shares of the Company's Senior Cumulative
Exchangeable Preferred Stock contemplated by the Form S-1 Registration Statement
filed on March 19, 1999, as subsequently amended (the "Preferred Stock
Registration Statement").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree to amend the Warrantholders' Agreement as follows:
1. Amendment to Section 9.12 of the Warrantholders' Agreement.
Effective as of the Effective Time (as defined below), Section 9.12 of the
Warrantholders' Agreement shall be amended by deleting the existing Section 9.12
in its entirety, and replacing it with the following:
"Section 9.12. Term. This Agreement shall remain in effect so
long as any of the Investors hold Warrants or Registrable Securities;
provided, however, that the provisions of Articles III, IV, V, VI, VII
and VIII shall terminate upon the closing of a Qualified
<PAGE>
Public offering by the Company; and, provided, further, that the
provisions of Articles VIII hereof shall, in any event, terminate on
the tenth anniversary of the date hereof."
2. Effectiveness of Amendment. For purposes hereof, the term "Effective
Time" shall mean the first date on which both of the Common Stock Registration
Statement and the Preferred Stock Registration Statement have been declared
effective by the Securities and Exchange Commission.
3. Documents Otherwise Unchanged. Except as provided herein, the
Warrantholders' Agreement shall remain unchanged and in full force and effect.
4. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
5. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and any respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
the Warrantholders' Agreement as of the date first above written.
RADIO ONE, INC.
By:
------------------------------------------
Its:
-----------------------------------------
---------------------------------------------
Catherine L. Hughes
---------------------------------------------
Alfred C. Liggins, III
SYNCOM CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management
Partners III, L.P.
By:
------------------------------------------
Its:
-----------------------------------------
BANCBOSTON INVESTMENTS INC.
By:
------------------------------------------
Its:
-----------------------------------------
3
<PAGE>
ALLIANCE ENTERPRISE CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
OPPORTUNITY CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
MEDALLION CAPITAL, INC.
By:
------------------------------------------
Its:
-----------------------------------------
TSG VENTURES, L.P.
By: TSGVI Associates, Inc.
Its: General Partner
By:
------------------------------------------
Its:
-----------------------------------------
FULCRUM VENTURE CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
---------------------------------------------
Grant M. Wilson
4
<PAGE>
---------------------------------------------
Jerry A. Moore III
5
Exhibit 10.45(a)
------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
------------------------------------------------------------------------
by and among
SINCLAIR TELECABLE, INC.
d/b/a SINCLAIR COMMUNICATIONS
and
COMMONWEALTH BROADCASTING, LLC
and
RADIO ONE, INC.
for the sale and purchase of
Station WCDX-FM, Station WPLZ-FM, Station WGCV-AM and Station WJRV-FM
Dated as of May 6, 1999
---
<PAGE>
TABLE OF EXHIBITS
EXHIBIT 1 -- Escrow Agreement
EXHIBIT 2 -- Time Brokerage Agreement
-ii-
<PAGE>
TABLE OF SCHEDULES
SCHEDULE 2.1(c)(1) Contracts
SCHEDULE 6.1 Seller's Places of Business
SCHEDULE 6.3 Litigation
SCHEDULE 6.4 Permitted Encumbrances
SCHEDULE 6.5 Governmental Authorizations
SCHEDULE 6.6 Equipment
SCHEDULE 6.8 Intellectual Property
SCHEDULE 6.9 Insurance
SCHEDULE 6.10(b) Financial Statements
SCHEDULE 6.11 Employees
SCHEDULE 6.12 Employment and Benefits Agreements
SCHEDULE 6.13 Real Property
SCHEDULE 6.14 Environmental
SCHEDULE 6.15 Compliance With Law
SCHEDULE 6.21 Related Parties
-iii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Agreement, made and entered into as of this ______ day of May,
1999, by and among Sinclair Telecable, Inc. d/b/a Sinclair Communications, an
Indiana corporation, Commonwealth Broadcasting, LLC, a Commonwealth of Virginia
limited liability company (collectively "Seller", individually, "Sinclair" and
"Commonwealth" respectively), and Radio One, Inc., a Delaware corporation
("Buyer").
WITNESSETH THAT:
WHEREAS, Sinclair is the licensee of Stations WCDX-FM, Mechanicsville,
Virginia, 92.1 MHz, WPLZ-FM, Petersburg, Virginia, 99.3 MHz, and WGCV-AM,
Petersburg, Virginia, 1240 KHz and Commonwealth is the licensee of Station
WJRV-FM, Richmond, Virginia, 105.7 MHz (the "Stations"); and
WHEREAS, the parties desire that Buyer purchase the assets used or held
for use in the operation of the Stations and acquire the authorizations issued
by the Federal Communications Commission (the "Commission") for the operation of
the Stations; and
WHEREAS, Seller may elect to structure this Transaction as a
tax-deferred like-kind exchange pursuant to Internal Revenue Code Section 1031,
consistent with the provisions contained herein; and
WHEREAS, the authorizations issued by the Commission may not be
assigned to Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties, intending to be legally bound, agree as follows:
1.0 RULES OF CONSTRUCTION.
1.1. DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ADMINISTRATIVE VIOLATION" means those violations described in Section
8.6 hereof.
"ASSIGNMENT APPLICATION" means the applications on FCC Form 314 that
Seller and Buyer shall join in and file with the Commission requesting its
consent to the assignment of the FCC Licenses (as hereinafter defined) from
Seller to Buyer.
"BUSINESS RECORDS" means all business records of Seller (including
logs, public files materials and engineering records) relating to or used in the
operation of the Stations and not relating solely to Seller's internal corporate
affairs.
"BUYER" means Radio One, Inc., a Delaware corporation.
<PAGE>
"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 by Section 11.
"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.
"CONTRACTS" means those contracts, leases and other agreements listed
or described in Schedule 2.1(c)(1) which are in effect on the date hereof and
which Buyer has agreed to assume, but not including Sales Agreements and Trade
Agreements (as hereinafter defined).
"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.
"ESCROW AGENT" means Wilmington Trust Company.
"ESCROW AGREEMENT" means the escrow agreement described in Section 3,
the form of which is attached as Exhibit 1.
"ESCROW DEPOSIT" means the monies deposited with the Escrow Agent
described in Section 3.
"EQUIPMENT" means all tangible personal property and fixtures used or
useful in the operation of the Stations as described in Section 2.1(b).
"EXCLUDED ASSETS" means those assets excluded from the Purchased Assets
and retained by the Seller, to the extent in existence on the Closing Date, as
specifically described in Section 2.2.
"FCC LICENSES" means all licenses, pending applications, permits and
other authorizations issued by the Commission for the operation of the Stations
listed on Schedule 6.5.
-2-
<PAGE>
"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.
"FINANCIAL STATEMENTS" means Seller's audited and unaudited financial
statements as described in Section 6.10.
"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, oils, petroleum or
petroleum-derived compounds, CFCs, or PCBs.
"INTANGIBLE PROPERTY" means all of Seller's right, title and interest
in and to the goodwill and other intangible assets used or useful in or arising
from the business of the Stations as described in Section 2.1(f).
"INTELLECTUAL PROPERTY" means all Seller's right, title and interest in
and to the trademarks, tradenames, service marks, patents, franchises,
copyrights, including registrations and applications for registration of any of
them, slogans, jingles, logos, computer programs and software, trade secrets and
similar materials and rights relating to the Stations as listed on Schedule 6.8.
"KNOWLEDGE OF BUYER" means the actual knowledge, after reasonable
inquiry of Buyer's senior management, and the books and records of Buyer.
"KNOWLEDGE OF SELLER" means the actual knowledge, after reasonable
inquiry of Seller's senior management, the books and records of the Stations,
and the actual knowledge of J. David Sinclair and Benjamin Miles.
"MATERIAL CONTRACTS" means those leases, contracts and agreements
specifically designated in Schedule 2.1(c)(1) as being "Material Contracts."
"PERMITTED ENCUMBRANCES" means those permitted liens or encumbrances to
the Purchased Assets described in Section 6.4 and set forth on Schedule 6.4.
"PURCHASE PRICE" shall mean the total consideration for the Purchased
Assets as described in Section 4.1.
-3-
<PAGE>
"PURCHASED ASSETS" means those assets which are the subject matter of
this Agreement that Seller shall sell, assign, transfer, convey and deliver to
Buyer at Closing as described in Section 2.1.
"SALES AGREEMENTS" means agreements entered into by Seller for the sale
of time on the Stations for cash, as described in Section 2.1(c)(2).
"SELLER" means Sinclair Telecable, Inc. d/b/a Sinclair Communications,
and Commonwealth Broadcasting, LLC.
"SELLER DOCUMENTS" means those documents, agreements and instruments to
be executed and delivered by Seller in connection with this Agreement as
described in Section 6.1.
"SPECIFIED EVENT" means those broadcast transmission failures described
in Section 8.5(b).
"STATIONS" means WCDX-FM, Mechanicsville, Virginia, 92.1 MHz, WPLZ-FM,
Petersburg, Virginia, 99.3 MHz, WJRV-FM, Richmond, Virginia, 105.7 MHz, and
WGCV-AM, Petersburg, Virginia, 1240 KHz.
"STUDIO SITE" means the leased real estate located at 2809 Emerywood
Parkway, Suite 300, Petersburg, Virginia that is currently used as the studio
and office facilities for Stations WCDX-FM, WPLZ-FM and WJRV-FM.
"WGCV-AM STUDIO SITE" means the leased real estate located at 10537
South Crater Road, Petersburg, Virginia.
"TRADE AGREEMENTS" means agreements entered into by Seller for the sale
of time on the Stations in exchange for merchandise or services, including those
listed on Schedule 2.1(c)(1).
"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 as of Closing exceeds the value of goods
and services to be received. The Trade Balance is "positive" if the value of
time owed as of Closing is less than the value of goods and services to be
received.
"TRANSACTION" means the sale and purchase and assignments and
assumptions contemplated by this Agreement and the respective obligations of
Seller and Buyer set forth herein.
"WCDX-FM BACKUP TRANSMITTER SITE" means the real estate located at 8216
Meadowbridge Road, Mechanicsville, Virginia owned by John Sinclair, that is
currently used as Station WCDX's backup transmitter site.
-4-
<PAGE>
"WCDX-FM TRANSMITTER SITE" means the real estate located at 3425 Basie
Road, Richmond, Virginia that is currently used as Station WCDX's transmitter
site.
"WPLZ-FM TRANSMITTER SITE" means the real estate located at Hare and
Culpepper Streets, Petersburg, Virginia that is currently used as Station WPLZ's
transmitter site.
"WJRV-FM TRANSMITTER SITE" means the real estate located at 701 German
School Road, Richmond, Virginia that is currently used as Station WJRV's
transmitter site.
"WGCV-AM TRANSMITTER SITE" means the real estate located at Hare and
Culpepper Streets, Petersburg, Virginia that is currently used as Station WGCV's
transmitter site.
"WPLZ STL SITE" means the real estate located at 3249 Basie Road,
Richmond, Virginia that is currently used as Station WPLZ's Studio Transmitter
Link ("STL") site.
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 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."
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.
2.0 ASSETS TO BE CONVEYED.
2.1. PURCHASED ASSETS. On the Closing Date, Seller shall sell, assign,
transfer, convey and deliver to Buyer free of all liens, encumbrances,
mortgages, security interests of any kind or type whatsoever, all of Seller's
assets used in the conduct of the business and operations of the
-5-
<PAGE>
Stations (collectively referred to as the "Purchased Assets"), including, but
not limited to, the following:
(A) LICENSES. The FCC Licenses, and all other transferrable
licenses, permits and authorizations issued by any other Governmental Authority
that are used in or necessary for the lawful operation of the Stations as
currently operated by Seller.
(B) EQUIPMENT. All tangible personal property and fixtures used
or held for use in the operation of the Stations, including the property and
assets listed or described in Schedule 6.6, together with supplies, inventory,
spare parts and replacements thereof and improvements and additions thereto made
between the date hereof and the Closing Date (the "Equipment").
(C) CONTRACTS AND AGREEMENTS. The Contracts, Sales Agreements and
Trade Agreements, subject to the following:
(1) Buyer shall be obligated to assume only those Contracts
that are listed in Schedule 2.1(c)(1) or that have been or will have been
entered into in the ordinary course of the Station's business and in accordance
with the terms of this Agreement, between the date hereof and the Closing Date,
provided that, unless otherwise approved in writing by Buyer, the obligations of
the Stations or Buyer under such Contracts entered into in the ordinary course
of business do not exceed Five Thousand Dollars ($5,000) per annum per Contract
or Twenty-five Thousand Dollars ($25,000) per annum in the aggregate or are
terminable by the Stations on not more than 30 days' notice.
(2) Except for those Sales Agreements to be assumed by Buyer
that are listed on Schedule 2.1(c)(1), Buyer shall be obligated to assume only
those Sales Agreements with terms of no longer than ten (10) weeks, or if
containing terms of longer than 10 weeks, are terminable by the Station on not
more than 15 days' notice and are (i) in existence as of the date of this
Agreement or (ii) will have been entered into in the ordinary course of business
and in accordance with the terms of this Agreement at commercially reasonable
rates.
(3) Except with regard to that certain Trade Agreement dated
February 4, 1999, between Sinclair Telecable, Inc. and Moore Cadillac (the
"Cadillac Lease"), Buyer shall be obligated to assume only those Trade
Agreements that are listed in Schedule 2.1(c)(1) or that have been or will have
been entered into in the ordinary course of business and in accordance with the
terms of this Agreement, between the date hereof and the Closing Date, and are
(i) immediately preemptible for cash time sales; (ii) require the provision of
air time only on a "run of schedule" basis; and (iii) primarily inure or will
inure to the benefit of the Stations. Notwithstanding the foregoing and except
with regard to the Cadillac Lease, Buyer's obligation to assume Trade Agreements
(including those Trade Agreements listed on Schedule 2.1(c)(1) and those entered
into by the Station on or before May 31, 1999 in the ordinary course of
business) that have an aggregate negative Trade Balance exceeding Five Thousand
Dollars ($5,000), is conditioned upon Seller's agreement that Buyer will receive
a credit against the Purchase Price at
-6-
<PAGE>
Closing equivalent to the amount that such negative Trade Balance exceeds Five
Thousand Dollars ($5,000) as of May 31, 1999.
(4) Notwithstanding any provision of this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
Contract or other agreement, undertaking or obligation if (i) an attempted
assignment, without the consent required for such assignment, may constitute a
breach thereof or may in any way have a material adverse effect on Seller's
rights thereunder prior to Closing or Buyer's rights thereunder after Closing
and (ii) such consent is not obtained by Seller prior to Closing, provided,
however, that Seller will use its best efforts at its own expense to obtain all
such consents prior to Closing.
(D) PROGRAMMING MATERIALS. All programs, programming material,
and music libraries in whatever form or nature owned by Seller and used or
intended for use in the operation of the Stations.
(E) INTELLECTUAL PROPERTY. All Seller's right, title and interest
in and to the Intellectual Property used in the operation of the Stations.
(F) INTANGIBLE PROPERTY. All of Seller's right, title and
interest in and to the goodwill and other intangible assets used or useful in or
arising from the business of the Stations, including all customer lists, and
sales plans.
(G) BUSINESS RECORDS. All business records of Seller (including
logs, public file materials and engineering records) relating to or used in the
operation of the Stations and not relating solely to Seller's internal corporate
affairs.
(H) STATION RECORDS. All of the Stations' proprietary
information, technical information and data, machinery and equipment warranties
(to the extent such warranties are assignable), maps, plans, diagrams,
blueprints, schematics, files, records, studies, data, lists, general accounting
records, books of account, in whatever form, used or held for use for the
business or operation of the Stations, including filings with the FCC which
relate to the Stations.
(I) REAL PROPERTY. The Real Property described in Schedule 6.13
which is used as both the WPLZ-FM Transmitter Site and WGCV-AM Transmitter Site.
(J) REAL PROPERTY LEASES. Sinclair currently holds a leasehold
interest in the Real Property described in Schedule 6.13 which is used as the
WCDX-FM Transmitter Site and the WPLZ(FM) Studio Transmitter Link site (WPJB292
call sign). Commonwealth currently holds a leasehold interest in the Real
Property described in Schedule 6.13 which is used as the WJRV-FM Transmitter
Site. At Closing, Seller shall transfer and assign any and all of its rights,
title and interest in these leasehold interests to Buyer. In addition, John
Sinclair hold title to the Real Property described in Schedule 6.13 which is
used as the WCDX-FM Backup Transmitter Site. At Closing, Seller shall at Buyer's
option cause John Sinclair (or his successors and assigns) to enter into a lease
with Buyer for an initial term of ten (10) years, with, at Buyer's
-7-
<PAGE>
option, two (2) renewal terms of ten (10) years each, for the amount of $100
per year for continued use of the site.
(K) STUDIO SITE LEASES. Seller currently holds a leasehold
interest in the Real Property described in Schedule 6.13 which is used as the
Studio Site and the WGCV-AM Studio Site. At Closing, Seller shall transfer and
assign any and all of its rights, title and interest in the Studio Site Leases
to Buyer.
2.2. EXCLUDED ASSETS. There shall be excluded from the Purchased
Assets and retained by the Seller, to the extent in existence on the Closing
Date, the following assets (the "Excluded Assets"):
(A) RECEIVABLES. All Accounts Receivable.
(B) CASH AND INVESTMENTS. All cash and cash equivalents on hand
or in bank accounts and other cash items and investment securities of Seller on
the Closing Date.
(C) INSURANCE. All contracts of insurance (including any cash
surrender value thereof) and all insurance proceeds of settlement and insurance
claims made by Seller on or before the Closing Date, except that any insurance
proceeds Seller receives due to damaged equipment will be used to repair or
replace such equipment.
(D) EMPLOYEE BENEFIT ASSETS. All pension, profit sharing and
savings plans and trusts, and any assets thereof, except that any employee
account balances under any plan qualified under Section 401(k) of the Code shall
be promptly transferred to a plan qualified under Section 401(k) and, at Buyer's
request, made available by or on behalf of Buyer if such employee is hired by
Buyer, to the extent allowed under each such plan and applicable law.
(E) CONTRACTS. All contracts that will have terminated or expired
prior to Closing by their terms and all contracts, agreements, instruments,
undertakings and obligations not expressly assumed by Buyer hereunder.
(F) TAX ITEMS. All claims, rights and interest in and to any
refunds for federal, state or local taxes to which Seller is entitled for
periods prior to the Closing Date.
(G) CORPORATE RECORDS. Seller's corporate minute books and other
books and records relating to internal corporate minutes.
3.0 ESCROW DEPOSIT. Simultaneously with the execution and delivery of
this Agreement by both parties, Buyer has deposited with Wilmington Trust
Company ("Escrow Agent"), a cash deposit of One Million Two Hundred and Fifty
Thousand Dollars ($1,250,000) (the "Escrow Deposit"). The Escrow Deposit shall
be held in an interest-bearing account and disbursed by Escrow Agent pursuant to
the terms of an escrow agreement in the form attached hereto as Exhibit 1 (the
"Escrow Agreement"), which Escrow Agreement has been entered into by Seller,
Buyer and Escrow Agent simultaneously herewith.
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4.0 PURCHASE PRICE AND METHOD OF PAYMENT.
4.1. CONSIDERATION. The total consideration for the Purchased Assets at
Closing (the "Purchase Price") shall be Thirty Four Million Dollars
($34,000,000) payable as set forth in this Section 4.
4.2. PAYMENT AT CLOSING. At Closing, Buyer shall pay:
(a) Thirty Two Million Seven Hundred and Fifty Thousand Dollars
($32,750,000) (as adjusted pursuant to Sections 8.5 and 12.1) to Seller by check
or wire transfer of same day funds pursuant to wire transfer instructions
which shall be delivered by Seller to Buyer at least five business days prior to
Closing.
(b) One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
to Seller by causing the Escrow Agent to release the Escrow Deposit to Seller,
with all interest earned on the Escrow Deposit remitted to Buyer.
4.3. ALLOCATION. The Purchase Price shall be allocated to the Purchased
Assets in accordance with an allocation schedule prepared by Seller pursuant to
Section 1060 of the Code and mutually agreed upon by Seller and Buyer. Seller
and Buyer shall use such allocation for tax accounting (including preparation of
IRS Form 8594), and all other purposes. If Seller and Buyer have not agreed upon
the allocation prior to the Closing Date, Closing shall take place as scheduled
and any dispute shall be resolved by a qualified media appraiser mutually
acceptable to Seller and Buyer, whose decision shall be final and whose fees and
expenses shall be paid one-half by Seller and one-half by Buyer. If the
allocation must be determined by a media appraiser, Seller and Buyer agree to
cooperate in good faith so that such appraisal may be completed within sixty
(60) days after Closing.
4.4. SELLER'S LIABILITIES. Buyer does not and shall not assume or be
deemed to assume, pursuant to this Agreement or otherwise, any agreements,
liabilities, undertakings, obligations or commitments of Seller or the Stations
of any nature whatsoever except: (i) liabilities accruing after Closing under
the Contracts, Sales Agreements and Trade Agreements listed in Schedule
2.1(c)(1) or otherwise expressly assumed by Buyer pursuant to, and subject to,
Section 2.1(c), provided, that, Buyer shall not assume liability for any
breaches, violations or defaults under the Contracts, Sales Agreements and Trade
Agreements that occurred prior to Closing; and (ii) prorated items that are to
be paid by Buyer after Closing pursuant to Section 12.1.
5.0 HART-SCOTT-RODINO. As promptly as practicable and no later than ten
(10) days following the execution of this Agreement, Seller and Buyer shall
complete any filing that may be required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. Seller and Buyer shall
diligently take all necessary and proper steps and provide any additional
information reasonably requested in order to comply with the requirements of
such Act. Buyer shall pay the filing fee.
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6.0 SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller hereby makes
to and for the benefit of Buyer, the following representations, warranties and
covenants:
6.1. EXISTENCE, POWER AND IDENTITY. Sinclair is a corporation duly
organized and validly existing under the laws of the State of Indiana and
Commonwealth is a limited liability company duly organized and validly existing
under the laws of the Commonwealth of Virginia. Both Sinclair and Commonwealth
are licensed to do business in the Commonwealth of Virginia with full corporate
power and authority (a) to own, lease and use the Purchased Assets as currently
owned, leased and used, (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 Seller in connection with this Agreement (collectively, the "Seller
Documents"), and to perform and comply with all of the terms, obligations and
covenants to be performed and complied with by Seller hereunder and thereunder.
The addresses of Seller's chief executive office and all of Seller's additional
places of business, and all places where any of the tangible personal property
included in the Purchased Assets is now located, or has been located during the
past 180 days, are correctly listed in Schedule 6.1. Except as set forth in
Schedule 6.1, during the past five years, Seller has not been known by or used,
nor, to the best of Seller's knowledge, 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 Purchased Assets.
6.2. BINDING EFFECT. The execution, delivery and performance by Seller
of this Agreement has been and the Seller Documents will be duly authorized by
all necessary corporate or limited liability company action, and copies of those
authorizing resolutions, certified by an officer, member, partner or manager as
appropriate, shall be delivered to Buyer at Closing. No other action by Sinclair
or Commonwealth is required for Seller's execution, delivery and performance of
this Agreement. This Agreement has been duly and validly executed and delivered
by Seller to Buyer and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller 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.
6.3. NO VIOLATION. Except as set forth on Schedule 6.3, none of (i) the
execution, delivery and performance by Seller of this Agreement or any of the
Seller Documents, (ii) the consummation of the Transaction, or (iii) Seller'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 (x) Seller's articles of
incorporation, bylaws, operating agreement or limited liability company
agreement, (y) any judgment, decree, order, consent, agreement, lease or other
instrument (including any Contract, Sales Agreement or Trade Agreement) to which
Seller is a party or by which Seller or any of its assets (including the
Purchased Assets) or the Stations is or may be legally bound or affected, or (z)
any law, rule,
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regulation or ordinance of any Governmental Authority applicable to Seller or
any of its assets (including the Purchased Assets) or the operation of the
Stations.
6.4. CONVEYANCE OF ASSETS. At Closing, Seller shall convey to Buyer
good and marketable title to all the Purchased Assets, free and clear of all
liens, pledges, collateral assignments, security interests, capital or financing
leases, easements, covenants, restrictions and encumbrances or other defects of
title except: (i) the inchoate lien for current taxes or other governmental
charges not yet due and payable and that will be prorated between Seller and
Buyer pursuant to Section 12.1; and (ii) the Permitted Encumbrances.
6.5. GOVERNMENTAL AUTHORIZATIONS. Except for the FCC Licenses which are
set forth in Schedule 6.5, no transferable licenses, permits, or authorizations
from any Governmental Authority are required to own, use or operate the
Purchased Assets, to operate the Stations or to conduct Seller's business as
currently operated and conducted by Seller. The FCC Licenses are all the
Commission authorizations held by Seller 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 Seller. 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
Seller, Seller's officers, employees or agents. Seller has delivered true and
complete copies of all FCC Licenses to Buyer. There is not pending or, to the
Knowledge of Seller, 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 Seller,
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 Seller or otherwise with respect to
the Stations. The Stations are operating in 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. Seller has no knowledge of any
facts relating to it that, under the Communications Act or the current rules,
regulations, policies and practices of the Commission may cause the Commission
to deny Commission renewal of the FCC Licenses or deny Commission consent to the
Transaction.
6.6. EQUIPMENT. Seller has good and marketable title, both legal and
equitable, to the Equipment. The Equipment, together with any improvements and
additions thereto and replacements thereof less any retirements or other
dispositions as permitted by this Agreement between the date hereof and the
Closing Date, will, at Closing, be all the tangible personal property used or
useful in the lawful operation of the Stations as currently operated by Seller.
Except as specifically indicated to the contrary in Schedule 6.6, all Equipment
is serviceable, in good
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operating condition (reasonable wear and tear excepted), and is not in imminent
need of repair or replacement. All items of transmitting and studio equipment
included in the Equipment (i) have been maintained in a manner consistent with
generally accepted standards of good engineering practice and (ii) will permit
the Stations to operate in accordance with the terms of the FCC Licenses.
6.7. CONTRACTS. Seller has made available to Buyer or its
representatives complete and correct copies of all Contracts and Trade
Agreements listed on Schedule 2.1(c)(1) hereto. The list of Trade Agreements on
Schedule 2.1(c)(1) is accurate and complete. Except for Sales Agreements that
comply with the terms of this Agreement, Schedule 2.1(c)(1) includes all the
contracts, leases, and agreements to which Seller is a party and which Buyer has
agreed to assume, other than those contracts that will be performed in full
prior to the Closing. To the Knowledge of Seller, each Contract is in full force
and effect and is unimpaired by any acts or omissions of Seller, Seller's
employees or agents, or Seller's officers. Except as set forth on Schedule
2.1(c)(1), there has not occurred as to any Contract any event of default by
Seller or any event that, with notice, the lapse of time or otherwise, could
become an event of default by Seller. There has not occurred as to any Contract
any default by any other party thereto or any event that, with notice, the lapse
of time or otherwise, or at the election of any person other than Seller, could
become an event of default by such party. Those Contracts whose stated duration
extends beyond the Closing Date will, at Closing, be in full force and effect,
unimpaired by any acts or omissions of Seller, Seller's employees or agents, or
Seller's officers. If any Contract requires the consent of any third party in
order for Seller to assign that Contract to Buyer, Seller shall use its best
efforts to obtain at its own expense such consent prior to Closing.
6.8. PROMOTIONAL RIGHTS. The Intellectual Property set forth on
Schedule 6.8 includes all call signs and trademarks that Seller is transferring
to Buyer, used to promote or identify the Stations. Except as set forth on
Schedule 6.8, the Intellectual Property is in good standing and uncontested by
any third party. Except as set forth on Schedule 6.8, Seller has no Knowledge of
any 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 Richmond or Petersburg metropolitan areas that may be
confusingly similar to those currently used by the Stations. Except as set forth
on Schedule 6.8, to the Knowledge of Seller, the operations of the Stations do
not infringe, and no one has asserted to Seller that such operations infringe,
any copyright, trademark, tradename, service mark or other similar right of any
other party.
6.9. INSURANCE. Schedule 6.9 lists all insurance policies held by
Seller with respect to the Purchased Assets and 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 Seller is in compliance with the
terms thereof. Seller 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. Seller will maintain the insurance policies listed on Schedule 6.9
in full force and effect through the Closing Date.
6.10. FINANCIAL STATEMENTS.
(a) Seller has furnished Buyer with the audited Financial
Statements for fiscal years 1996, and 1997 as well as unaudited Financial
Statements for December 31, 1998. The Financial Statements: (i) have been
prepared in accordance with generally accepted accounting
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principles applied on a consistent basis throughout the periods involved and as
compared with prior periods; and (ii) fairly present Seller's financial
position, income, expenses, assets, liabilities, shareholder's equity and the
results of operations of the Stations as of the dates and for the periods
indicated. Since December 31, 1998, there has been no material adverse change in
the business, assets, properties or condition (financial or otherwise) of the
business. No event has occurred that would make such Financial Statements
misleading in any respect.
(b) Except as reflected in the most recently available balance sheets,
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) since the date of
the most recently available balance sheets, there exist no liabilities or
obligations of Seller, contingent or absolute, matured or unmatured, known or
unknown. Except as set forth on Schedule 6.10(b) since the date of the most
recently available balance sheets, (i) Seller 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 Seller, 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
material adverse change in the business or in the condition (financial or
otherwise) of the Stations, (iv) Seller has operated the business in the
ordinary course and (v) Seller has not increased the salaries or any other
compensation of any of its employees or agreed to the payment of any bonuses.
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,
shareholder's or member's 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 Seller.
6.11. EMPLOYEES. Except as otherwise listed on Schedule 6.11, (i) no
employee of the Stations 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
Seller, there has been no concerted effort to unionize any of the Stations'
employees and (ii) Seller has no other written or oral employment agreement or
arrangement with any Station employee, and no written or oral agreement
concerning bonus, termination, hospitalization or vacation. Seller has delivered
to Buyer a list of all persons currently employed at the Stations together with
an accurate description of the terms and conditions of their respective
employment as of the date of this Agreement. Seller will promptly advise Buyer
of any terminations or resignations of management employees or on-air staff that
occur prior to the earlier of commencement of the Time Brokerage Agreement
between the parties or the Closing Date.
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6.12. EMPLOYEE BENEFIT PLANS.
(1) Except as described in Schedule 6.12, neither Seller 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,
bonus, stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement ("Other Plan"). Seller 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 "employee benefit plan" (as defined in Section 3(3) of ERISA), or
Other Plan that is not listed in Schedule 6.12. For purposes of this Section
6.12, the term "Affiliate" shall include all persons under common control with
Seller 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").
(2) Each plan or arrangement listed in Schedule 6.12 (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 6.12 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 in
the revocation of such determination. Seller and the Affiliates have made all
required contributions or payments to or under each plan or arrangement listed
in Schedule 6.12 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.
(3) To the Knowledge of Seller, the consummation of this
Agreement (and the employment by Buyer of former employees of Seller 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. In addition,
Seller and each Affiliate make the following representations (i) as to all of
their Pension Plans: (A) neither Seller nor any Affiliate has become liable to
the PBGC under ERISA under which a lien could attach to the assets of Seller or
an Affiliate; (B) Seller and each Affiliate has not ceased operations at a
facility so as to become subject to the provisions of Section 4062(e) of ERISA;
and (C) Seller and each Affiliate has not made 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 (ii) all group
health plans maintained by the Seller and each Affiliate have been operated in
material compliance with Section 4980B(f) of the Code.
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(4) The parties agree that Buyer does not and will not assume
the sponsorship of, or the responsibility for contributions to, or any liability
in connection with, any Pension Plan, any Welfare Plan, or Other Plan maintained
by Seller or an Affiliate for its employees, former employees, retirees, their
beneficiaries or any other person.
6.13. REAL PROPERTY. Sinclair holds title to the real property
described in Schedule 6.13 which is used as the WPLZ-FM Transmitter Site and the
WGCV-AM Transmitter Site. In addition, John Sinclair holds title to the real
property described in Schedule 6.13 which is used as the WCDX-FM Backup
Transmitter Site. Sinclair also holds leasehold interests in the real property
described in Schedule 6.13 which is used as the WCDX-FM Transmitter Site, the
WPLZ-FM STL Site and the real property described in Schedule 6.13 which is used
as the WCDX-FM, WPLZ-FM and WJRV-FM Studio Site. Commonwealth holds a leasehold
interest in the property described in Schedule 6.13 which is used as the WJRV
Transmitter Site. Sinclair holds a leasehold interest in the real property
described in Schedule 6.13 which is used as the WGCV-AM Studio Site. All such
interests in real property are hereinafter referred to as "Real Property".
Except as listed on Schedule 6.13, 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 the
building, health, fire and environmental protection codes of all applicable
governmental jurisdictions, 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. No portion of the Real Property
described in Schedule 6.13 is the subject of any condemnation or eminent domain
proceedings currently instituted or pending, and to the Knowledge of Seller, no
such proceedings are threatened. There are no condemnation, zoning or other land
use regulations proceedings instituted or, to the Knowledge of Seller, planned
to be instituted, which would materially affect the use and operations of the
Real Property for any lawful purpose, and Seller has not received notice of any
special assessment proceedings materially affecting the Real Property. 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 Seller in the
operation of the Stations.
6.14. ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 6.14,
(i) no Hazardous Substances have been treated, stored, used, released or
disposed of on the Studio Site, or the WGCV-AM Studio Site, (collectively the
"Studio Sites"), the WPLZ-FM Transmitter Site, the WGCV-AM Transmitter Site, the
WCDX-FM Transmitter Site, the WJRV-FM Transmitter Site, the WCDX-FM Backup
Transmitter Site or the WPLZ-FM STL Site (collectively the "Transmitter Sites")
by Seller or to the Knowledge of Seller, by any other party; (ii) to the
Knowledge of Seller, Seller is not liable for cleanup or response costs with
respect to any present or past emission, discharge, or release of any Hazardous
Substances; (iii) to the Knowledge of Seller, 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 Stations or is located on the
Studio Sites or the Transmitter Sites; (iv) there are no pending actions, suits,
claims, legal proceedings or any other proceedings based on environmental
conditions or noncompliance at the
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Studio Sites or Transmitter Sites, or any part thereof, arising from Seller's
activities involving Hazardous Substances; (v) there are no conditions,
facilities, procedures or any other facts or circumstances caused by the Seller,
or to the Knowledge of the Seller, caused by any other party at the Studio Sites
or Transmitter Sites which constitute noncompliance with Environmental Law or
regulations; and (vi) there are no structures, improvements, equipment,
activities, fixtures or facilities at the Studio Sites or Transmitter Sites that
have been placed by the Seller, or to the Knowledge of the Seller, by any other
party which are constructed with, use or otherwise contain Hazardous Substances,
including, but without limitation, asbestos or polychlorinated biphenyls.
6.15. COMPLIANCE WITH LAW. There is no outstanding complaint, citation,
or notice issued by any Governmental Authority asserting that Seller 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, health and
sanitation, environmental protection, occupational safety and the use of
electric power) affecting the Purchased Assets or the business or operations of
the Stations, and Seller 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) Seller has, in the conduct of the Stations' 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 Seller is not
liable for any arrears of wages or any tax penalties due to any failure to
comply with any of the foregoing.
(c) Except as set forth in Schedule 6.15, all ownership reports,
employment reports, tax returns and other material documents required to be
filed by Seller 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
records files have been placed in such files; all proofs of performance and
measurements that are required to be made by Seller 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) Seller will, prior to Closing, use its best efforts to make
the Stations' local public file complete in all material respects.
(e) The location of the Stations' main studio(s) complies with
the FCC's rules.
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(f) Seller has paid to the Commission the regulatory fees due for
the Stations for the years 1994-98.
6.16. LITIGATION. Except for proceedings affecting radio broadcasters
generally and except as set forth on Schedule 6.3, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Seller, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the business or operations of the Stations or to the Purchased Assets. Except as
set forth on Schedule 6.3, there is no other litigation, action, suit,
complaint, claim, investigation or proceeding pending, or to the Knowledge of
Seller, threatened that may give rise to any material claim against any of the
Purchased Assets or adversely affect Seller's ability to consummate the
Transaction as provided herein. To the Knowledge of Seller, there are no facts
that could reasonably result in any such proceedings.
6.17. INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character, including bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Stations' Assets or the Purchased Assets are pending or, to the Knowledge of
Seller, threatened. Seller has not made an assignment for the benefit of
creditors.
6.18. SALES AGREEMENTS. The Sales Agreements in existence on the date
hereof have been entered into in the ordinary course of the Stations' business,
at rates consistent with Seller's usual past practices and each Sales Agreement
is for a term no longer than 10 weeks or, if longer, is terminable by the
Stations upon not more than 15 days notice.
6.19. LIABILITIES. There are no known liabilities or obligations of
Seller relating to the Stations, whether related to tax or non-tax matters, due
or not yet due, except as and to the extent set forth on the most recent
Financial Statements described in Section 6.10.
6.20. SUFFICIENCY OF ASSETS. The Purchased Assets in conjunction with
the leases referred to in Section 2.1(j) are and, on the Closing Date will be,
sufficient to conduct the operation and business of the Stations in the manner
in which it is currently being conducted.
6.21. RELATED PARTIES. Except as disclosed in Schedule 6.21 neither
Seller nor any member, manager, shareholder, officer or director of Seller has
any interest whatsoever in any corporation, firm, partnership or other business
enterprise which has had any business transactions with Seller relating to the
Purchased Assets or the Stations, and no member, manager, shareholder, officer
or director of Seller has entered into any transactions with Seller relating to
the Purchased Assets or the Stations.
6.22. TAXES. The Seller has timely filed with all appropriate
Governmental Authority all federal, state, commonwealth, 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
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commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof. Seller
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 Seller.
The Seller has timely withheld and paid over all taxes with respect to
employees, independent contractors and shareholders. Such returns and forms are
true, correct and complete in all material respects, and Seller has no liability
for any Taxes in excess of the Taxes shown on such returns. Seller is not a
party to any pending action or proceeding and, to the Knowledge of Seller, there
is no action or proceeding threatened by any Governmental Authority against
Seller for assessment or collection of any Taxes, and no unresolved claim for
assessment or collection of any Taxes has been asserted against Seller.
6.23. NO MISLEADING STATEMENTS. This Agreement, and any disclosures
made in this Agreement and any Schedule attached hereto will not 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. Seller represents and
warrants that it has disclosed, and agrees it will continue to disclose to
Buyer, any fact that Seller is obligated to disclose to assure the continuing
accuracy of the representations and warranties contained in this Section 6.
7.0 BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby makes
to and for the benefit of Seller, 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,
and as of the Closing Date will be authorized to do business in the Commonwealth
of Virginia.
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 Seller at Closing. This Agreement has
been, and each of the Buyer Documents will be, duly and validly executed and
delivered by Buyer to Seller 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. The execution, delivery and performance by Buyer of
this Agreement or any of the Buyer's documents will not, 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 (x) Buyer's articles of
incorporation or by-laws, (y) any judgment, decree, order,
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consent agreement, lease or other instrument to which Buyer is a party or by
which Buyer is legally bound, or (z) any law, rule, regulation or ordinance of
any Governmental Authority applicable to Buyer.
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. To the Knowledge of Buyer, there are no facts that could
reasonably result in any such proceedings.
7.5. LICENSEE QUALIFICATIONS. To the Knowledge of Buyer, there is no
existing fact that would, under the current published and written policies,
rules and regulations of the Commission or any other federal agency, disqualify
Buyer from being the assignee of the FCC Licenses or the owner and operator of
the Stations. Should Buyer become aware of any such fact, it will so inform
Seller, and Buyer will use commercially reasonable efforts to remove any such
disqualification. If such commercially reasonable efforts by Buyer are
unsuccessful, Seller shall have the right in accordance with the terms hereof to
terminate this Agreement.
7.6. FINANCIAL QUALIFICATIONS. Buyer will have available on the
Closing Date, sufficient funds to enable it to consummate the Transaction
contemplated hereby.
8.0 PRE-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
respect to the period prior to Closing:
8.1. APPLICATION FOR COMMISSION CONSENT. Seller and Buyer shall join
in and file the Assignment Application no later than June 1, 1999. Once the
Assignment Application is filed, Seller and Buyer shall diligently take all
reasonable steps necessary or desirable and proper expeditiously to prosecute
the Assignment Application and to obtain the Commission's determination that
grant of the Assignment Application will serve the public interest, convenience
and necessity. Each party shall promptly provide the other with a copy of any
pleading, order or other document served on the other relating to the Assignment
Application. In the event that Closing occurs prior to a Final Order, then each
party's obligations hereunder shall survive the Closing.
8.2. ACCESS. Between the date hereof and the Closing Date, Seller
shall, in consultation with Buyer and upon reasonable notice to Seller, give
Buyer and representatives of Buyer reasonable access during business hours to
the Purchased Assets, the Stations, the employees of Seller and the Stations and
the books and records of Seller relating to the business and operations 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, such environmental assessments and surveys of the Studio Site, the
WGCV-AM Studio Site and the Transmitter Sites, and such reviews of the Station's
financial records as Buyer may desire, so long as the same do not unreasonably
interfere with Seller's operation of the Stations. No inspection or
investigation made by or on behalf of Buyer, or Buyer's failure to make any
inspection or investigation, shall affect Seller's representations, warranties
and covenants
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hereunder or be deemed to constitute a waiver of any of those representations,
warranties and covenants.
8.3. MATERIAL ADVERSE CHANGES; FINANCIAL STATEMENTS. Through the
Closing Date:
(a) Seller shall promptly notify Buyer of any event of which
Seller obtains knowledge which has caused or is likely to cause a material
adverse change to the financial condition or operation of the Stations.
(b) Seller shall furnish to Buyer (i) monthly Financial
Statements for Seller and (ii) such other reports as Buyer may reasonably
request relating to Seller. Each of the Financial Statements delivered pursuant
to this Section 8.3(b) shall be prepared in accordance with GAAP consistently
applied during the periods covered (except as disclosed therein).
8.4. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement
and the Closing Date:
(a) Seller shall operate the Stations in a manner consistent with
Seller's and the Stations' past practice and in material compliance with all
applicable laws, regulations, rules, decrees, ordinances, orders and
requirements of the Commission and all other Governmental Authority. Seller
shall promptly notify Buyer of any actions or proceedings that from the date
hereof are commenced against Seller or the Stations or, to the Knowledge of
Seller, against any officer, director, employee, consultant, agent or other
representative of Seller with respect to the business of the Stations or the
Purchased Assets.
(b) Seller shall: (i) use the Purchased Assets only for the
operation of the Stations; (ii) maintain the Purchased Assets in substantially
their present condition (reasonable wear and tear in normal use and damage due
to unavoidable casualty excepted); (iii) replace and/or repair the Purchased
Assets as necessary in the ordinary course of business; (iv) maintain all
inventories of supplies, tubes and spare parts at levels at least equivalent to
those existing on the date of this Agreement; and (v) promptly give Buyer
written notice of any unusual or materially adverse developments with respect to
the Purchased Assets or the business or operations of the Stations.
(c) Seller shall maintain the Stations' Business Records in the
usual, regular and ordinary manner, on a basis consistent with prior periods.
(d) Seller shall not: (i) sell, lease, encumber or otherwise
dispose of any Purchased Assets or any interest therein except in the ordinary
course of business and only if any property disposed of is replaced by property
of like or better value, quality and utility prior to Closing; (ii) cancel,
terminate, modify, amend or renew any of the Contracts without Buyer's express
prior written consent; (iii) increase the compensation payable or to become
payable to any employee of the Stations; or (iv) except to the extent expressly
permitted in Section 2.1(c), enter into any Contract or other agreement,
undertaking or obligation or assume any liability that may impose any obligation
on Buyer after Closing, whether Seller is acting within or outside of
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the ordinary course of the Stations' business, without Buyer's prior written
consent. Such consent shall not be unreasonably withheld provided that such
action by Seller is taken in accordance with the ordinary course of business.
(e) Seller and the Stations will enter into Sales Agreements only
in the ordinary course of the Stations' business at commercially reasonable
rates and each such Sales Agreement shall have a term not longer than 10 weeks
or, if longer, shall be terminable by the Stations upon not more than 15 days
notice.
(f) Seller and the Stations will enter into Trade Agreements only
in the ordinary course of the Stations' business and only if such Trade
Agreements are (i) immediately preemptible for cash time sales; (ii) require the
provision of air time only on a "run of schedule" basis; and (iii) primarily
inure or will inure to the benefit of the Stations.
(g) Seller shall use its best efforts to preserve the operations,
organization and reputation of the Stations intact, by continuing to make
expenditures and engage in activities designed to promote the Stations and
encourage the purchase of advertising time on the Stations in a manner
consistent with Seller's past practices. Seller shall use its best efforts to
preserve the goodwill and business of the Stations' advertisers, suppliers and
others having business relations with the Stations, and to continue to conduct
financial operations of the Stations, including credit and collection policies,
with no less effort, as in the prior conduct of the business of the Stations.
(h) Seller shall not make or agree to any material amendment to
any FCC License relating to the Stations.
(i) Seller shall not, 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.
(j) With respect to the Purchased Assets, Seller shall not 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) Seller shall not solicit, either directly or indirectly,
initiate, encourage or accept any offer for the purchase or acquisition of the
Purchased Assets by any party other than Buyer.
(l) Seller shall not terminate without comparable replacement or
fail to renew any insurance coverage applicable to the Purchased Assets or Real
Property of Seller.
(m) Seller shall not take any action or fail to take any action
that would cause the Seller to materially breach the representations, warranties
and covenants contained in this Agreement.
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8.5. DAMAGE.
(A) RISK OF LOSS. The risk of loss or damage, confiscation or
condemnation of the Purchased Assets shall be borne by Seller at all times prior
to Closing. In the event of material loss or damage, Seller shall promptly
notify Buyer thereof and 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 One
Hundred Thousand Dollars ($100,000) or less, and Seller 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 One Hundred Thousand Dollars ($100,000), and Seller 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 Seller shall
be entitled to all proceeds under any applicable insurance policies with respect
to such claim; or
(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 Seller 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 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. Seller 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 twelve (12) consecutive
hours: (i) the transmission of the regular broadcast programming of any of the
Stations in the normal and usual manner is interrupted or discontinued; or (ii)
any of the Stations 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 of the Stations is not operated at its
licensed operating parameters for more than forty-eight (48) hours (or, in the
event of force majeure or utility failure affecting generally the market served
by the Stations, one hundred and twenty (120) 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 twelve (12) consecutive hours, then
Buyer may, at its option: (i) terminate this Agreement, or (ii) proceed in the
manner set forth in Paragraph 8.5(a)(1) or 8.5(a)(2). In the event of
termination of this Agreement by Buyer pursuant to this Section, the
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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 Seller and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, and whose fees and expenses shall be paid
one-half each by Seller and Buyer.
8.6. ADMINISTRATIVE VIOLATIONS. If Seller receives any finding,
order, complaint, citation or notice prior to Closing which states that any
aspect of any of the Stations' operations 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 Law, the employment of labor or equal employment opportunity,
Seller shall promptly notify Buyer of the Administrative Violation, 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.
8.7. [THIS SECTION INTENTIONALLY OMITTED]
8.8. CONTROL OF STATIONS. 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, Seller shall control, supervise and
direct the operation of the Stations.
8.9. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. Between
the date hereof and the Closing Date, Seller, its shareholders, members,
managers, officers, directors and employees shall cooperate and Seller shall
cause its independent accounting firm to cooperate with Buyer for the purpose of
preparing Financial Statements reviewed by Buyer's independent accountants for
purposes of including such statements in any reports filed by Buyer with any
Governmental Authority. Buyer shall be permitted to disclose the audited
Financial Statements for, 1996, 1997 and 1998 as well as unaudited Financial
Statements for any period subsequent to 1998 available prior to Closing and this
Agreement in any filings submitted by the Buyer to any Governmental Authority.
8.10. CLOSING OBLIGATIONS. Seller and Buyer shall make commercially
reasonable efforts to satisfy the conditions precedent to Closing.
8.11 ENVIRONMENTAL ASSESSMENT. From the date hereof through the date
that is within thirty (30) days prior to Closing, Buyer may commence and
complete, at its expense, a Phase I and, if necessary, a Phase II Environmental
Assessment of the owned and leased Real Property, including the WGCV-AM and
WPLZ-FM Transmitter Site, the WCDX-FM Transmitter Site, the WCDX Backup
Transmitter Site, the WJRV-FM Transmitter Site, the WPLZ-FM STL Site, the
WGCV-AM Studio Site and the Studio Site. Seller agrees to cooperate with Buyer
and such firm
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in performing such Environmental Assessment. Buyer shall provide a copy of such
Environmental Assessment to Seller but such delivery shall not relieve Seller of
any obligation with respect to any representation, warranty or covenant in this
Agreement or waive any condition to Buyer's obligation under this Agreement.
8.12. TIME BROKERAGE AGREEMENT. Seller and Buyer shall enter into a
Time Brokerage Agreement ("TBA") that will commence on June 1, 1999 in the form
attached hereto as Exhibit 2.
8.13. TAX-DEFERRED EXCHANGE. Seller has advised Buyer that it may elect
to structure this Transaction as a tax-deferred like-kind exchange pursuant to
Internal Revenue Code Section 1031. Buyer will cooperate with Seller to
effectuate such an exchange provided, that, such tax-deferred, like-kind
exchange shall (i) not commence a second statutory 30-day public notice period
for the Assignment Application under the Commission's published rules,
regulations or policies, (ii) not result in any additional cost or expense to
Buyer, (iii) not result in any tax consequences to Buyer, (iv) not affect
Seller's liability to Buyer for any of the representations, warranties,
covenants and obligations of Seller pursuant to this Agreement and (v) not
require Buyer to serve as the qualified intermediary.
8.14. OBJECTIONS TO PENDING APPLICATIONS. To the Knowledge of Buyer,
there have been no petitions to deny or informal objections filed with the
Commission against any application which is pending as of the date of this
Agreement for assignment of license or transfer of control of any broadcast
station to Buyer. Between the date hereof and the Closing Date, Buyer shall
promptly inform Seller if any party files a petition to deny or informal
objection with the Commission against any pending application for assignment of
license or transfer of control of any broadcast station to Buyer.
9.0 STATUS OF EMPLOYEES.
9.1. EMPLOYMENT RELATIONSHIP. All Station employees shall be and
remain Seller's employees, subject to Seller's discretion, with Seller having
full authority and control over their actions, and Buyer shall not assume the
status of an employer or a joint employer of, or incur or be subject to any
liability or obligation of an employer with respect to, any such employees
unless and until actually hired by Buyer. Seller shall be solely responsible for
any and all liabilities and obligations Seller may have to its employees,
including, compensation, severance pay and accrued vacation time and sick leave.
Seller shall be solely responsible for any and all liabilities, penalties, fines
or other sanctions that may be assessed or otherwise due under such laws on
account of the Transaction and the dismissal or termination of any of Seller's
employees.
9.2. BUYER'S RIGHT TO EMPLOY. Seller consents to Buyer discussing with
the Stations' employees, at any time after ten (10) business days from the
execution of this Agreement the possibility of their employment by Buyer. Seller
agrees and acknowledges, however, that Buyer is under no obligation to offer
employment to any of those employees.
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10.0 CONDITIONS PRECEDENT.
10.1. MUTUAL CONDITIONS. The respective obligations of both Buyer and
Seller to consummate the Transaction are subject to the satisfaction of each of
the following conditions:
(A) APPROVAL OF ASSIGNMENT APPLICATION. The Commission shall have
granted the Assignment 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 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 act or omission of, such party.
(C) HART-SCOTT-RODINO. All applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
expired.
10.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION. In addition to the
satisfaction of the mutual conditions contained in Section 10.1, 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 Seller 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 Seller on or before the Closing
Date under this Agreement and the Seller Documents shall have been duly complied
with and performed in all material respects.
(C) DISCHARGE OF LIENS. Seller shall have obtained and delivered
to Buyer, 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 Purchased Assets are being conveyed to Buyer free and clear of all
liens, security interests and encumbrances except for Permitted Encumbrances or
otherwise consented to by Buyer in writing. The record searches described in the
report shall have taken place no more than 15 days prior to the Closing Date.
Buyer and Seller shall each pay one half of the expenses associated with these
reports.
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(D) THIRD-PARTY CONSENTS. Seller shall have obtained (i) all
required third-party consents to Buyer's assumption of the Material Contracts,
such that Buyer will, after Closing, enjoy all the rights and privileges of
Seller under the Material Contracts subject only to the same obligations as are
binding on Seller pursuant to the Material Contracts' current terms; and (ii)
all other requisite third-party consents and approvals which may be necessary to
consummate the Transaction.
(E) ESTOPPEL CERTIFICATES. At Closing, Seller shall deliver to
Buyer a certificate executed by the other party to each Material Contract,
including the landlord under the leases for the Studio Site, the WGCV-AM Studio
Site, the WCDX-FM Transmitter Site, the WPLZ-FM STL Site and the WJRV-FM
Transmitter Site dated no more than 15 days prior to the Closing Date, stating
(i) that such 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; and (iii) that Seller 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
Seller.
(F) NO MATERIAL ADVERSE CHANGE. None of the Stations nor the
Purchased Assets 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 Seller, of the Stations or of the Purchased
Assets, except changes contemplated by this Agreement and changes which are not
(either individually or in the aggregate) materially adverse to the Stations.
(G) OPINION OF SELLER'S COUNSEL. At Closing, Seller shall deliver
to Buyer the written opinion or opinions of Seller's counsel, dated the Closing
Date, in scope and form satisfactory to Buyer, to the following effect:
(1) Sinclair is a corporation duly organized, validly
existing and in good standing under the laws of the State of Indiana, and
licensed to do business in the Commonwealth of Virginia with all requisite
corporate power and authority to enter into and perform this Agreement.
(2) Commonwealth is a limited liability company duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, with all requisite corporate power and authority to
enter into and perform this Agreement.
(3) This Agreement has been duly executed and delivered by
Seller and such action has been duly authorized by all necessary corporate
action. This Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller 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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(4) None of (i) the execution and delivery of this Agreement,
(ii) the consummation of the Transaction, or (iii) 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 Seller's operating agreement, articles of
incorporation or bylaws, any law, rule, regulation or other requirement of any
Governmental Authority, or any judgment, decree, order, agreement, lease or
other instrument to which Seller is a party or by which Seller, the Stations or
any of the Seller's assets, including the Purchased Assets, may be bound or
affected.
(5) Except as disclosed in Schedule 6.3, to such counsel's
knowledge, no suit, action, claim or proceeding is pending or threatened that
questions or may affect the validity of any action to be taken by Seller
pursuant to this Agreement or that seeks to enjoin, restrain or prohibit Seller
from carrying out the Transaction.
(6) Except as disclosed in Schedule 6.3, to such counsel's
knowledge, there is no outstanding judgment, or any suit, action, claim or
proceeding pending, threatened or deemed by Seller's counsel to be probable of
assertion, or any governmental proceeding or investigation in progress (other
than proceedings affecting radio broadcasters generally) that could reasonably
be expected to have an adverse effect upon the Purchased Assets or upon the
business or operations of the Stations after Closing.
(7) Seller is the authorized legal 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 6.5 constitute all FCC licenses and authorizations issued
in connection with the operation of the Stations and are the only such licenses
and authorizations required for the operation of the Stations, as currently
operated. There are no applications pending before the Commission with respect
to the Stations.
(8) The Commission has consented to the assignment of the FCC
Licenses to Buyer and, to such counsel's knowledge, no appeal or petition for
reconsideration was filed.
(9) 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 Stations, or any complaint, petition to deny
or proceeding against or involving the Stations pending before the Commission.
The foregoing opinions shall be for the benefit of and may be relied on
by Buyer and Buyer's lenders. In rendering such opinions, Seller's counsel may
rely upon such corporate records of Seller and such certificates of public
officials and officers of Seller as Seller's counsel deems appropriate.
(H) FINAL ORDER. The Commission's action granting the
Assignment Application shall have become a Final Order.
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(I) FINANCIAL STATEMENTS. The financial information set forth
in the Stations' Financial Statements for the years ending December 31, 1997 and
December 31, 1998, 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 Stations for those periods.
(J) TRADE BALANCE. The Trade Balance, if negative, will not
exceed Five Thousand Dollars ($5,000).
(K) COMPENSATION. Seller shall have satisfied all amounts due
employees for compensation, whether pursuant to the terms of a written agreement
or otherwise, including bonuses, vacation and sick pay and reimbursement of
expenses, that have accrued as of the Closing.
(L) STUDIO SITE LEASE. At Closing, Sinclair shall have
assigned its interest in or have caused the owner of the Studio Site to enter
into a written lease with Buyer for the use of the real property described in
Section 6.13 as the Studio Site.
(M) WGCV-AM STUDIO SITE LEASE. At Closing, Seller shall have
assigned its interest in or have cause the owner of the WGCV-AM Studio Site to
enter into a written lease with Buyer for the use of the real property described
in Schedule 6.13 as the WGCV-AM Studio Site.
(N) WCDX-FM TRANSMITTER SITE LEASE. At Closing, Sinclair
shall have assigned its interest in or have caused the owner of the WCDX-FM
Transmitter Site to enter into a written lease with Buyer for the use of the
real property described in Schedule 6.13 as the WCDX-FM Transmitter Site.
(O) WJRV-FM TRANSMITTER SITE LEASE. At Closing, Commonwealth
shall have assigned its interest in or have caused the owner of the WJRV-FM
Transmitter Site to enter into a written lease with Buyer for the use of the
real property described in Schedule 6.13 as the WJRV-FM Transmitter Site.
(P) WCDX-FM BACKUP TRANSMITTER SITE LEASE. At Closing, Seller
shall have caused John Sinclair (or his successors and assigns) to enter into a
written lease with Buyer for the use of the WCDX-FM Backup Transmitter Site for
an initial term of ten (10) years, with, at Buyer's option, two (2) renewal
terms of ten (10) years each for the amount of $100 per year.
(Q ) WPLZ-FM STL SITE. At Closing, Seller shall have assigned
its interest in or have cause the owner of the WPLZ-FM STL Site to enter into a
written lease with Buyer for the use of the real property described in Schedule
6.13 as the WPLZ-FM STL Site.
(R) ENVIRONMENTAL REMEDIATION. Seller shall have cured, to
Buyer's satisfaction, any deficiency identified in the Environmental Assessment,
provided that in no event shall Seller be required to effect any cure except to
the extent any Hazardous Substances
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would give rise to liability under Environmental Law as it applies to the
present use of the Real Property, and provided further that Seller shall not be
required to expend more than Fifty Thousand Dollars ($50,000) to cure such
deficiency.
(S) TITLE INSURANCE AND SURVEYS. Buyer, at its cost and
expense, will obtain with respect to each parcel of owned real property
described in Schedule 6.13 which is used as Station WPLZ-FM Transmitter Site and
Station WGCV-AM Transmitter Site not less than forty-five (45) days prior to
Closing, (i) an owner's policy, in an amount equal to the fair market value of
such real property (including all improvements located thereon), insuring
Buyer's fee simple title to such real property as of the Closing without defects
in title, together with such endorsements for zoning, continuity, public access
and extended coverage as Buyer or its lender may reasonably request and (ii) a
current survey of each parcel of real property certified to Buyer and its
lender, prepared by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads ("Survey") which shall not disclose
any defect or encroachment from or onto any of the real property which has not
been cured or insured over prior to the Closing.
(T) CLOSING DOCUMENTS. At the Closing Seller shall deliver to
Buyer (i) such assignments, bills of sale and other instruments of conveyance as
are necessary to vest in Buyer title to the Purchased Assets, all of which
documents shall be dated as of the Closing Date, duly executed by Seller and in
form reasonably acceptable to Buyer; (ii) a certificate, dated the Closing Date,
executed by Seller's President certifying as to those matters set forth in
Section 10.2(a) and (b); (iii) copies of Seller's corporate and governing
resolutions authorizing the Transaction, each certified as to accuracy and
completeness by Seller's Secretary, (iv) a document providing that Seller
indemnifies Buyer for any claims that the intermediate party participating in
the like-kind exchange may have against Buyer and (v) a certificate stating that
the Operating Agreement for Station WGCV-AM with Hoffman Communications, Inc.
has been terminated and all obligations under that agreement have been
satisfied.
10.3. ADDITIONAL CONDITIONS TO SELLER'S OBLIGATION. In addition to
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Seller to consummate the Transaction is subject, at Seller's option, to the
satisfaction or waiver by Seller of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller 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.
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(C) ASSUMPTION OF LIABILITIES. Buyer shall assume and agree to
pay, perform and discharge Seller's obligations under the Contracts, Sales
Agreements and Trade Agreements to the extent Buyer has expressly agreed to
assume such obligations pursuant to Section 4.4.
(D) PAYMENT. Buyer shall pay Seller the Purchase Price due at
Closing, as provided in Section 4.2.
(E) CLOSING DOCUMENTS. Buyer shall deliver to Seller 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 10.3(a) and (b).
11.0. CLOSING. The Closing shall occur no earlier than the tenth day after
the date on which the Commission's grant of the Assignment Application becomes a
Final Order and no later than eighteen (18) months from the date of this
Agreement. Notwithstanding the preceding sentence, Seller shall have the option,
upon sixty (60) days prior written notice to Buyer, of establishing a date for
Closing that is no earlier than the tenth day after the date on which the
Commission's grant of the Assignment Application becomes a Final Order and no
later than eighteen (18) months from the date of this Agreement, provided that,
all of the conditions to Closing described in Section 10 have been satisfied or
waived. Seller and Buyer shall cooperate in seeking extensions from the
Commission as necessary to permit Closing to occur consistent with the terms
hereof. Closing shall take place at 10:00 a.m. on the Closing Date at the
offices of Buyer's counsel, Kirkland & Ellis, 655 15th Street, NW, Suite 1200,
Washington, D.C. 20005.
12.0. PRORATIONS.
12.1. APPORTIONMENT OF EXPENSES. To the extent that they are not
prorated pursuant to Section 13.0 of the Time Brokerage Agreement, Seller shall
be responsible for all expenses arising out of the business of the Stations
until 11:59 p.m. on the Closing Date, and Buyer shall be responsible for all
expenses arising out of the business of the Stations after 11:59 p.m. on the
Closing Date to the extent such expenses relate to liabilities assumed by Buyer
pursuant to Section 4.4. All overlapping expenses shall be prorated or
reimbursed, as the case may be, as of 11:59 p.m. on the Closing Date, provided
however, that Seller shall be responsible for the payment of any and all
Regulatory Fees for Fiscal Year 1999 (covering authorizations held in connection
with the Stations as of October 1, 1998), owing to the Federal Communications
Commission for each of the Stations and any and all auxiliary broadcast
facilities licensed to Seller and used in the operation of Stations.
12.2. DETERMINATION AND PAYMENT. Prorations shall be made, insofar as
feasible, at Closing and shall be paid by way of adjustment to the Purchase
Price. As to the prorations that cannot be made at Closing, the parties shall,
within ninety (90) days after the Closing Date, make and pay all such
prorations. If the parties are unable to agree upon all such prorations within
that 90-day period, then any disputed items shall be referred to a firm of
independent certified public accountants, mutually acceptable to Seller and
Buyer, whose decision shall be final, and whose fees and expenses shall be
allocated between and paid by Seller and Buyer, respectively, to the
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extent that such party does not prevail on the disputed matters decided by the
accountants. If the disputed amount of the prorations are Ten Thousand Dollars
($10,000) or less, Seller and Buyer shall each pay one-half.
13.0. POST-CLOSING OBLIGATIONS. The parties covenant and agree as follows
with respect to the period subsequent to Closing:
13.1. INDEMNIFICATION.
(A) BUYER'S RIGHT TO INDEMNIFICATION. Seller hereby
indemnifies and holds Buyer, its officers, directors and shareholders harmless
from and against (i) any breach, misrepresentation, or violation of any of
Seller's representations, warranties, covenants, or other obligations contained
in this Agreement or in any Seller Document; (ii) all obligations and
liabilities of Seller and/or the Stations not expressly assumed by Buyer
pursuant to Section 4.4; and (iii) all claims by third parties (including
employees) against Buyer attributable to the operation of the Stations and/or
the use or ownership of the Purchased Assets prior to Closing. This indemnity is
intended by Seller to cover all actions, suits, proceedings, claims, demands,
assessments, adjustments, interest, penalties, costs and expenses (including,
reasonable fees and expenses of counsel), whether suit is instituted or not and,
if instituted, whether at the trial or appellate level, with respect to any and
all of the specific matters set forth in this indemnity.
(B) SELLER'S RIGHT TO INDEMNIFICATION. Buyer hereby
indemnifies and holds Seller, its officers, directors, shareholders, managers
and members harmless from and against (i) any breach, misrepresentation or
violation of any of Buyer's representations, warranties, covenants or
obligations contained in this Agreement; (ii) all obligations and liabilities
expressly assumed by Buyer hereunder pursuant to Section 4.4; and (iii) all
claims by third parties against Seller attributable to Buyer's operation of the
Stations after Closing. This indemnity is intended by Buyer to cover all
actions, suits, proceedings, claims, demands, assessments, adjustments,
interest, penalties, costs and expenses (including reasonable fees and expenses
of counsel), whether suit is instituted or not and, if instituted, whether at
the trial or appellate level, with respect to any and all of the specific
matters set forth in this indemnity.
(C) PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(1) 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.
(2) 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
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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.
(3) 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
any 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 13.1(c)(3) to the
contrary notwithstanding, (i) if there is a reasonable probability that a claim
may materially and adversely affect the Claimant other than as a result of money
damages or other money payments, 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 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) ASSIGNMENT OF CLAIMS. If any payment is made pursuant to
this Section 13.1, 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.
(E) INDEMNIFICATION NOT SOLE REMEDY. The right to
indemnification provided for in this Section shall not be the exclusive remedy
of either party in connection with any breach by the other party of its
representations, warranties, covenants or other obligations hereunder, nor shall
such indemnification be deemed to prejudice or operate as a waiver of any right
or remedy to which either party may otherwise be entitled as a result of any
such breach by the other party.
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(F) THRESHOLD CONCERNING SECTIONS 13.1(A) AND (B).
Notwithstanding anything to the contrary in Sections 13.1(a) and (b), the
parties shall not be entitled to indemnity under Sections 13.1(a) and (b) unless
the aggregate loss indemnified against thereunder exceeds $25,000 (in which
case, the Claimant shall be entitled to recovery from the Indemnitor of the full
amount of the loss).
13.2 COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. From the
date of Closing and for a period of three (3) years thereafter, Seller shall
provide Buyer with such cooperation and information as Buyer shall reasonably
request in Buyer's: (i) analysis and review of the Financial Statements or (ii)
preparation of documentation to fulfill any reporting requirements of Buyer
including reports that may be filed with the Securities and Exchange Commission.
Seller shall make its independent accounting firm available, the cost of said
firm to be paid by the Buyer, and the information relied upon by that firm,
including its opinions and Financial Statements for the Seller, to provide
explanations of any documents or information provided hereunder and to permit
disclosure by Buyer, including disclosure to any Governmental Authority.
13.3. LIABILITIES. Following the Closing Date, Seller shall pay
promptly when due all of the debts and liabilities of Seller relating to the
Stations, other than liabilities specifically assumed by Buyer hereunder.
14. DEFAULT AND REMEDIES.
14.1. OPPORTUNITY TO CURE. If either party believes the other to be in
breach or in default hereunder, the former party shall provide the other with
written notice specifying in reasonable detail the nature of such default. If
the default has not been cured by the earlier of: (i) the Closing Date, or (ii)
within 10 days after delivery of that notice (or such additional reasonable time
as the circumstances may warrant provided the party in default undertakes
diligent, good faith efforts to cure the default within such 10-day period and
continues such efforts thereafter), then the party giving such notice may
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.
14.2. SELLER'S REMEDIES. Buyer recognizes that if the Transaction is
not consummated as a result of Buyer's default, Seller 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 due to the default of Buyer, Seller, provided that Seller is not
in default and has otherwise complied with its obligations under this Agreement,
shall be entitled to the Escrow Deposit, with interest earned thereon. The
parties agree that this sum shall constitute liquidated damages and shall be in
lieu of any other relief to which Seller might otherwise be entitled due to
Buyer's failure to consummate the Transaction as a result of a default by Buyer.
14.3. BUYER'S REMEDIES. Seller agrees that the Purchased Assets
include unique property that cannot be readily obtained on the open market and
that Buyer will be irreparably
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injured if this Agreement is not specifically enforced. Therefore, Buyer shall
have the right specifically to enforce Seller's performance under this
Agreement, and Seller agrees (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 Seller's default instead of
seeking specific performance, Buyer shall be entitled to the return of the
Escrow Deposit together with all interest earned thereon, and in addition
thereto, to initiate a suit for damages. Buyer and Seller hereby agree that the
total amount of damages to be recovered by Buyer from any suit for damages shall
equal Two Million Dollars ($2,000,000).
15.0. TERMINATION OF AGREEMENT.
15.1. FAILURE TO CLOSE. This Agreement may be terminated at the option
of either party upon written notice to the other if the Commission has not
granted the Assignment Application within twelve (12) months after the
Commission accepts the Assignment Application for filing or may be terminated by
Buyer if the Commission's action granting the Assignment Application has not
become a Final Order within eighteen (18) months from execution of this
Agreement. This Agreement may also be terminated upon the mutual agreement of
Buyer and Seller. In the event of termination pursuant to this Section, the
Escrow Deposit, together with all interest earned thereon, shall be returned to
Buyer and the parties shall be released and discharged from any further
obligation hereunder unless the failure to consummate the Transaction is
attributable to Buyer's default, and Seller is not in default and has otherwise
complied with its obligations under this Agreement, in which case the Escrow
Deposit plus interest earned thereon shall be released to Seller as liquidated
damages pursuant to Section 14.2.
15.2. DESIGNATION FOR HEARING. The time for approval provided in
Section 15.1 notwithstanding, either party may terminate this Agreement upon
written notice to the other, if, for any reason, the Assignment Application is
designated for hearing by the Commission, provided, however, that written notice
of termination must be given within 10 days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section and provided that Buyer is not in default,
the Escrow Deposit together with all interest earned thereon shall be returned
to Buyer and the parties shall be released and discharged from any further
obligation hereunder.
15.3. ENVIRONMENTAL REMEDIATION. By either Buyer or Seller if the
Environmental Assessment shows the presence of conditions that must be cured or
removed and such remediation will cost in excess of Fifty Thousand Dollars
($50,000) ("Threshold Amount") and Seller declines to pay for remediation in
excess of the Threshold Amount, provided that neither Buyer nor Seller will be
entitled to terminate this Agreement pursuant to this Section 15.3 if Buyer
elects to pay for remediation in excess of the Threshold Amount and such excess
payment does not reduce the Purchase Price.
15.4. FAILURE TO PAY TIME BROKERAGE AGREEMENT FEES. If Buyer defaults
on its obligations to pay the Time Brokerage Fee as defined in the Time
Brokerage Agreement or the
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expenses defined in Schedule 3.0 of the Time Brokerage Agreement and such
default has not been cured within the period defined in the Time Brokerage
Agreement, Seller may terminate this Agreement and exercise the remedies
provided to Seller in Section 14.2 hereof.
16. GENERAL PROVISIONS.
16.1. BROKERAGE. Seller and Buyer represent to each other that neither
party has dealt with a broker in connection with the Transaction, except that
Seller has retained Star Media Group. No finders fee is due to any person or
entity in connection with the Transaction except for Star Media Group and such
fee shall be paid one half by Buyer and one half by Seller at Closing, provided
that Buyer shall not be required to pay more than $265,000.
16.2. FEES. All Commission filing fees for the Assignment Application,
and all recording costs, transfer taxes, sales tax, document stamps and other
similar charges shall be paid one-half by Seller and one-half by Buyer. 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.
16.3. 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:
If to Sinclair or Commonwealth:
Mr. Robert Sinclair
Sinclair Telecable, Inc.
500 Dominion Tower
999 Waterside Drive
Norfolk, Virginia 23510
Fax: (757) 640-8552
and
Mr. J. David Sinclair
6158 Yellow Birch Court
Plainfield, IN 46168
Fax: (317) 838-7225
with a copy (which shall not constitute notice) to:
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Howard M. Weiss, Esq.
Fletcher Heald & Hildreth
1300 North 17th Street
11th Floor
Arlington, VA 22209
Fax: (703) 812-0486
If to Buyer:
Mr. Alfred C. Liggins, President
Radio One, Inc.
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, Esquire
Radio One, Inc.
5900 Princess Garden Parkway
8th Floor
Lanham, MD 20706
Fax: (301) 306-9638
and
Mr. Scott R. Royster
Executive Vice President
Radio One, Inc.
5900 Princess Garden Parkway
8thFloor
Lanham, MD 20706
Fax: (301) 306-9426
Either 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.
16.4. ASSIGNMENT. Neither party may assign this Agreement without the
other party's express prior written consent, provided, however, Buyer may assign
its rights and obligations pursuant to this Agreement without Seller'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
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provided that, Buyer remains obligated to pay the Purchase Price, or (ii) to
Buyer's lenders as collateral for any indebtedness incurred by Buyer; and
subsequent to Closing to (x) any entity which acquires all or substantially all
of the Purchased Assets or (y) to Buyer's lenders as collateral for any
indebtedness incurred by Buyer. 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.
16.5. EXCLUSIVE DEALINGS. For so long as this Agreement remains in
effect, neither Seller nor any person acting on Seller'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
any of the Purchased Assets or the Stations, other than Buyer or Buyer's
permitted assignees.
16.6. THIRD PARTIES. Nothing in this Agreement, whether express or
implied, is intended to: (i) confer any rights or remedies on any person other
than Seller, 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 Seller or
Buyer.
16.7. 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.
16.8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, and indemnification obligations of the parties contained herein
shall survive for twelve (12) months after the Closing Date except that claims
properly asserted within the twelve (12) month period shall survive until
finally and fully resolved; provided, however, that Seller's representations and
warranties in Sections 6.2, 6.3, 6.4, 6.5, 6.10, 6.13 and 6.21 and Buyer's
indemnification rights with respect thereto and with respect to Section
13.1(a)(ii) shall survive the Closing until the end of the applicable statute of
limitations period.
16.9. 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.
16.10. 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.
16.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits and
Schedules to this Agreement set forth the entire understanding between the
parties in connection with the
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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.
16.12. 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.
16.13. GOVERNING LAW, JURISDICTION. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of the Commonwealth
of Virginia without regard to the choice of law rules utilized in that
jurisdiction. Buyer and Seller 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 and Seller each hereby consent to service of process by registered mail at
the address to which notices are to be given. Each of Buyer and Seller agrees
that its submission to jurisdiction and its consent to service of process by
mail is made for the express benefit of the other party hereto. Final judgment
against Buyer or Seller 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.
16.14. 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.
16.15. 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.
16.16. FURTHER ASSURANCES. Seller 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
Purchased Assets to be and intended to be transferred, assigned and conveyed
hereunder.
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IN WITNESS WHEREOF, and to evidence their assent to the foregoing,
Seller and Buyer have executed this Asset Purchase Agreement under seal as of
the date first written above.
SELLER:
SINCLAIR TELECABLE, INC.
d/b/a SINCLAIR COMMUNICATIONS
By: ______________________________
J. David Sinclair
President
AND
COMMONWEALTH BROADCASTING, LLC
By: ______________________________
J. David Sinclair
Member
BUYER:
RADIO ONE, INC.
By: ______________________________
Alfred C. Liggins
President
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EXHIBIT 10.45(b)
TIME BROKERAGE AGREEMENT
This Agreement is made this 6th day of May, 1999, by and between
Sinclair Telecable, Inc., an Indiana corporation, and Commonwealth Broadcasting,
L.L.C., a Virginia limited liability company (collectively "Licensee"),
licensees of Stations WCDX-FM, Mechanicsville, Virginia, WPLZ-FM, Petersburg,
Virginia, WGCV-AM, Petersburg, Virginia, and WJRV-FM, Richmond, Virginia,
respectively (the "Stations"), and Radio One, Inc., a Delaware corporation
("Timebroker").
1.0 Programming.
1.1 In consideration for the mutual obligations herein contained and
the payment by Timebroker to Licensee of the sums of money provided for herein,
Licensee agrees to sell and Timebroker agrees to buy, beginning June 1, 1999
(the "Commencement Date") and until the earlier of the termination, according to
its terms, of the Asset Purchase Agreement (the "Asset Purchase Agreement" dated
May 6th, 1999) or the Closing, as defined in the Asset Purchase Agreement
between the parties, or some earlier date on which this Agreement terminates,
those certain segments of air time (hereinafter referred to as "Sold Time") on
the Stations. Subject to the rules and policies of the Federal Communications
Commission ("FCC" or "Commission") and the limitations contained herein, Sold
Time shall consist of up to 168 hours per week of programming which shall be
provided to Licensee by Timebroker, including entertainment programs and
commercials when and as selected by Timebroker. Licensee, however, reserves for
use, at its option, one hour between 5:00 and 6:00 a.m. each Saturday and
Sunday.
1.2 Licensee may produce or present on the Stations public affairs or
other informational programming and such additional programming as it elects to
present during the preemptions provided for in paragraph 1.3 hereof. Licensee's
public affairs programs shall respond to the needs and interests of Richmond,
Mechanicsville, and Petersburg.
<PAGE>
2
1.3 Timebroker's programming shall consist primarily of music,
commercial announcements, news and informational programming. Timebroker shall
not alter the format of any of the stations without Licensee's prior consent.
Licensee may, from time to time, preempt portions of Sold Time to broadcast
emergency information or programs it deems would better serve the public
interest, and may refuse to broadcast any program and/or announcement of
Timebroker should Licensee deem such program and/or announcement to be contrary
to the public interest. However, such authority shall not be exercised in an
arbitrary manner or for the commercial advantage of Licensee. Timebroker shall
be notified, unless such advance notice is impossible or impractical, at least
one week in advance of any preemption of Timebroker's programming for the
purpose of broadcasting programs Licensee deems necessary to serve the public
interest. In the event of any such preemption, Timebroker shall receive a
pro-rated credit for the preempted time against the monthly payment required by
paragraph 3.0 and described in subparagraph (a) of Schedule 3.0 hereof.
1.4 Timebroker shall broadcast (a) an announcement in form satisfactory
to Licensee at the beginning of each hour to identify each respective Station's
call sign and city of license, (b) an announcement at the beginning of each
segment of Sold Time (i.e., at the beginning of each broadcast day) to indicate
that program time has been purchased by Timebroker, (c) sponsorship
identification announcements for all commercial matter included in Sold Time
that comply with Section 73.1212(a) of the FCC's rules and regulations, and (d)
any other announcement that may be required by law, regulation, or the Stations'
policy, as provided, in writing, to Timebroker.
2.0 Record Keeping.
2.1 Licensee shall promptly provide Timebroker with a copy of any
official correspondence it receives from the FCC or any other federal, state or
local governmental authority, which relates in any way to, or alleges a
violation by Licensee, of any law, rule, regulation, ordinance or any other
governmental requirement. Licensee also shall continue to be responsible for
maintenance of all FCC required logs and records for the Stations, including the
<PAGE>
3
public inspection file and quarterly lists of community problems and programs
broadcast in response thereto. In this regard, Timebroker shall, at its expense,
and under Licensee's supervision, compile and complete all such logs, records
and reports relating to the Stations' Sold Time as are customary in the
broadcast industry, and such logs, records and reports shall be the property of
Licensee, but shall be available at all times to Timebroker. Timebroker will,
forthwith upon receipt of same, furnish to Licensee all correspondence it
receives from the public regarding the Stations' operations or programming
during Sold Time.
2.2 Upon the request of Licensee, Timebroker shall provide for
Licensee's approval a schedule describing the play lists and a day part
breakdown of the programming matter to be transmitted by Timebroker for
broadcast on each of the Stations during the week (Sunday-Saturday) following
such request, and Licensee will notify Timebroker by 5:00 p.m. on the Friday
preceding the week for which the schedule has been provided of any objection
Licensee has to Timebroker's planned programming, based upon Licensee's
obligation to provide programming consistent with the FCC's Rules. Timebroker
shall conform or alter its programming schedule to meet any such objections.
Also, for any particular broadcast day, Timebroker shall provide Licensee,
within two (2) days following Licensee's request, program and traffic logs
setting forth, respectively, all of the programming and commercial matter that
was transmitted by Timebroker for broadcast on the Stations. Such logs shall
include notations that identify the subjects known to have been addressed in any
public affairs and talk shows, public service announcements or other programs
addressing local needs and interests, and shall identify the sponsor, the time
and the duration of each commercial announcement. Timebroker shall also provide
in a timely manner, upon Licensee's advance request, air checks of the Stations'
operations.
3.0 Payments. Commencing on June 1, 1999, and on the first day of each
month thereafter during the term of this Agreement, Timebroker shall pay a time
brokerage fee to Licensee in the amount and in the manner set forth in Schedule
3.0 attached hereto. In addition, Timebroker shall make payments to Licensee to
cover expenses itemized in Section 4.0 and
<PAGE>
4
Schedule 3.0 prior to their due dates, which shall be specified in writing by
Licensee and accompanied by documentation of the expense at least fifteen (15)
days in advance of the due date. Licensee shall provide documentation of the
expenses and monthly statements to Timebroker demonstrating that Licensee has
paid said expenses . In the event Licensee fails to pay any expense, Timebroker
may terminate this Agreement or pay the expense itself, at its option. If
Timebroker elects the latter option and pays the expense, Licensee shall
promptly repay Timebroker, or Timebroker may take a credit toward the Purchase
Price at Closing on the Asset Purchase Agreement. Should Timebroker fail or
refuse at any time to timely make the time brokerage fee required under this
paragraph, then upon five (5) days' written notice and opportunity to cure, to
Timebroker, Licensee may declare this Agreement null and void such that all of
Timebroker's rights hereunder shall be deemed forfeited and canceled for all
purposes. The same shall apply, but on ten (10) days' notice and opportunity to
cure, to the expense payments required hereunder. In either event, if Licensee
exercises its right to declare this Agreement null and void, Timebroker shall
(a) vacate the premises of the Stations and remove all of its equipment, papers
and materials within thirty (30) days after the date of notice of such
termination, and (b) be liable for a material breach of the Asset Purchase
Agreement. Should closing on the Asset Purchase Agreement occur during a month
for which payments in this Section 3 have been made, such payments shall be
prorated.
4.0 Expenses.
4.1 Timebroker shall be permitted access to and use of Licensee's
studio and program production facilities at no additional cost. However,
Licensee shall be responsible in the amounts and manner described in Schedule
3.0 for the payment of all fees and expenses relating to the basic operations of
the Stations or necessary for Licensee to fulfill its FCC obligations,
including, but not limited to: salaries, benefits and taxes relating to the
employment of Licensee's managerial and clerical employees, electricity,
property taxes, rents, and equipment repairs and maintenance.
<PAGE>
5
4.2 All equipment necessary for broadcasting by the Station shall be
maintained by Licensee, with Timebroker's assistance when requested, in a
condition consistent with good engineering practice and in compliance in all
material respects with the applicable rules, regulations and technical standards
of the FCC. All capital expenditures (defined as any equipment repair and
maintenance cost in excess of Two Thousand Dollars ($2,000))reasonably required
to maintain the technical quality of the Stations' signal shall be made in a
timely fashion by Timebroker after consultation with Licensee and made available
for use by Licensee at the Stations, provided that should the parties not close
under the Asset Purchase Agreement for any reason, then at Timebroker's option,
Timebroker will either continue to own the equipment and may remove it or
Licensee will purchase the equipment from Timebroker at cost. Should the parties
close, the cost of such capital expenditures will be borne by Timebroker, but a
credit against the purchase price for half the cost thereof will be provided at
Closing.
4.3 All expenses associated with the production and delivery of
Timebroker's programming, including the salaries and related compensation of
Timebroker's employees, and music license fees shall be the sole responsibility
of Timebroker.
5.0 Insurance. Timebroker will arrange to include Licensee as a
co-insured on Timebroker's policy for appropriate liability and fire and
extended coverage insurance in amounts reasonably required to protect the
parties hereto from losses from liability for personal injury as well as from
loss by theft, fire and other causes to the Stations' equipment.
6.0 "Payola" and "Plugola". Timebroker agrees that it will take steps
consistent with broadcast industry standards to assure that its employees will
not accept any consideration in money, goods, services or otherwise, directly or
indirectly (including to relatives) from any person or company for the playing
of records, the presentation of any programming or the broadcast of any
commercial announcement over the Stations without reporting the same to the
management of the Licensee and without such broadcast being announced as
sponsored. Timebroker understands that violation of this provision is "payola"
and constitutes a federal crime. It is further understood and agreed that no
commercial message ("plug") or undue
<PAGE>
6
reference shall be made in programming presented over the Stations to any
business venture, profit-making activity or other interest (other than
non-commercial announcements for bona fide charities, church activities or other
public service activities) in which Timebroker or anyone else are directly or
indirectly interested without the same having been approved by the management of
Licensee and said broadcast being announced as sponsored.
7.0 Political Broadcasts. Timebroker agrees that any spot or program
time sold to any candidates for political office or person(s) supporting a
candidate will be sold in strict accordance with FCC rules and regulations and
will be supported by documentation as required by the FCC. Such documentation
will be transmitted to Licensee in a timely manner for inclusion in the
Stations' "political file." Timebroker will coordinate the Timebroker's
political sales policies with Licensee prior to any pre-election period.
8.0 Compliance With Laws/Indemnification. Timebroker and Licensee shall
comply in all material respects with all state, local and federal laws, rules
and regulations, including the rules, regulations and policies of the FCC, as
well as with all other obligations on their part under this Agreement, and the
failure of either to do so shall constitute a breach of this Agreement, provided
that the non-breaching party shall provide thirty (30) days' notice and
opportunity to cure to the allegedly defaulting party (except that such thirty
day period shall not apply to defaults under Section 3.0.). In the event of such
breach, Timebroker or Licensee, as the case may be, hereby indemnifies, makes
whole and holds harmless the other party, its officers, directors, shareholders,
members and employees of and from any and all costs, liabilities, claims,
obligations and expenses, including reasonable attorneys fees, which the other
party may incur arising from such breach or default. Further, Timebroker and
Licensee hereby indemnify and hold each other harmless against all liability for
libel, slander, illegal competition or trade practices, infringement of trade
marks, trade names, or program titles, violation of rights of privacy, and
infringement of copyrights and property rights resulting from the broadcast of
programming furnished or broadcast by the other party. These mutual obligations
shall survive any termination of this Agreement and shall continue until the
expiration of all applicable
<PAGE>
7
statutes of limitation and the conclusion and payment of all judgments which may
be rendered in all litigation which may have been commenced prior to such
expiration. Breach of the obligations in this paragraph by either party shall
not constitute a breach of the Asset Purchase Agreement.
9.0 Control of Station. Anything to the contrary in this Agreement
notwithstanding, Licensee shall retain ultimate control of all aspects of the
Stations' operations and Timebroker shall in no way represent itself or hold
itself out as the Stations' licensee. Licensee shall employ a station manager
whose principal workplace during regular business hours, five (5) days per week,
shall be the Stations' studios. Licensee shall employ at least one additional
person who shall be present at the Stations' studios at least during those
regular business hours when Licensee's manager must be elsewhere, or shall share
such an employee with the Timebroker. The parties shall jointly determine who
this shared employee will be and what his or her salary will be.
10.0 Employees. As of May 31, 1999, Licensee will dismiss all employees
of the Stations except for the Licensee's station manager. Timebroker may, prior
to the Commencement Date, extend offers of employment to any of the Stations'
dismissed employees. Licensee shall be responsible, consistent with state law
and internal station policy, for payment of all salary and other benefits,
whether monetary or otherwise (including, without limitation, accrued vacation
time), to which such dismissed employees of the Stations are entitled for all
periods up to and including May 31, 1999, and shall indemnify and hold
Timebroker harmless therefor.
11.0 Cure of FCC-Related Deficiencies. It is the intention of the
parties that this Agreement comply in all material respects with the rules and
policies of the FCC concerning agreements of this nature. In the event that
there is any complaint, inquiry, investigation, or proceeding at the FCC
concerning this Agreement and the relationship between the parties, the parties
shall cooperate fully and share equally the costs in responding to such matter.
The parties also agree to modify this Agreement in any reasonable manner
required to maintain compliance
<PAGE>
8
with FCC rules and policies, preserving to the maximum extent possible the basic
business terms and conditions contained herein. Should such modification prove
impossible, this Agreement may be terminated by either party.
12.0 Term
12.1 The term of this Agreement shall be from June 1, 1999, until the
earlier of (a) Closing under the Asset Purchase Agreement, (b) termination of
the Asset Purchase Agreement, (c) termination of this Agreement pursuant to
paragraph 3.0 (d) termination of this Agreement pursuant to paragraph 12.2
hereof, or (e) termination of this Agreement pursuant to paragraph 11 hereof.
12.2 In the event of a material default in performing the respective
duties and obligations as set forth in this Agreement (with the exception of
Timebroker's payment requirements as described in paragraphs 3 and 4), the
non-defaulting party may terminate this Agreement without penalty, provided that
such default shall not have been cured by the defaulting party within thirty
(30) days after written notice thereof.
12.3 In the event of termination of this Agreement, it is understood
that Timebroker reserves the right to ownership of logos and positioning
statements which it develops during the term of this Agreement, and Licensee may
not make use of any such materials without the consent of Timebroker.
12.4 In the event of Licensee's termination of this Agreement due to
Timebroker's default, all agreements or contracts for advertising during Sold
Time then in existence shall belong to and be the property of Licensee, except
that Licensee shall have the option whether to assume contracts with terms
longer than ten (10) weeks. Licensee shall (a) have the duty to perform all such
assumed agreements or contracts, and (b) be entitled to collect and receive the
money thereafter derived therefrom; and Timebroker will forthwith assign same to
Licensee and turn over to Licensee all books and records relating to the sale of
advertising for broadcast exclusively over the Stations. Timebroker shall, at
such time, pay over to Licensee any money or other consideration it shall have
received as "pre-payment" for such advertising which
<PAGE>
9
Licensee may thereafter undertake to broadcast over the Stations. Licensee
indemnifies and holds Timebroker harmless against any nonperformance of any
assumed agreement or contract. All uncollected revenue for advertising broadcast
during Sold Time prior to such termination shall belong to, be the property of
and be for the benefit of Timebroker.
13.0 Proration. Licensee shall be responsible for all expenses arising
out of the business of the Stations until 11:59 p.m. on May 31, 1999.
Thereafter, expenses arising out of the business of the Stations shall be
treated as outlined above in paragraph 3.0 and Schedule 3.0. All overlapping
expenses shall be prorated or reimbursed, as the case may be, as of 11:59 p.m.
on May 31, 1999.
14.0 Inspection of Books and Records. To the extent the FCC or any
third party is entitled by law or contract to review any of Timebroker's books
and records relating to the Stations' operation during Sold Time, including
financial books and records, whether pursuant to contracts entered into by
Licensee or otherwise, e.g., with ASCAP, BMI, or SESAC, Timebroker will, upon
reasonable notice, make such books and records available for such third party's
inspection and, to the extent required or made necessary by law or contractual
obligations of Licensee, for inspection by Licensee. In addition, upon request
by Licensee, Timebroker will forthwith supply Licensee with all information, and
all books and records necessary for verification thereof, which will enable
Licensee to prepare, file or maintain the records and reports required by the
FCC, ASCAP, BMI, SESAC and like entities.
15.0 No Carry-Over Agreements Without Consent. Timebroker shall seek
consent from Licensee to make agreements which shall require use of time on the
Stations subsequent to the expiration or termination of this Agreement which
exceed six (6) months in duration, and shall in no other way obligate Licensee
without Licensee's written consent.
16.0 Accounts Receivable. After the Commencement Date both parties
shall be responsible for collection of their own Accounts Receivable that are
outstanding and unpaid , except for those Accounts Receivable which Licensee has
instituted litigation to collect or
<PAGE>
10
referred to a collection agency as of the date of this Agreement and which are
identified in Schedule 16.0. All payments received by Timebroker or Licensee
from any person who makes a payment with respect to any Accounts Receivable for
the other party shall be promptly paid over to the other party, attempting
wherever possible to do so within fifteen (15) days of receipt thereof. Licensee
shall continue timely to pay commissions on the same percentage basis as prior
to the Commencement Date to employees, agencies and representatives on these
Accounts Receivable on the 15th and last day of each month, and to make
reasonable efforts in the ordinary course of business to collect the Accounts
Receivable. The parties will make every effort to cooperate with each other to
ensure that both are paid monies owed them promptly, but without undue
disruption to the parties' accounting systems or Timebroker's relationships with
customers.
17.0 Force Majeure Event. If either Timebroker or Licensee is prevented
from performing its obligations hereunder by a Force Majeure event (i.e., fires,
acts of God, orders of civil or military authorities or other contingencies
beyond the reasonable control of the parties), and such a situation cannot be
corrected within a period of thirty (30) days, this Agreement shall, at the
option of either of the parties hereto, terminate and, except as otherwise
provided herein, the parties' obligations accruing beyond that time shall be
terminated; and neither shall be liable to the other for a breach caused
thereby. Neither Timebroker nor Licensee shall be required to correct problems
caused by a Force Majeure event which eliminates its ability to carry out this
Agreement.
18.0 Waiver of Breach. A waiver by either Timebroker or Licensee of a
breach of any provision of this Agreement shall not be deemed to constitute a
waiver of any preceding or subsequent breach of the same provision or any other
provision.
19.0 Entire Agreement. This writing constitutes the entire agreement
between Timebroker and Licensee pertaining to time brokerage, all prior
understandings being merged herein. This Agreement may not be changed, modified,
renewed, extended or discharged, except as specifically provided herein or by an
agreement in writing signed by the parties hereto. It is recognized that the
obligations of Licensee and Timebroker hereunder are subject to applicable
<PAGE>
11
federal, state and local law, rules and regulations, including, but not limited
to, the Communications Act of 1934, as amended, and the rules and regulations of
the FCC.
20.0 Notices. All notices called for herein shall be in writing and
shall either be delivered by hand delivery, evidenced by written receipt; by
Federal Express, or other similar courier service or telecopier and evidenced by
written receipt; all of which shall be addressed as follows:
IF TO LICENSEE:
Mr. Robert Sinclair
Sinclair Telecable, Inc.
500 Dominion Tower
999 Waterside Drive
Norfolk, Virginia 23510
Fax: (757) 640-8552
<PAGE>
12
WITH A COPY TO:
Mr. J. David Sinclair
6158 Yellow Birch Court
Plainfield, IN 46168
Fax: (317) 838-7225
and
Howard M. Weiss, Esq.
Fletcher, Heald & Hildreth
1300 North 17th Street
11th Floor
Arlington, Virginia 22209
Fax: (703) 812-0486
IF TO TIMEBROKER:
Mr. Alfred C. Liggins, President
Radio One, Inc.
5900 Princess Garden Parkway
8th Floor
Lanham, Maryland 20706
Fax: (301) 306-9426
WITH A COPY TO:
Linda J. Eckard, Esq.
Radio One, Inc.
5900 Princess Garden Parkway
Suite 800
Lanham, MD 20706
Fax: (301) 306-9638
21.0 Binding Agreement/Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns.
22.0 Corporate/LLC Authority/Construction. The undersigned signatories
to this
<PAGE>
13
Agreement personally represent and warrant that they have full authority to
execute this Agreement on behalf of the respective parties. This Agreement shall
be construed and enforced under the laws of the Commonwealth of Virginia, but
not its conflicts of law principles.
23.0 Certifications.
23.1 Licensee hereby certifies that for the term of this Agreement it
shall maintain ultimate control over the Stations' facilities, including control
over the Stations' finances, personnel and programming, and nothing herein shall
be interpreted as depriving Licensee of the power or right of such ultimate
control.
23.2 Timebroker hereby certifies that the arrangement contemplated by
this Agreement complies with the provisions of Sections 73.3555 of the FCC's
Rules.
24.0 WGCV
24.1 Upon written request by Timebroker, Licensee shall give the
requisite notice to Hoffman Communications terminating the Time Brokerage
Agreement relating to WGCV (the "Hoffman Agreement"). Until that termination,
this Agreement shall not apply to WGCV. Upon termination of the Hoffman
Agreement, all of the provisions hereof shall apply to that station. The parties
hereby agree to use their collective best efforts to estimate the cost of
integrating the operation of Station WGCV into the combined operations of the
Stations. Timebroker shall reimburse promptly said costs upon the receipt of
documentation from Licensee.
WHEREFORE, the parties intending to be fully bound by the
terms hereof have executed this Agreement as of the date first written above.
<PAGE>
14
SINCLAIR TELECABLE, INC.
d/b/a SINCLAIR COMMUNICATIONS
By:
----------------------------------------
Robert Sinclair, Vice President
COMMONWEALTH BROADCASTING, LLC
By:
----------------------------------------
Robert L. Sinclair, Member
LICENSEE (collectively)
RADIO ONE, INC.
By:
----------------------------------------
Alfred C. Liggins, President
TIMEBROKER
<PAGE>
15
Schedule 3.0
Compensation
Timebroker will pay Licensee monthly as follows:
(a) $233,000.00 (the time brokerage fee); plus
(b) An amount equal to Licensee's expenses to be paid during the
following month starting on the Commencement Date for the following:
(i) salaries, benefits and taxes relating to the
employment of Licensee's employees;
(ii) electric costs;
(iii) property taxes and rents;
(iv) equipment repairs and maintenance.
The expenses defined in (i) - (iv) above are estimated not to exceed
Forty Two Thousand and Five Hundred Dollars ($42,500) in any month ("Expense
Amount"). Licensee shall be required to submit to Timebroker on a quarterly
basis an accurate account of expenses detailed in (i) - (iv) above, supported by
appropriate documentation. In no event shall Timebroker be required to pay any
amount in excess of the actual expenses. Thus, in the event that total actual
expenses for any quarter are less than the expenses paid during that quarter,
the parties shall in good faith and supported by appropriate documentation make
adjustments thereto and any excess amount paid by Timebroker shall be remitted
by Licensee within fifteen (15) days of the close of the quarter.
Notwithstanding the foregoing, if such expenses in any month exceed the Expense
Amount, Timebroker and Licensee shall each pay one half of the cost in excess of
the Expense Amount.
EXHIBIT 10.52
------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
------------------------------------------------------------------------
by and between
KJI BROADCASTING, LLC
and
RADIO ONE, INC.
for the sale and purchase of
Station WCAV-FM
Dated as of May 24, 1999
<PAGE>
TABLE OF EXHIBITS
EXHIBIT 1 -- Escrow Agreement
EXHIBIT 2 -- Time Brokerage Agreement
EXHIBIT 3 -- Cooperation Agreement
-ii-
<PAGE>
TABLE OF SCHEDULES
SCHEDULE 2.1(c)(1) Contracts
SCHEDULE 6.1 Seller's Places of Business
SCHEDULE 6.3 Litigation
SCHEDULE 6.4 Permitted Encumbrances
SCHEDULE 6.5 FCC Licenses
SCHEDULE 6.6 Equipment
SCHEDULE 6.8 Intellectual Property
SCHEDULE 6.9 Insurance
SCHEDULE 6.10 Financial Statements
SCHEDULE 6.11 Employees
SCHEDULE 6.12 Employment and Benefits Agreements
SCHEDULE 6.13 Real Property
SCHEDULE 6.14 Environmental
SCHEDULE 6.18 Sales Agreements
SCHEDULE 6.21 Related Parties
-iii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Agreement, made and entered into as of this 24th day of May, 1999,
by and between KJI Broadcasting, LLC, a Massachusetts limited liability company
("Seller"), and Radio One, Inc., a Delaware corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the licensee of Station WCAV-FM, 97.7 MHz, Brockton,
Massachusetts (the "Station"); and
WHEREAS, the parties desire that Buyer purchase certain assets used or
held for use in the operation of the Station and acquire the authorizations
issued by the Federal Communications Commission (the "Commission") for the
operation of the Station; and
WHEREAS, the authorizations issued by the Commission may not be
assigned to Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties, intending to be legally bound, agree as follows:
1.0 RULES OF CONSTRUCTION.
1.1. DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ACCOUNTS RECEIVABLE" means the cash accounts receivable of Seller
arising from Seller's operation of the Station prior to and immediately before
the Closing.
"ADMINISTRATIVE VIOLATION" means those violations described in Section
8.6 hereof.
"ASSIGNMENT APPLICATION" means the application on FCC Form 314 that
Seller and Buyer shall join in and file with the Commission requesting its
consent to the assignment of the FCC Licenses (as hereinafter defined) from
Seller to Buyer.
"BUSINESS RECORDS" means all business records of Seller (including
logs, public file materials and engineering records) relating to or used in the
operation of the Station and not relating solely to Seller's internal corporate
affairs.
"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.
-1-
<PAGE>
"CLOSING" means the consummation of the Transaction (as hereinafter
defined).
"CLOSING DATE" means the date on which the Closing takes place, as
determined by Section 11.
"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.
"CONTRACTS" means those contracts, leases and other agreements listed
or described in Schedule 2.1(c)(1) which are in effect on the date hereof and
which Buyer has agreed to assume.
"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.
"EQUIPMENT" means all tangible personal property and fixtures used or
useful in the operation of the Station as described in Section 2.1(b).
"ESCROW AGENT" means Media Services Group, Inc.
"ESCROW AGREEMENT" means the escrow agreement described in Section 3,
the form of which is attached as Exhibit 1.
"ESCROW DEPOSIT" means the monies deposited with the Escrow Agent
described in Section 3.2.
"EXCLUDED ASSETS" means those assets excluded from the Purchased Assets
and retained by the Seller, to the extent in existence on the Closing Date, as
specifically described in Section 2.2.
"FCC LICENSES" means all licenses, pending applications, permits and
other authorizations issued by the Commission for the operation of the Station
listed on Schedule 6.5.
"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
-2-
<PAGE>
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.
"FINANCIAL STATEMENTS" means Seller's audited and unaudited financial
statements as described in Section 6.10.
"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, oils, petroleum or
petroleum-derived compounds, CFCS, or PCBs.
"INCENTIVE PAYMENT" means any additional consideration paid to Seller
consistent with the terms described in Section 4.3 hereof.
"INTANGIBLE PROPERTY" means all of Seller's right, title and interest
in and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station as described in Section 2.1(f).
"INTELLECTUAL PROPERTY" means all Seller's right, title and interest in
and to the trademarks, tradenames, service marks, patents, franchises,
copyrights, including registrations and applications for registration of any of
them, slogans, jingles, logos, computer programs and software, trade secrets and
similar materials and rights relating to the Station as listed on Schedule 6.8.
"KNOWLEDGE OF BUYER" means the actual knowledge, after reasonable
inquiry of Buyer's senior management, and the books and records of Buyer.
"KNOWLEDGE OF SELLER" means the actual knowledge, after reasonable
inquiry of Seller's senior management, and the books and records of the Station.
"MATERIAL CONTRACTS" means those leases, contracts and agreements
specifically designated in Schedule 2.1(c)(1) as being "Material Contracts."
"NEW TOWER SITE" means the antenna location described in a construction
permit issued on January 29, 1999, pursuant to FCC File No. BPH-981020IB.
"PERMITTED ENCUMBRANCES" means those permitted liens or encumbrances to
the Purchased Assets described in Section 6.4 and set forth on Schedule 6.4.
"PURCHASE PRICE" shall mean the total consideration for the Purchased
Assets as described in Section 4.1.
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"PURCHASED ASSETS" means those assets which are the subject matter of
this Agreement that Seller shall sell, assign, transfer, convey and deliver to
Buyer at Closing as described in Section 2.1.
"RELOCATION PERIOD" means the three (3) year time period beginning on
the Closing Date, during which Buyer may potentially relocate the Station's
antenna as described in Section 4.3 hereof.
"RELOCATION SITE" means any tower site proposed by Buyer for the
relocation of the Station's antenna as described in Section 4.3 hereof.
"SALES AGREEMENTS" means agreements entered into by Seller for the sale
of time on the Station for cash, as described in Section 2.1(c)(2).
"SELLER" means KJI Broadcasting, LLC, a Massachusetts limited liability
corporation.
"SELLER DOCUMENTS" means those documents, agreements and instruments to
be executed and delivered by Seller in connection with this Agreement as
described in Section 6.1.
"SPECIFIED EVENT" means those broadcast transmission failures described
in Section 8.5(b).
"STUDIO SITE" means the real estate located at 60 Main Street,
Brockton, Massachusetts 02403, that is currently used as the Station's studio
and office facilities.
"TRADE AGREEMENTS" means agreements entered into by Seller for the sale
of time on the Station in exchange for merchandise or services, including those
listed on Schedule 2.1(c)(1).
"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 as of Closing exceeds the value of goods
and services to be received. The Trade Balance is "positive" if the value of
time owed as of Closing is less than the value of goods and services to be
received.
"TRANSACTION" means the sale and purchase and assignments and
assumptions contemplated by this Agreement and the respective obligations of
Seller and Buyer set forth herein.
"TRANSMITTER SITE" means the real estate located at 485 North Quincy
Street, Abington, Massachusetts that will be used as the New Tower Site.
1.2. OTHER DEFINITIONS. Other capitalized terms used in this Agreement
shall have the meanings ascribed to them herein.
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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 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."
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 7:00 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
2.0 ASSETS TO BE CONVEYED.
2.1. PURCHASED ASSETS. On the Closing Date, Seller shall sell, assign,
transfer, convey and deliver to Buyer free of all liens, encumbrances,
mortgages, security interests of any kind or type whatsoever, all of Seller's
assets used in the conduct of the business and operations of the Station
(collectively referred to as the "Purchased Assets"), including, but not limited
to, the following:
(A) LICENSES. The FCC Licenses, including all of the rights in
and to the call letters of the Station, and all other transferable licenses,
permits and authorizations issued by any other Governmental Authority that are
used in or necessary for the lawful operation of the Station as currently
operated by Seller.
(B) EQUIPMENT. All tangible personal property and fixtures
described in Schedule 6.6, together with supplies, inventory, spare parts and
replacements thereof and improvements and additions thereto made between the
date hereof and the Closing Date (the "Equipment").
(C) CONTRACTS AND AGREEMENTS. The Contracts, Sales Agreements
and Trade Agreements, subject to the following:
(1) Buyer shall be obligated to assume only those
Contracts that are listed in Schedule 2.1(c)(1) or that have been or will have
been entered into in the ordinary course of the Station's business and in
accordance with the terms of this Agreement, between the
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date hereof and the Closing Date, provided that, unless otherwise approved in
writing by Buyer, the obligations of the Station or Buyer under such Contracts
entered into in the ordinary course of business do not exceed Five Thousand
Dollars ($5,000) per annum per Contract or Twenty-five Thousand Dollars
($25,000) per annum in the aggregate or are terminable by the Station on not
more than 30 days' notice.
(2) Buyer shall be obligated to assume only those
Sales Agreements that have been or will have been entered into in the ordinary
course of business, consistent with past practice and in accordance with Section
6.18.
(3) Buyer shall be obligated to assume only those
Trade Agreements that are disclosed at Closing and that are (i) immediately
preemptible for cash time sales; (ii) require the provision of air time only on
a "run of schedule" basis; and (iii) inure or will inure to the benefit of the
Station. Notwithstanding the foregoing, Buyer shall not be obligated to assume
Trade Agreements (including those entered into in the ordinary course of
business) that have an aggregate negative Trade Balance exceeding Twenty
Thousand Dollars ($20,000).
(4) Notwithstanding any provision of this Agreement
to the contrary, this Agreement shall not constitute an agreement to assign any
Contract or other agreement, undertaking or obligation if (i) an attempted
assignment, without the consent required for such assignment, may constitute a
breach thereof or may in any way have a material adverse effect on Seller's
rights thereunder prior to Closing or Buyer's rights thereunder after Closing
and (ii) such consent is not obtained by Seller prior to Closing, provided,
however, that Seller will use its best efforts at its own expense to obtain all
such consents prior to Closing.
(D) PROGRAMMING MATERIALS. All programs, programming material,
and music libraries in whatever form or nature owned by Seller and used or
intended for use in the operation of the Station.
(E) INTELLECTUAL PROPERTY. All Seller's right, title and
interest in and to the Intellectual Property used in the operation of the
Station.
(F) INTANGIBLE PROPERTY. All of Seller's right, title and
interest in and to the goodwill and other intangible assets used or useful in or
arising from the business of the Station, including all customer lists, and
sales plans.
(G) BUSINESS RECORDS. All business records of Seller
(including logs, public file materials and engineering records) relating to or
used in the operation of the Station and not relating solely to Seller's
internal corporate affairs.
(H) STATION RECORDS. All of the Station's proprietary
information, technical information and data, machinery and equipment warranties
(to the extent such warranties are assignable), maps, plans, diagrams,
blueprints, schematics, files, records, studies, data, lists, general accounting
records, books of account, in whatever form, used or held for use for the
business or operation of the Station, including filings with the FCC which
relate to the Station.
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(I) REAL PROPERTY SITE LICENSE. Seller currently holds a
license to use the Real Property described in Schedule 6.13 which is used as the
Station's Transmitter Site.
2.2. EXCLUDED ASSETS. There shall be excluded from the Purchased Assets
and retained by the Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets"):
(A) RECEIVABLES. All Accounts Receivable.
(B) CASH AND INVESTMENTS. All cash and cash equivalents on
hand or in bank accounts and other cash items and investment securities of
Seller on the Closing Date.
(C) INSURANCE. All contracts of insurance (including any cash
surrender value thereof) and all insurance proceeds of settlement and insurance
claims made by Seller on or before the Closing Date.
(D) EMPLOYEE BENEFIT ASSETS. All pension, profit sharing and
savings plans and trusts, and any assets thereof, except that any employee
account balances under any plan qualified under Section 401(k) of the Code shall
be promptly transferred to a plan qualified under Section 401(k) and, at Buyer's
request, made available by or on behalf of Buyer if such employee is hired by
Buyer, to the extent allowed under each such plan and applicable law.
(E) CONTRACTS. All contracts that will have terminated or
expired prior to Closing by their terms and all contracts, agreements,
instruments, undertakings and obligations not expressly assumed by Buyer
hereunder.
(F) TAX ITEMS. All claims, rights and interest in and to any
refunds for federal, state or local taxes to which Seller is entitled for
periods prior to the Closing Date.
(G) CORPORATE RECORDS. Seller's corporate minute books and
other books and records relating to internal corporate minutes.
(H) OTHER ASSETS. All other assets not described in Section
2.1.
3.0 ESCROW ARRANGEMENTS.
3.1 ESCROW DEPOSIT. Simultaneous with the execution of this Agreement,
Buyer shall deposit with Media Services Group, Inc., a cash deposit of Five
Hundred Thousand Dollars ($500,000) (the "Escrow Deposit"). The Escrow Deposit
shall be held in an interest-bearing account and disbursed by Escrow Agent
pursuant to the terms of an escrow agreement in the form attached hereto as
Exhibit 1 (the "Escrow Agreement"). The Escrow Agreement shall be entered into
by Seller, Buyer and Escrow Agent simultaneously with the execution of this
Agreement.
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4.0 PURCHASE PRICE AND METHOD OF PAYMENT.
4.1. CONSIDERATION. The total consideration for the Purchased Assets
(the "Purchase Price") shall be Ten Million Dollars ($10,000,000), payable as
set forth in this Section 4.
4.2. PAYMENT AT CLOSING. At Closing, Buyer shall pay:
(a) Nine Million Five Hundred Thousand Dollars ($9,500,000)
(as adjusted pursuant to Sections 8.5 and 12.1) to Seller by check or wire
transfer of same day funds pursuant to wire transfer instructions which shall be
delivered by Seller to Buyer at least five business days prior to Closing.
(b) Five Hundred Thousand Dollars ($500,000) to Seller by
causing the Escrow Agent to release the Escrow Deposit to Seller, with all
interest earned on the Escrow Deposit remitted to Buyer.
4.3 ADDITIONAL CONSIDERATION. On or before the third anniversary of the
Closing Date (the "Relocation Period"), additional consideration (the "Incentive
Payment"), in an amount to be determined in accordance with subsection (a) of
this Section 4.3, and not to exceed a cumulative total of One Million Dollars
($1,000,000), shall be paid to Seller, provided that the Buyer relocates the
Station's antenna from the New Tower Site to any other tower site that is north
of the New Tower Site and the total population served by the Station's 60 dbU
contour (as calculated pursuant to the FCC's Rules) (the "Relocation Site"),
increases from the population within the 60 dbU contour of the New Tower Site
and the Station commences program test authority from the Relocation Site.
(A) The amount of the Incentive Payment shall be determined as
follows:
<TABLE>
<CAPTION>
Distance from Incentive
New Tower Site Payment
-------------- -------
<S> <C>
less than or equal to 1 mile $ 100,000
less than or equal to 2 miles $ 400,000
less than or equal to 3 miles $ 750,000
greater than 3 miles $1,000,000
</TABLE>
(B) The distance of the Relocation Site from the New Tower
Site shall be determined by using a computer program used to calculate the
spacing between tower sites for purposes of complying with Section 73.208 of the
FCC's rules.
(C) If Buyer relocates the Station's antenna from the New
Tower Site consistent with this Section 4.3 through successive relocations
during the Relocation Period, then Seller shall be entitled to successive, but
cumulative, Incentive Payments. However, any successive Incentive Payment made
to Seller shall be reduced by the amount of any Incentive
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Payment previously paid to Seller so that the total Incentive Payment made to
Seller shall not exceed $1,000,000.
(D) If any Incentive Payment shall be required to be paid
during the Relocation Period, such payment shall be due sixty (60) days after
the date that Buyer commences program test authority for the Station at the
Relocation Site.
4.4. ALLOCATION. The Purchase Price shall be allocated to the Purchased
Assets in accordance with an allocation schedule to be prepared by Buyer
pursuant to Section 1060 of the Code and mutually agreed upon by Seller and
Buyer. Seller and Buyer shall use such allocation for tax accounting (including
preparation of IRS Form 8594), and all other purposes. If Seller and Buyer have
not agreed upon the allocation prior to the Closing Date, Closing shall take
place as scheduled and any dispute shall be resolved by a qualified media
appraiser mutually acceptable to Seller and Buyer, whose decision shall be final
and whose fees and expenses shall be paid one-half by Seller and one-half by
Buyer. If the allocation must be determined by a media appraiser, Seller and
Buyer agree to cooperate in good faith so that such appraisal may be completed
expeditiously.
4.5. SELLER'S LIABILITIES. Buyer does not and shall not assume or be
deemed to assume, pursuant to this Agreement or otherwise, any agreements,
liabilities, undertakings, obligations or commitments of Seller or the Station
of any nature whatsoever except: (i) liabilities accruing after Closing under
the Contracts, Sales Agreements and Trade Agreements listed in Schedule
2.1(c)(1) or otherwise expressly assumed by Buyer pursuant to, and subject to,
Sections 2.1(c), 6.18 and 10.2(j) provided, that, Buyer shall not assume
liability for any breaches, violations or defaults under the Contracts, Sales
Agreements and Trade Agreements that occurred prior to Closing; and (ii)
prorated items that are to be paid by Buyer after Closing pursuant to Section
12.1.
5.0. [SECTION INTENTIONALLY OMITTED]
6.0. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller hereby makes to
and for the benefit of Buyer, the following representations, warranties and
covenants:
6.1. EXISTENCE, POWER AND IDENTITY. Seller is a limited liability
corporation duly organized and validly existing under the laws of The
Commonwealth of Massachusetts with corporate power and authority as a limited
liability company (a) to own, lease and use the Purchased Assets as currently
owned, leased and used, (b) to conduct the business and operation of the Station
as currently conducted and (c) to execute and deliver this Agreement and each
other document, agreement and instrument to be executed and delivered by Seller
in connection with this Agreement (collectively, the "Seller Documents"), and to
perform and comply with all of the terms, obligations and covenants to be
performed and complied with by Seller hereunder and thereunder. The addresses of
Seller's chief executive office and all of Seller's additional places of
business, and all places where any of the tangible personal property included in
the Purchased Assets is now located, or has been located during the past 180
days, are correctly
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listed in Schedule 6.1. Except as set forth in Schedule 6.1, since June 1, 1998,
Seller has not been known by or used, nor, to the best of Seller'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 Purchased Assets.
6.2. BINDING EFFECT. The execution, delivery and performance by Seller
of this Agreement has been and the Seller Documents will be duly authorized by
all necessary limited liability corporate action, and copies of those
authorizing resolutions, certified by an officer, member or manager of Seller,
shall be delivered to Buyer at Closing. No other limited liability corporate
action by Seller is required for Seller's execution, delivery and performance of
this Agreement. This Agreement has been duly and validly executed and delivered
by Seller to Buyer and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller 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.
6.3. NO VIOLATION. Except as set forth on Schedule 6.3, none of (i) the
execution, delivery and performance by Seller of this Agreement or any of the
Seller Documents, (ii) the consummation of the Transaction, or (iii) Seller'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 (x) Seller's articles of
incorporation or operating agreement, (y) any judgment, decree, order, consent,
agreement, lease or other instrument (including any Contract, Sales Agreement or
Trade Agreement) to which Seller is a party or by which Seller or any of its
assets (including the Purchased Assets) or the Station is or may be legally
bound or affected, or (z) any law, rule, regulation or ordinance of any
Governmental Authority applicable to Seller or any of its assets (including the
Purchased Assets) or the operation of the Station.
6.4. CONVEYANCE OF ASSETS. At Closing, Seller shall convey to Buyer
good and marketable title to all the Purchased Assets, free and clear of all
liens, pledges, collateral assignments, security interests, capital or financing
leases, easements, covenants, restrictions and encumbrances or other defects of
title except: (i) the inchoate lien for current taxes or other governmental
charges not yet due and payable and that will be prorated between Seller and
Buyer pursuant to Section 12.1; and (ii) the Permitted Encumbrances.
6.5. GOVERNMENTAL AUTHORIZATIONS. Except for the FCC Licenses, no
licenses, permits, or authorizations from any Governmental Authority are
required to own, use or operate the Purchased Assets, to operate the Station or
to conduct Seller's business as currently operated and conducted by Seller. The
FCC Licenses are all the Commission authorizations held by Seller 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 Seller. 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 Seller, Seller's officers, employees or agents. Seller
has delivered true and complete copies of all FCC Licenses to Buyer. There is
not
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pending or, to the Knowledge of Seller, 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 Seller, 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 Seller or
otherwise with respect to the Station. The Station is operating in 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. Except as otherwise set forth in Schedule 6.5, the
Commission's most recent renewals of the FCC Licenses were not challenged by any
petition to deny or any competing application. Seller has no knowledge of any
facts relating to it that, under the Communications Act or the current rules,
regulations, policies and practices of the Commission may cause the Commission
to deny Commission renewal of the FCC Licenses or deny Commission consent to the
Transaction.
6.6. EQUIPMENT. Seller has good and marketable title, both legal and
equitable, to the Equipment. The Equipment, together with any improvements and
additions thereto and replacements thereof less any retirements or other
dispositions as permitted by this Agreement between the date hereof and the
Closing Date, will, at Closing, be all the tangible personal property used or
useful in the lawful operation of the Station as currently operated by Seller.
Except as specifically indicated to the contrary in Schedule 6.6, all Equipment
is serviceable, in good operating condition (reasonable wear and tear excepted).
All items of transmitting and studio equipment included in the Equipment (i)
have been maintained in a manner consistent with generally accepted standards of
good engineering practice and (ii) will permit the Station to operate in
accordance with the terms of the FCC Licenses.
6.7. CONTRACTS. Seller has made available to Buyer or its
representatives complete and correct copies of all Contracts and Trade
Agreements listed on Schedule 2.1(c)(1) hereto. The list of Trade Agreements on
Schedule 2.1(c)(1) is accurate and complete. Except for Sales Agreements and
Trade Agreements that comply with the terms of this Agreement, Schedule
2.1(c)(1) includes all the contracts, leases, and agreements to which Seller is
a party and which Buyer has agreed to assume, other than those contracts that
will be performed in full prior to the Closing. To the Knowledge of Seller, each
Contract is in full force and effect and is unimpaired by any acts or omissions
of Seller, Seller's employees or agents, or Seller's officers. Except as set
forth on Schedule 2.1(c)(1), there has not occurred as to any Contract any event
of default by Seller or any event that, with notice, the lapse of time or
otherwise, could become an event of default by Seller. To the Knowledge of
Seller, there has not occurred as to any Contract any default by any other party
thereto or any event that, with notice, the lapse of time or otherwise, or at
the election of any person other than Seller, could become an event of default
by such party. Those Contracts whose stated duration extends beyond the Closing
Date will, at Closing, be in full force and effect, unimpaired by any acts or
omissions of Seller, Seller's employees or agents, or Seller's officers. If any
Contract requires the consent of any third party in order for Seller to assign
that Contract to Buyer, Seller shall use its best efforts to obtain at its own
expense such consent prior to Closing.
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6.8. PROMOTIONAL RIGHTS. The Intellectual Property set forth on
Schedule 6.8 includes all call signs and trademarks that Seller is transferring
to Buyer, used to promote or identify the Station. Except as set forth on
Schedule 6.8, the Intellectual Property is in good standing and uncontested by
any third party. Except as set forth on Schedule 6.8, to the Knowledge of Seller
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 station in the Boston metropolitan area that may be confusingly similar to
those currently used by the Station. Except as set forth on Schedule 6.8, to the
Knowledge of Seller, the operations of the Station do not infringe, and no one
has asserted to Seller that such operations infringe, any copyright, trademark,
tradename, service mark or other similar right of any other party.
6.9. INSURANCE. Schedule 6.9 lists all insurance policies held by
Seller with respect to the Purchased Assets and 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 Seller is in compliance with the
terms thereof. Seller 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. Seller will maintain the insurance policies listed on Schedule 6.9
in full force and effect through the Closing Date.
6.10. FINANCIAL STATEMENTS.
(a) Seller has furnished Buyer with the audited Financial
Statements for the fiscal year ending December 31, 1998, and will furnish Buyer
with unaudited Financial Statements for the period ending not more than thirty
(30) days prior to the Closing Date. 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 Seller's financial position, income, expenses,
assets, liabilities, shareholder's equity and the results of operations of the
Station as of the dates and for the periods indicated. Since December 31, 1998,
there has been no material adverse change in the business, assets, properties or
condition (financial or otherwise) of the business since the preparation of the
most recent annual Financial Statement. No event has occurred and, Seller has no
knowledge that prior to Closing, any event will have occurred that would make
such Financial Statements misleading in any material respect.
(b) Except as reflected in the most recently available balance
sheets, 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 Station (not including for
this purpose any tort-like liabilities or breach of contract) since the date of
the most recently available balance sheets, there exist no liabilities or
obligations of Seller, contingent or absolute, matured or unmatured, known or
unknown. Except as set forth on Schedule 6.10(b) since the date of the most
recently available balance sheets, (i) Seller 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
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by Seller, 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 material adverse change in
the business or in the condition (financial or otherwise) of the Station, (iv)
Seller has operated the business in the ordinary course and (v) Seller has not
increased the salaries or any other compensation of any of its employees or
agreed to the payment of any bonuses. 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, members' equity and the results of operations of the
Station as of the dates and for the periods indicated, subject to year end
adjustments which do not materially affect the operations of Seller.
6.11. EMPLOYEES. Seller has no written or oral employment agreements or
any other arrangement with any employee which would in any respect obligate or
cause any liability to Buyer at any time.
6.12. EMPLOYEE BENEFIT PLANS. Seller has no obligations or liabilities
(whether accrued, absolute, contingent or unliquidated, whether or not known,
and whether due or to become due) with respect 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"); (iii) any deferred compensation, bonus,
stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement ("Other Plan") or any (iv) "employee benefit plan"
(as defined in Section 3(3) of ERISA), which would in any respect obligate or
cause any liability to Buyer at any time.
6.13. REAL PROPERTY. Seller holds a license to use the real property
described in Schedule 6.13 which is used as the Station's Transmitter Site.
Except as listed on Schedule 6.13, 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 the
building, health, fire and environmental protection codes of all applicable
governmental jurisdictions, 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 Seller. No portion
of the real property described in Schedule 6.13 is the subject of any
condemnation or eminent domain proceedings currently instituted or pending, and
to the Knowledge of Seller, no such proceedings are threatened. There are no
condemnation, zoning or other land use regulations proceedings instituted or, to
the Knowledge of Seller, planned to be instituted, which would materially affect
the use and operations of the real property for any lawful purpose, and Seller
has not received notice of any special assessment proceedings materially
affecting the real property. The real property has direct and unobstructed
access to all public utilities necessary for the operation of the Station.
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6.14. ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 6.14
and to the Knowledge of Seller, (i) no Hazardous Substances have been treated,
stored, used, released or disposed of on the Transmitter Site in any manner that
would cause Buyer to incur material liability under any Environmental Laws; (ii)
Seller is not liable for cleanup or response costs with respect to any present
or past emission, discharge, or release of any Hazardous Substances; (iii) 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 Transmitter Site; (iv) there are no pending
actions, suits, claims, legal proceedings or any other proceedings based on
environmental conditions or noncompliance at the Transmitter Site, or any part
thereof, or otherwise arising from Seller's activities involving Hazardous
Substances; (v) there are no conditions, facilities, procedures or any other
facts or circumstances at the Transmitter Site which constitute noncompliance
with Environmental Laws or regulations; and (vi) there are no structures,
improvements, equipment, activities, fixtures or facilities at the Transmitter
Site which are constructed with, use or otherwise contain Hazardous Substances,
including, but without limitation, asbestos or polychlorinated biphenyls.
6.15. COMPLIANCE WITH LAW. There is no outstanding complaint, citation,
or notice issued by any Governmental Authority asserting that Seller 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, health and
sanitation, environmental protection, occupational safety and the use of
electric power) affecting the Purchased Assets or the business or operations of
the Station, and Seller is in material compliance with all such laws,
regulations, rules, ordinances, decrees, orders and requirements. Without
limiting the foregoing:
(a) The Station's 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) All ownership reports, employment reports, tax returns and
other material documents required to be filed by Seller 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 Station's local public records file have been placed in such file;
all proofs of performance and measurements that are required to be made by
Seller with respect to the Station's transmission facilities have been completed
and filed at the Station; and all information contained in the foregoing
documents is true, complete and accurate.
(c) The location of the Station's main studio complies with
the FCC's rules.
(d) Seller has paid to the Commission the regulatory fees due
for the Station for the years 1994-98.
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6.16. LITIGATION. Except for proceedings affecting radio broadcasters
generally and except as set forth on Schedule 6.3, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Seller, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the business or operations of the Station or to the Purchased Assets. Except as
set forth on Schedule 6.3, there is no other litigation, action, suit,
complaint, claim, investigation or proceeding pending, or to the Knowledge of
Seller, threatened that may give rise to any claim against any of the Purchased
Assets or adversely affect Seller's ability to consummate the Transaction as
provided herein. Seller is not aware of any facts that could reasonably result
in any such proceedings.
6.17. INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character, including bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Station Assets or the Purchased Assets are pending or, to the Knowledge of
Seller, threatened. Seller has not made an assignment for the benefit of
creditors.
6.18. SALES AGREEMENTS. Except as disclosed in Schedule 6.18, the Sales
Agreements in existence on the date hereof have been entered into in the
ordinary course of the Station's business, at rates consistent with Seller's
usual past practices. Such Sales Agreements, in certain cases, cover advertising
with respect to both the Station as well as its affiliated Station WBET-AM
and/or may be for a term longer than 10 weeks and not cancelable on 15 days or
less notice. With respect to such Sales Agreements described herein, the Seller
shall exercise its best reasonable efforts consistent with Buyer's request at
Closing to: (a) amend such Sales Agreements such that, as of the Closing Date,
remaining broadcasting time otherwise attributable to the Station after the
Closing Date will be moved to WBET-AM; (b) terminate such Sales Agreements; or
(c) assign such Sales Agreements to Buyer. With respect to any Sales Agreements
entered into on or after the date of this Agreement, Seller shall not enter into
any contract for a term longer than 10 weeks, or if longer, not terminable by
the Station upon not more than 15 days notice without the prior written consent
of Buyer. Such consent of Buyer shall not be unreasonably withheld.
6.19. LIABILITIES. There are no known liabilities or obligations of
Seller relating to the Station, whether related to tax or non-tax matters, due
or not yet due, except as and to the extent set forth on the most recent
Financial Statements described in Section 6.10.
6.20. SUFFICIENCY OF ASSETS. At the time of Closing, the Purchased
Assets in conjunction with the site license referred to in Section 2.1(i) will
be sufficient to transmit signals under the Station's applicable FCC License
with respect to the modified station facilities for the Station at the New Tower
Site.
6.21. RELATED PARTIES. Except as disclosed in Schedule 6.21 neither
Seller nor any member, officer or director of Seller has any interest whatsoever
in any corporation, firm, partnership or other business enterprise which has had
any business transactions with Seller relating to the Purchased Assets or the
Station, and no shareholder, officer or director of Seller has entered into any
transactions with Seller relating to the Purchased Assets or the Station.
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6.22. TAXES. The Seller has timely filed with all appropriate
Governmental Authority all federal, state, commonwealth, 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
commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof. Seller
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 Seller. To
the Knowledge of Seller, such returns and forms are true, correct and complete
in all material respects, and Seller has no liability for any Taxes in excess of
the Taxes shown on such returns. Seller is not a party to any pending action or
proceeding and, to the Knowledge of Seller, there is no action or proceeding
threatened by any Governmental Authority against Seller for assessment or
collection of any Taxes, and no unresolved claim for assessment or collection of
any Taxes has been asserted against Seller.
6.23. NO MISLEADING STATEMENTS. This Agreement, and any disclosures
made pursuant hereto will not 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. Seller represents and warrants that it will continue to disclose to
Buyer, any fact that Seller is obligated to disclose to assure the continuing
accuracy of the representations and warranties contained in this Section 6.
7.0 BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby makes to and
for the benefit of Seller, 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,
and as of the Closing Date will be authorized to do business in The Commonwealth
of Massachusetts.
7.2. BINDING EFFECT. The execution, delivery and performance by Buyer
of this Agreement has been, and each other document, agreement and instrument to
be executed and delivered by Buyer in connection with this Agreement
(collectively, the "Buyer Documents") will be duly authorized by all necessary
corporate action, and copies of those authorizing resolutions, certified by
Buyer's Secretary shall be delivered to Seller at Closing. This Agreement has
been, and each of the Buyer Documents will be, duly and validly executed and
delivered by Buyer to Seller 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.
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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 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 (x) Buyer's articles of incorporation or by-laws or (y) any judgment,
decree, order, consent agreement, 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.
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 assignee of the FCC Licenses or the owner and operator of
the Station. Should Buyer become aware of any such fact, it will so inform
Seller, and Buyer will use commercially reasonable efforts to remove any such
disqualification.
8.0 PRE-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
respect to the period prior to Closing:
8.1. APPLICATION FOR COMMISSION CONSENT. Within five (5) business days
from the date of this Agreement, Seller and Buyer shall join in and file the
Assignment Application, and they shall diligently take all steps necessary or
desirable and proper expeditiously to prosecute the Assignment Application and
to obtain the Commission's determination that grant of the Assignment
Application will serve the public interest, convenience and necessity. The
failure by either party to timely file or diligently prosecute its portion of
the Assignment Application shall be deemed a material breach of this Agreement.
Each party shall promptly provide the other with a copy of any pleading, order
or other document served on the other relating to the Assignment Application. In
the event that Closing occurs prior to a Final Order, then each party's
obligations hereunder shall survive the Closing.
8.2. ACCESS. Between the date hereof and the Closing Date, Seller
shall, in consultation with Buyer, give Buyer and representatives of Buyer
reasonable access during normal business hours to the Purchased Assets, the
Station, the employees of Seller and the Station and the books and records of
Seller relating to the business and operations 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 Transmitter Site, and such reviews
of the Station's financial records as Buyer may desire, so long as the same do
not unreasonably interfere with Seller's operation of the Station. No inspection
or investigation made by or on behalf of Buyer, or Buyer's failure to make any
inspection or investigation, shall affect Seller's representations, warranties
and covenants hereunder or be deemed to constitute a waiver of any of those
representations, warranties and covenants.
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8.3. MATERIAL ADVERSE CHANGES; FINANCIAL STATEMENTS. Through the
Closing Date:
(a) Seller shall promptly notify Buyer of any event of which
Seller obtains knowledge which has caused or is likely to cause a material
adverse change to the operations of the Station.
(b) Seller shall furnish to Buyer (i) monthly Financial
Statements for Seller and (ii) such other reports as Buyer may reasonably
request relating to Seller. Each of the Financial Statements delivered pursuant
to this Section 8.3(b) shall be prepared in accordance with GAAP consistently
applied during the periods covered (except as disclosed therein).
8.4. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement
and the Closing Date:
(a) Seller shall operate the Station in a manner consistent
with Seller's and the Station's past practice and in material compliance with
all applicable laws, regulations, rules, decrees, ordinances, orders and
requirements of the Commission and all other Governmental Authority. Seller
shall promptly notify Buyer of any actions or proceedings that from the date
hereof are commenced against Seller or the Station or, to the Knowledge of
Seller, against any officer, director, employee, consultant, agent or other
representative of Seller with respect to the business of the Station or the
Purchased Assets.
(b) Seller shall: (i) use the Purchased Assets only for the
operation of the Station; (ii) maintain the Purchased Assets in substantially
their present condition (reasonable wear and tear in normal use and damage due
to unavoidable casualty excepted); (iii) replace and/or repair the Purchased
Assets as necessary in the ordinary course of business; (iv) maintain all
inventories of supplies, tubes and spare parts at levels at least equivalent to
those existing on the date of this Agreement; and (v) promptly give Buyer
written notice of any unusual or materially adverse developments with respect to
the Purchased Assets or the business or operations of the Station.
(c) Seller shall maintain the Station's Business Records in
the usual, regular and ordinary manner, on a basis consistent with prior
periods.
(d) Seller shall not: (i) sell, lease, encumber or otherwise
dispose of any Purchased Assets or any interest therein except in the ordinary
course of business and only if any property disposed of is replaced by property
of like or better value, quality and utility prior to Closing; (ii) cancel,
terminate, modify, amend or renew any of the Contracts without Buyer's express
prior written consent; or (iii) except to the extent expressly permitted in
Section 2.1(c), enter into any Contract or other agreement, undertaking or
obligation or assume any liability that may impose any obligation on Buyer after
Closing, whether Seller is acting within or outside of the ordinary course of
the Station's business, without Buyer's prior written consent.
(e) Seller and the Station will enter into Sales Agreements
only in the ordinary course of the Station's business at commercially reasonable
rates and each such Sales Agreement
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shall have a term not longer than 10 weeks or, if longer, shall be terminable by
the Station upon not more than 15 days notice.
(f) Seller and the Station will enter into Trade Agreements
only in the ordinary course of the Station's business and only if such Trade
Agreements are (i) immediately preemptible for cash time sales trade; (ii)
require the provision of air time only on a "run of schedule", basis; and (iii)
inure or will inure to the benefit of the Station.
(g) Seller shall use its best efforts to preserve the goodwill
and business of the Station's advertisers, suppliers and others having business
relations with the Station, and to continue to conduct financial operations of
the Station, including credit and collection policies, with no less effort, as
in the prior conduct of the business of the Station.
(h) Seller shall not issue, sell or deliver any shares of
stock of Seller or grant any options, warrants or other rights to acquire the
stock of Seller.
(i) Seller shall not make or agree to any material amendment
to any FCC License relating to the Station.
(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) solicit, either directly or indirectly, initiate,
encourage or accept any offer for the purchase or acquisition of the Purchased
Assets by any party other than Buyer.
(l) terminate without comparable replacement or fail to renew
any insurance coverage applicable to the assets or properties of Seller.
(m) take any action or fail to take any action that would
cause the Seller to breach the representations, warranties and covenants
contained in this Agreement.
(n) Seller shall promptly respond to any complaints of
blanketing interference caused by operation from the modified Station facilities
at the New Tower Site.
8.5. DAMAGE.
(A) RISK OF LOSS. The risk of loss or damage, confiscation or
condemnation of the Purchased Assets shall be borne by Seller at all times prior
to Closing. In the event of material loss or damage, Seller shall promptly
notify Buyer thereof and 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 Fifty
Thousand Dollars ($50,000) or less, and Seller 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
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condition. If the cost to repair, replace, or restore the lost or damaged
property exceeds Fifty Thousands Dollars ($50,000), and Seller 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 Purchase Price paid at Closing the amount necessary to
restore the lost or damaged property to its former condition in which event
Seller shall be entitled to all proceeds under any applicable insurance policies
with respect to such claim; or
(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 Seller 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 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. Seller 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) consecutive hours:
(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 is 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 five (5) 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
Paragraph 8.5(a)(1) or 8.5(a)(2). In the event of termination of this Agreement
by Buyer pursuant to this Section, the 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 Seller and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, and whose fees and expenses shall be paid
one-half each by Seller and Buyer.
8.6. ADMINISTRATIVE VIOLATIONS. If Seller receives any finding, order,
complaint, citation or notice prior to Closing which states that any aspect of
the Station's operation violates
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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, Seller shall promptly
notify Buyer of the Administrative Violation, 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.
8.7. BULK SALES ACT. Seller shall be responsible for compliance with
the provisions of any bulk sales statute applicable to the Transaction, and
shall indemnify and hold Buyer harmless from and against any claims, actions,
liabilities and all costs and expenses, including reasonable legal fees,
incurred or suffered by Buyer as a result of the failure to comply with any such
statute.
8.8. 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, Seller shall control, supervise and
direct the operation of the Station.
8.9. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. Between the
date hereof and the Closing Date, Seller, its members, officers, directors and
employees shall cooperate and Seller shall cause its independent accounting firm
to cooperate with Buyer for the purpose of preparing Financial Statements
reviewed by Buyer's independent accountants for purposes of including such
statements in any reports filed by Buyer with any Governmental Authority. Buyer
shall be permitted to disclose the audited Financial Statements for 1998 as well
as unaudited Financial Statements for any period subsequent to 1998 available
prior to Closing and this Agreement in any filings submitted by the Buyer to any
Governmental Authority.
8.10. TIME BROKERAGE AGREEMENT. Simultaneously with the execution of
this Agreement, Seller and Buyer shall enter into a Time Brokerage Agreement
("TBA") in the form attached hereto as Exhibit 2. Failure by Buyer to commence
operations under the terms of the TBA shall not be deemed a breach of this
Agreement.
8.11. STUDIO TRANSMITTER LINK. Seller shall apply with the Commission
for a license for a studio transmitter link should the Station's operation from
the Transmitter Site so require.
8.12. CLOSING OBLIGATIONS. Seller and Buyer shall make commercially
reasonable efforts to satisfy the conditions precedent to Closing.
9.0 STATUS OF EMPLOYEES. All Station employees shall be and remain Seller's
employees, with Seller having full authority and control over their actions, and
Buyer shall not assume the status of an employer or a joint employer of, or
incur or be subject to any liability or obligation of an employer with respect
to, any such employees unless and until actually hired by Buyer. Seller shall be
solely responsible for any and all liabilities and obligations Seller may have
to its employees, including, compensation, severance pay and accrued vacation
time and sick leave. Seller shall be solely responsible for any and all
liabilities, penalties, fines or other
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sanctions that may be assessed or otherwise due under such laws on account of
the Transaction and the dismissal or termination of any of Seller's employees.
10.0 CONDITIONS PRECEDENT.
10.1. MUTUAL CONDITIONS. The respective obligations of both Buyer and
Seller to consummate the Transaction are subject to the satisfaction of each of
the following conditions:
(A) APPROVAL OF ASSIGNMENT APPLICATION. The Commission shall
have granted the Assignment 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 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 act or omission of, such party.
10.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION. In addition to the
satisfaction of the mutual conditions contained in Section 10.1, 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 Seller 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 Seller on or before the
Closing Date under this Agreement and the Seller Documents shall have been duly
complied with and performed in all material respects.
(C) DISCHARGE OF LIENS. Seller shall have obtained and
delivered to Buyer, at Seller'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 Purchased Assets are being conveyed
to Buyer free and clear of all liens, security interests and encumbrances except
for Permitted Encumbrances or otherwise consented to by Buyer in writing. The
record searches described in the report shall have taken place no more than 15
days prior to the Closing Date.
(D) THIRD-PARTY CONSENTS. Seller shall have obtained (i) all
required third-party consents to Buyer's assumption of the Material Contracts,
such that Buyer will, after Closing, enjoy all the rights and privileges of
Seller under the Material Contracts subject only to the same obligations as are
binding on Seller pursuant to the Material Contracts' current terms;
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and (ii) all other requisite third-party consents and approvals which may be
necessary to consummate the Transaction.
(E) ESTOPPEL CERTIFICATES. At Closing, Seller shall deliver to
Buyer a certificate executed by the other party to each Material Contract,
including the licensor under the license for the Transmitter Site, dated no more
than 15 days prior to the Closing Date, stating (i) that such 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; and (iii)
that Seller 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 Seller.
(F) NO MATERIAL ADVERSE CHANGE. The Purchased Assets shall not
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 Seller, of the Station or of the Purchased Assets, except changes
contemplated by this Agreement and changes which are not (either individually or
in the aggregate) materially adverse to the Station.
(G) OPINION OF SELLER'S COUNSEL. At Closing, Seller shall
deliver to Buyer the written opinion or opinions of Seller's counsel, dated the
Closing Date, in scope and form satisfactory to Buyer, to the following effect:
(1) Seller is a limited liability corporation duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts with all requisite corporate power and authority
to enter into and perform this Agreement.
(2) This Agreement has been duly executed and
delivered by Seller and such action has been duly authorized by all necessary
corporate action. This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller 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.
(3) None of (i) the execution and delivery of this
Agreement, (ii) the consummation of the Transaction, or (iii) 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 Seller's articles of incorporation or
bylaws, any law, rule, regulation or other requirement of any Governmental
Authority, or any judgment, decree, order, agreement, lease or other instrument
to which Seller is a party or by which Seller, the Station or any of the
Seller's assets, including the Purchased Assets, may be bound or affected and of
which counsel has knowledge.
(4) To such counsel's knowledge, based on a search of
court dockets as shall be reasonably satisfactory to Buyer's counsel, no suit,
action, claim or proceeding is pending
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or threatened that questions or may affect the validity of any action to be
taken by Seller pursuant to this Agreement or that seeks to enjoin, restrain or
prohibit Seller from carrying out the Transaction.
(5) To such counsel's knowledge, based on a search of
court dockets as shall be reasonably satisfactory to Buyer's counsel, there is
no outstanding judgment, or any suit, action, claim or proceeding pending, or
any governmental proceeding or investigation in progress (other than proceedings
affecting radio broadcasters generally).
(6) Seller is the authorized legal 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 6.5 constitute all FCC licenses and authorizations issued
in connection with the operation of the Station and are the only such licenses
and authorizations required for the operation of the Station, as currently
operated. There are no applications pending before the Commission with respect
to the Station.
(7) The Commission has consented to the assignment of
the FCC Licenses to Buyer and that consent has become a Final Order, unless the
requirement for a Final Order is waived by Buyer.
(8) 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 the Station pending before
the Commission.
The foregoing opinions shall be for the benefit of and may be relied on
by Buyer and Buyer's lenders. In rendering such opinions, Seller's counsel may
rely upon such corporate records of Seller and such certificates of public
officials and officers of Seller.
(H) FINAL ORDER. The Commission's action granting the
Assignment Application shall have become a Final Order.
(I) FINANCIAL STATEMENTS. The financial information set forth
in the Station's Financial Statements for the year ending December 31, 1998, 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
Station for those periods.
(J) TRADE BALANCE. The Trade Balance, if negative, will not
exceed Twenty Thousand Dollars ($20,000).
(K) MODIFICATION APPLICATION FOR NEW TOWER SITE. The FCC's
grant of the application to relocate the Station's antenna to the New Tower Site
(FCC File No. BPH-981020IB), shall have become a Final Order.
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(L) STUDIO SITE LEASE. At Closing, Seller shall permit Buyer
to use the Studio Site for operations of the Station for a period of one year at
a cost of $500.00 per month.
(M) SITE LICENSE. At Closing, Seller shall deliver and assign
to Buyer its license to use the real property used as the Transmitter Site,
subject only to the same obligations as are binding on Seller pursuant to the
current terms of the lease.
(N) COOPERATION AGREEMENT. Seller and Buyer shall have entered
into an agreement whereby Seller agrees to cooperate in effectuating technical
changes to Station WINQ(FM), Winchendon, Massachusetts in accordance with the
provisions of Section 13.4.
(O) CLOSING DOCUMENTS. At the Closing Seller shall deliver to
Buyer (i) such assignments, bills of sale and other instruments of conveyance as
are necessary to vest in Buyer title to the Purchased Assets, all of which
documents shall be dated as of the Closing Date, duly executed by Seller and in
form reasonably acceptable to Buyer; (ii) a certificate, dated the Closing Date,
executed by Seller's President certifying as to those matters set forth in
Section 10.2(a) and (b); and (iii) copies of Seller's corporate resolutions
authorizing the Transaction, each certified as to accuracy and completeness by
Seller's Secretary.
(P) LICENSE APPLICATION. Seller shall have filed a license
application with the FCC seeking permanent authority to operate the Station from
the New Tower Site in accordance with the construction permit issued January 29,
1999.
(Q) LIST OF SALE AGREEMENTS. At least forty-five days prior to
Closing, Seller will provide a list of Sales Agreements to Buyer in accordance
with Section 6.18 so that Buyer may determine those Sales Agreements that it
will assume at Closing.
10.3. ADDITIONAL CONDITIONS TO SELLER'S OBLIGATION. In addition to
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Seller to consummate the Transaction is subject, at Seller's option, to the
satisfaction or waiver by Seller of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller 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) ASSUMPTION OF LIABILITIES. Buyer shall assume and agree to
pay, perform and discharge Seller's obligations under the Contracts, Sales
Agreements and Trade Agreements to the extent Buyer has expressly agreed to
assume such obligations pursuant to Section 4.5.
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(D) PAYMENT. Buyer shall pay Seller the Purchase Price due at
Closing, as provided in Section 4.2.
(E) CLOSING DOCUMENTS. Buyer shall deliver to Seller 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 10.3(a) and (b).
11.0. CLOSING. The Closing Date shall be on or before the tenth day after the
date on which the Commission grant of the Assignment Application becomes a Final
Order and all other preconditions to Closing set forth in Article 10 hereof
shall have been satisfied or waived, or at Buyer's option, if finality is waived
and all other preconditions to Closing set forth in Article 10 hereof have been
satisfied or waived, within fifteen (15) days after grant of the Assignment
Application, or such other time as Seller and Buyer may agree. Notwithstanding
the foregoing, if all of the preconditions to Closing set forth in Article 10
hereof have not been satisfied or waived, the parties agree that Closing shall
be delayed until the tenth day after the date of satisfaction of all conditions,
provided however, that Buyer shall not be obligated to consummate the
transaction contemplated herein if Closing shall not have occurred on or before
the date that is twelve (12) months following the date on which the Commission
accepts the Assignment Application for filing. At the conclusion of the
twelve-month period referred to in the preceding sentence, Buyer may terminate
this Agreement, and have the Escrow Deposit returned to it, or waive any
preconditions that have not been satisfied, or defer Closing until the
preconditions have been satisfied or waived. If Buyer chooses to defer Closing
until the tenth day after the date of satisfaction of all conditions, then if
all of the preconditions to Closing set forth in Article 10 hereof have not been
satisfied or waived by the date that is twenty-four (24) months following the
date on which the Commission accepts the Assignment Application for filing, then
either party may terminate this Agreement. Closing shall take place at 10:00
a.m. on the Closing Date at the office of Buyer's counsel, Kirkland & Ellis, 655
15th Street, Suite 1200, Washington, D.C. 20005.
12.0. PRORATIONS.
12.1. APPORTIONMENT OF EXPENSES. Seller shall be responsible for all
expenses arising out of the business of the Station until 11:59 p.m. on the
Closing Date, and Buyer shall be responsible for all expenses arising out of the
business of the Station after 11:59 p.m. on the Closing Date to the extent such
expenses relate to liabilities assumed by Buyer pursuant to Section 4.5. All
overlapping expenses shall be prorated or reimbursed, as the case may be, as of
11:59 p.m. on the Closing Date, provided however, that Seller shall be
responsible for the payment of any and all regulatory fees for Fiscal Year 1999,
owing to the Commission.
12.2. DETERMINATION AND PAYMENT. Prorations shall be made, insofar as
feasible, at Closing and shall be paid by way of adjustment to the Purchase
Price. As to the prorations that cannot be made at Closing, the parties shall,
within ninety (90) days after the Closing Date, make and pay all such
prorations. If the parties are unable to agree upon all such prorations within
that 90-day period, then any disputed items shall be referred to a firm of
independent certified public
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accountants, mutually acceptable to Seller and Buyer, whose decision shall be
final, and whose fees and expenses shall be allocated between and paid by Seller
and Buyer, respectively, to the extent that such party does not prevail on the
disputed matters decided by the accountants. Notwithstanding anything herein to
the contrary, if the dispute is equal to $5,000 or less, then the parties shall
each pay one half of the liability.
13.0. POST-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
respect to the period subsequent to Closing:
13.1. INDEMNIFICATION.
(A) BUYER'S RIGHT TO INDEMNIFICATION. Seller hereby
indemnifies and holds Buyer, its officers, directors, shareholders and assigns
harmless from and against (i) any breach, misrepresentation, or violation of any
of Seller's representations, warranties, covenants, or other obligations
contained in this Agreement or in any Seller Document; (ii) all obligations and
liabilities of Seller and/or the Station not expressly assumed by Buyer pursuant
to Section 4.5; (iii) all claims by third parties (including employees) against
Buyer attributable to the operation of the Station and/or the use or ownership
of the Purchased Assets prior to Closing and (iv) any Employee Benefit Plan,
Pension Plan, Welfare Plan, or Other Plan (as defined in Section 6.12) that the
Seller may establish. This indemnity is intended by Seller to cover all actions,
suits, proceedings, claims, demands, assessments, adjustments, interest,
penalties, costs and expenses (including, reasonable fees and expenses of
counsel), whether suit is instituted or not and, if instituted, whether at the
trial or appellate level, with respect to any and all of the specific matters
set forth in this indemnity.
(B) SELLER'S RIGHT TO INDEMNIFICATION. Buyer hereby
indemnifies and holds Seller, its officers, directors, members and assigns
harmless from and against (i) any breach, misrepresentation or violation of any
of Buyer's representations, warranties, covenants or obligations contained in
this Agreement; (ii) all obligations and liabilities expressly assumed by Buyer
hereunder pursuant to Section 4.5; and (iii) all claims by third parties against
Seller attributable to Buyer's operation of the Station after Closing. This
indemnity is intended by Buyer to cover all actions, suits, proceedings, claims,
demands, assessments, adjustments, interest, penalties, costs and expenses
(including reasonable fees and expenses of counsel), whether suit is instituted
or not and, if instituted, whether at the trial or appellate level, with respect
to any and all of the specific matters set forth in this indemnity.
(C) PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(1) 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.
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(2) With respect to claims between the parties,
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have 30 days to make any investigation of the claim that the Indemnitor deems
necessary or desirable, or such lesser time if a 30-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 30-day period, or lesser period
if required by this section (or any mutually agreed upon extension hereof) the
Claimant may seek appropriate legal remedies.
(3) 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 30
days after notice of any such claim from the Claimant, or such lesser period as
required by Section 13.1(c)(2), 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 13.1(c)(3) to the
contrary notwithstanding, (i) if there is a reasonable probability that a claim
may materially and adversely affect the Claimant other than as a result of money
damages or other money payments, 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 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) ASSIGNMENT OF CLAIMS. If any payment is made pursuant to
this Section 13.1, 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.
(E) INDEMNIFICATION NOT SOLE REMEDY. The right to
indemnification provided for in this Section shall not be the exclusive remedy
of either party in connection with any breach by the other party of its
representations, warranties, covenants or other obligations hereunder, nor shall
such indemnification be deemed to prejudice or operate as a waiver of any
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right or remedy to which either party may otherwise be entitled as a result of
any such breach by the other party.
(F) THRESHOLD CONCERNING SECTIONS 13.1(a) AND (b).
Notwithstanding anything to the contrary in Sections 13.1(a) and (b), the
parties shall not be entitled to indemnity under Sections 13.1(a) and (b) unless
the aggregate loss indemnified against thereunder exceeds $50,000 (in which
case, the Claimant shall be entitled to recovery from the Indemnitor of the full
amount of the loss).
13.2. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. From the
date of Closing and for a period of two (2) years thereafter, Seller shall
provide Buyer with such cooperation and information as Buyer shall reasonably
request in Buyer's: (i) analysis and review of the Financial Statements or (ii)
preparation of documentation to fulfill any reporting requirements of Buyer
including reports that may be filed with the Securities and Exchange Commission.
Seller shall make its independent accounting firm available, the cost of said
firm to be paid by the Buyer, and the information relied upon by that firm,
including its opinions and Financial Statements for the Seller, to provide
explanations of any documents or information provided hereunder and to permit
disclosure by Buyer, including disclosure to and filing with any Governmental
Authority.
13.3. LIABILITIES. Following the Closing Date, Seller shall pay
promptly when due all of the debts and liabilities of Seller relating to the
Station, other than liabilities specifically assumed by Buyer hereunder.
13.4. ACQUISITION AND MODIFICATION OF WINQ(FM). On or after the Closing
Date, Buyer may demand that Seller satisfy its obligations pursuant to the
Cooperation Agreement referred to in Section 10.2(n) and entered into as of
Closing.
13.5. REIMBURSEMENT TO CENTRAL BROADCASTING CORPORATION. If as of the
Closing Date the amount due Central Broadcasting Corporation pursuant to a
Station Reimbursement Agreement dated October 14, 1998 should be outstanding,
Seller shall assume sole responsibility for and promptly satisfy the amount due.
13.6. RESPONSIBILITY TO DEFEND CONSTRUCTION PERMIT. The parties
acknowledge that an appeal has been filed of the FCC's action granting the
application to relocate the Station's antenna to the New Tower Site. In the
event that the FCC's action has not become a Final Order as of the Closing Date,
then Seller agrees at all times after the Closing to bear the responsibility of
any and all expenses incurred to defend and/or resolve the appeal in an effort
to obtain a Final Order. Seller will diligently take all steps that are
necessary, proper or desirable to defend the application and to expedite the
resolution of the appeal in an effort to obtain a Final Order. Buyer will, at
Seller's expense, cooperate with Seller in preparing and executing any documents
necessary to defend the grant of the application.
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14. DEFAULT AND REMEDIES.
14.1. OPPORTUNITY TO CURE. If either party believes the other to be in
breach or in default hereunder, the former party shall provide the other with
written notice specifying in reasonable detail the nature of such default. If
the default has not been cured by the earlier of: (i) the Closing Date, or (ii)
within 10 days after delivery of that notice (or such additional reasonable time
as the circumstances may warrant provided the party in default undertakes
diligent, good faith efforts to cure the default within such 10-day period and
continues such efforts thereafter), then the party giving such notice may
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.
14.2. SELLER'S REMEDIES. Buyer recognizes that if the Transaction is
not consummated as a result of Buyer's default, Seller 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 due to the default of Buyer, Seller, provided that Seller is not
in default and has otherwise complied with its obligations under this Agreement,
shall be entitled to terminate this Agreement and demand (i) the Escrow Deposit,
with interest earned thereon, and (ii) an additional Five Hundred Thousand
Dollars ($500,000). The parties agree that this sum of One Million Dollars
($1,000,000) shall constitute liquidated damages and shall be in lieu of any
other relief to which Seller might otherwise be entitled due to Buyer's failure
to consummate the Transaction as a result of a default by Buyer.
14.3. BUYER'S REMEDIES. Seller agrees that the Purchased Assets include
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 Seller's
performance under this Agreement, and Seller agrees (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 Seller's
default instead of seeking specific performance, Buyer shall be entitled to the
return of the Escrow Deposit together with all interest earned thereon, and in
addition thereto, to initiate a suit for damages.
14.4. RECOVERY OF COSTS. If any party pursues its remedies under either
Section 14.2 or 14.3, the non-prevailing party, as determined by an arbitrator,
mediator or judge, shall pay all of the reasonable costs and expenses (including
reasonable attorneys' fees) of the prevailing party associated therewith. Any
settlement between the parties shall result in each party's payment of its own
reasonable costs and expenses.
15.0. TERMINATION OF AGREEMENT.
15.1. FAILURE TO CLOSE. This Agreement may be terminated (a) at the
option of either party upon written notice to the other if the Commission has
not granted the Assignment Application within nine (9) months after the
Commission accepts the Assignment Application for filing or (b) by Buyer if the
Commission's action granting the Assignment Application has not
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become a Final Order within twelve (12) months after the Commission accepts the
Assignment Application for filing; or (c) by Buyer if all of the preconditions
to Closing as set forth in Article 10 hereof have not been satisfied or waived
and Closing has not occurred on or before the date that is twelve (12) months
after the date the Commission accepts the Assignment Application for filing; or
(d) by Buyer or Seller if Buyer has not terminated this Agreement pursuant to
Section 15.1(c) and all of the preconditions to Closing as set forth in Article
10 hereof have not been satisfied or waived and Closing has not occurred on or
before the date that is twenty-four (24) months after the date the Commission
accepts the Assignment Application for filing provided, however, that a party
may not terminate this Agreement if such party is in default hereunder, or if a
delay in any decision or determination by the Commission respecting the
Assignment Application or the modification application referenced in Section
10.2(k) hereof (the "Modification Application") has been caused or materially
contributed to (i) by any failure of such party to furnish, file or make
available to the Commission information within its control; (ii) by the willful
furnishing by such party of incorrect, inaccurate or incomplete information to
the Commission; or (iii) by any other action taken by such party for the purpose
of delaying the Commission's decision or determination respecting the Assignment
Application or the Modification Application. This Agreement may also be
terminated upon the mutual agreement of Buyer and Seller. In the event of
termination pursuant to this Section, the Escrow Deposit, together with all
interest earned thereon, shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder unless the failure
to consummate the Transaction is attributable to Buyer's default, and Seller is
not in default and has otherwise complied with its obligations under this
Agreement, in which case the Escrow Deposit plus interest earned thereon shall
be released to Seller as liquidated damages pursuant to Section 14.2.
15.2. DESIGNATION FOR HEARING. The time for approval provided in
Section 15.1 notwithstanding, either party may terminate this Agreement upon
written notice to the other, if, for any reason, the Assignment Application is
designated for hearing by the Commission, provided, however, that written notice
of termination must be given within 10 days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section, the Escrow Deposit together with all
interest earned thereon shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder, provided,
however, that if the designation for hearing is predicated upon breach by either
party of a representation, warranty or covenant contained in this Agreement, the
nonbreaching party may pursue the remedies available to such non-breaching party
provided in Sections 14.2 and 14.3.
15.3. FAILURE TO PAY TIME BROKERAGE AGREEMENT FEES. If there is an
Event of Default (as defined in the Time Brokerage Agreement) for failure to pay
the fee or the expenses described in Schedule II of the Time Brokerage
Agreement, then Seller may terminate this Agreement.
16. GENERAL PROVISIONS.
16.1. BROKERAGE. Seller and Buyer represent to each other that neither
party has dealt with a broker in connection with the Transaction, except that
Seller has retained Media Services
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Group, Inc.. No finders fee is due to any person or entity in connection with
the Transaction except for Media Services Group, Inc. and such fee shall be paid
by Seller at Closing.
16.2. FEES. All Commission filing fees for the Assignment Application,
and all recording costs, transfer taxes, sales tax, document stamps and other
similar charges shall be paid one-half by Seller and one-half by Buyer. 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.
16.3. 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:
If to Seller:
Mr. Joseph V. Gallagher
Managing Member
KJI Broadcasting, LLC
27 Chastellux Avenue
Newport, RI 02840
Fax: (401) 841-8591
with a copy (which shall not constitute notice) to:
E. Colby Cameron, Esq.
Cameron & Mittleman
56 Exchange Terrace
Providence, RI 02906
Fax: (401) 331-5787
If to Buyer:
Mr. Alfred C. Liggins, President
Radio One, Inc.
5900 Princess Garden Parkway
8th Floor
Lanham, MD 20706
Fax: (301) 306-9694
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with copies (which shall not constitute notice) to:
Linda J. Eckard, Esq.
Radio One, Inc.
5900 Princess Garden Parkway
8th Floor
Lanham, MD 20706
Fax: (301) 306-9638
Mr. Scott R. Royster
Chief Financial Officer
Radio One, Inc.
5900 Princess Garden Parkway
Lanham, MD 20706
Fax: (301) 306-9426
Either 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.
16.4. ASSIGNMENT. Neither party may assign this Agreement without the
other party's express prior written consent, provided, however, Buyer may assign
its rights and obligations pursuant to this Agreement without Seller'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, provided that Buyer
remains obligated to pay the Purchase Price, or (ii) to Buyer's lenders as
collateral for any indebtedness incurred by Buyer; and subsequent to closing to
(x) any entity which acquires all or substantially all of the Purchased Assets
or (y) to Buyer's lenders as collateral for any indebtedness incurred by Buyer.
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.
16.5. EXCLUSIVE DEALINGS. For so long as this Agreement remains in
effect, neither Seller nor any person acting on Seller'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
any of the Purchased Assets or the Station, other than Buyer or Buyer's
permitted assignees.
16.6. THIRD PARTIES. Nothing in this Agreement, whether express or
implied, is intended to: (i) confer any rights or remedies on any person other
than Seller, 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 Seller or
Buyer.
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16.7. 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.
16.8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, and indemnification obligations of the parties contained herein
shall survive for twelve (12) months after the Closing Date except that claims
properly asserted within the twelve (12) month period shall survive until
finally and fully resolved; provided, however, that Seller's representations and
warranties in Sections 6.2, 6.4, 6.5, 6.6, 6.10, 6.12 and 6.21 and Buyer's
indemnification rights with respect thereto and with respect to Section
13.1(a)(ii) shall survive the Closing until the end of the applicable statute of
limitations period.
16.9. 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.
16.10. 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.
16.11. 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.
16.12. 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.
16.13. GOVERNING LAW, JURISDICTION. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of The Commonwealth
of Massachusetts without regard to the choice of law rules utilized in that
jurisdiction. Buyer and Seller 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
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in or by such court. Buyer and Seller each hereby consent to service of process
by registered mail at the address to which notices are to be given. Each of
Buyer and Seller agrees that its submission to jurisdiction and its consent to
service of process by mail is made for the express benefit of the other party
hereto. Final judgment against Buyer or Seller 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.
16.14. 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.
16.15. 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.
16.16. FURTHER ASSURANCES. Seller 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
Purchased Assets to be and intended to be transferred, assigned and conveyed
hereunder.
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IN WITNESS WHEREOF, and to evidence their assent to the foregoing,
Seller and Buyer have executed this Asset Purchase Agreement under seal as of
the date first written above.
SELLER:
KJI BROADCASTING, LLC
By:
---------------------------------
Joseph V. Gallagher
Managing Member
BUYER:
RADIO ONE, INC.
By:
---------------------------------
Alfred C. Liggins
President
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EXHIBIT 10.53
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement ("Agreement") is made this 24th day of
May, 1999, by and between KJI Broadcasting, LLC ("Licensee"), the licensee of
Radio Station WCAV(FM), Brockton, Massachusetts (the "Station") and Radio One,
Inc. ("Broker").
WHEREAS, Licensee is the licensee of the Station;
WHEREAS, Broker 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 (the "FCC"); and
WHEREAS Broker and Licensee have entered into an Asset Purchase
Agreement, dated May 24, 1999 (the "Asset Purchase Agreement");
WHEREAS, Licensee, while maintaining control over the Station's
finances, personnel matters and programming, desires to accept and transmit
programming supplied by Broker on the Station, as well as broadcast Licensee's
own public interest programming.
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.
(a) Except as described in Paragraphs 1(b) and 1(c), Licensee
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, Broker's programs and
advertisements (the "Programs") as described in Attachment I hereto.
(b) Licensee shall have the right to present programs of local
significance on the Station on any Sunday during the hours of 6:00 a.m. to 8:00
a.m. Licensee shall notify Broker at least forty eight (48) hours in advance if
Licensee plans to broadcast on Sunday between 6:00 a.m. and 8:00 a.m.
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(c) Licensee will retain ultimate responsibility for
ascertainment of the needs of its community of license and service area.
Licensee shall have the right and obligation to broadcast programming addressing
those needs, either produced or purchased by Licensee, as it determines
appropriate to respond to the ascertained issues of community concern and to
delete or preempt in its sole discretion any Broker programming for the purpose
of transmitting such programming.
2. Payments. Broker hereby agrees to pay the amounts specified in
Attachment II to Licensee for broadcast of the Programs hereunder.
3. Term. Except as otherwise provided in Paragraph 21 of this
Agreement, the term of this Agreement shall commence at Buyer's option, at 12:01
a.m. EST on that date which is thirty (30) days following Seller's receipt of
written notice from Buyer that Buyer wishes to commence operations under the
terms of this Agreement (the "Effective Date"), and shall end on the earlier of
(a) closing under the Asset Purchase Agreement, of even date herewith, (b)
thirty (30) days after termination of the Asset Purchase Agreement, or (c)
termination pursuant to paragraph 21 hereof.
4. Programs. Broker 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. Broker shall be permitted access to and use of
Licensee's studio and program production facilities. All advertising spots and
promotional material or announcements shall comply with all applicable federal,
state and local regulations.
5. Competing Products. Broker will endeavor to maintain appropriate
separations between commercials for competing advertisers or products.
6. Handling of Public Comments. Licensee shall be advised promptly by
Broker of any public or FCC complaint or inquiry concerning programs provided by
Broker.
7. Programming and Operations Standards. Broker agrees to abide by the
standards set forth in Attachment III in its programming and operations. Broker
further agrees that if, in the sole judgment of Licensee or its Station's
manager, Broker does not comply with said standards, Licensee may suspend or
cancel any program not in compliance.
8. Operational Expenses. The costs of operating the Station shall be
paid by Licensee in accordance with Attachment II. Broker will be responsible
for paying the costs of purchasing the Programs and for the expenses incurred in
the sale of advertising time. Upon reasonable request by Broker, Licensee will
provide Broker with documentation adequate to demonstrate that Licensee is
current in its payment to all of its creditors whose services are used in
connection with the operation of the Station.
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9. Sale of Advertising Time. Broker is permitted to sell all
advertising for Programs it provides to Licensee and may sell such advertising
in combination with the sale of advertising on other stations owned by Broker
and Broker will retain all revenues from the sale of such advertising. Licensee
is permitted to sell all advertising available on public affairs programs
produced or purchased by Licensee and will retain all revenues from the sale of
such advertising.
10. Assumption of Contracts. Broker agrees to assume the obligations of
the Licensee as to Contracts, Sales Agreements and Trade Agreements (as defined
in the Asset Purchase Agreement) disclosed in writing to Broker at least fifteen
days prior to commencement of this Agreement consistent with the terms of the
Asset Purchase Agreement.
11. Operation of Station.
(a) Licensee Retains Control. Notwithstanding anything to the
contrary in this Agreement, Licensee shall have full authority and power over
the operation of the Station during the period of this Agreement. Licensee shall
retain control in its absolute discretion over the policies, programming and
operations of the Station, including, without limitation, the right to decide
whether to accept or reject any programming or advertisements, the right to
preempt or delay or delete any programs which Licensee reasonably believes to be
unsatisfactory, unsuitable or contrary to the public interest or in order to
broadcast a program deemed to be by Licensee to be of greater national,
regional, or local interest, and the right to take any other actions necessary
for compliance with the laws of the United States, the Commonwealth of
Massachusetts, and the rules, regulations, and policies of the FCC. Licensee
shall at all times be solely responsible for meeting all of the FCC's
requirements with respect to public service programming, maintaining a main
studio, maintaining the political and public inspection files, and preparing the
Station's logs and issues/programs lists. Broker shall, upon request by
Licensee, provide Licensee with information with respect to such of Broker's
Programs which are responsive to public needs and interest so as to assist
Licensee in the preparation of required programming reports and will provide,
upon request, other information to enable Licensee to prepare other records,
reports and logs required by the FCC or other local, state or federal
governmental agencies.
(b) Equipment. All equipment necessary for broadcasting by the
Station shall be maintained by Licensee in a condition consistent with good
engineering practices and in compliance in all material respects with the
applicable rules, regulations and technical standards of the FCC, and all
capital expenditures reasonably required to maintain the technical quality of
the Station's signals shall be made in a timely fashion at the sole expense and
in the sole discretion of Licensee. Licensee shall also be solely responsible
for all costs associated with ensuring that the Station is operating from the
New Tower Site (as defined in the Asset Purchase Agreement) consistent with
Licensee's representations and warranties in the Asset Purchase Agreement during
the term of this Agreement. Broker may, at its own expense, bring onto the
premises of the Station and use its own technical equipment and business
machines. Upon termination of this Agreement, Broker shall promptly remove all
of its technical equipment and business machines from the premises of the
Station and
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shall return the Station to the same condition it was in prior to the Effective
Date, unless termination is due to a sale of the Station to Broker.
12. Personnel. Broker 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.
Licensee shall provide and pay for the manager of the Station, who shall report
to and be accountable solely to Licensee and who shall be ultimately responsible
for the day-to-day operation of the Station. Licensee shall also employ such
personnel as Licensee, in its sole discretion, deems necessary to be responsible
for the public affairs programming broadcast on the Station, to comply with FCC
rules and record keeping, to ensure that the technical operations of the Station
are consistent with the Station's license and FCC rules and to provide
managerial and staff support for the Station's main studio. Licensee shall be
responsible for the salaries, taxes, insurance and related costs for all the
Station personnel under its employ. Employees of Broker shall conduct themselves
in a professional manner and while on the Station's premises shall be subject to
the supervision of Licensee's employees.
13. Special Events. Licensee reserves the right in its discretion, and
without liability, to preempt, delay or delete any of the Programs provided by
Broker which in Licensee's judgment, is of greater local or national importance.
However, such authority shall not be exercised in an arbitrary manner or for the
commercial advantage of Licensee. In all such cases, Licensee will use its best
efforts to give Broker reasonable notice of its intention to preempt such
broadcast or broadcasts, and, in the event of such preemption, Broker's monthly
payment shall be reduced as further described in Attachment II, Paragraph 2
hereto.
14. 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
Licensee, shall not constitute a breach of this Agreement and Licensee will not
be liable to Broker, except to the extent of allowing in each such case an
appropriate payment credit for time or broadcasts not provided as further
described in Attachment II, Paragraph 2 hereto.
15. Right to Use the Programs. The right to use the Programs provided
by Broker and to authorize their use in any manner and in any media whatsoever,
shall be and remain vested in Broker.
16. Payola. Broker agrees that Broker 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 Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for or
furnished such consideration in accordance with FCC requirements.
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17. Compliance with Laws. Broker agrees that throughout the term of
this Agreement Broker will comply in all material respects with all laws and
regulations applicable in the conduct of Licensee's business. Licensee 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. Licensee will file a copy of the Agreement with
the FCC, if required to do so under FCC rules or policies and Licensee will
place a copy of this Agreement in the public file for the Station, as required
by FCC rules.
18. Broker's Accounts Receivable. All receipts and accounts receivable,
including the proceeds thereof, generated from Broker's programming, including
music, commercial announcements, news and information programming broadcast on
the Station from the Effective Date through the termination hereof shall,
notwithstanding the termination of this Agreement, at all times hereafter remain
the sole and exclusive property of the Broker. Any receipts and/or accounts
receivable generated from the broadcast of commercial announcements from and
after the Effective Date of this Agreement through the termination hereof are
specifically acknowledged and agreed by the Licensee as belonging to the Broker.
19. Indemnification.
(a) Scope. Each party shall forever protect, save, defend and
keep the other party harmless and indemnify said other party against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities of any kind or nature whatsoever arising
directly or indirectly out of the acts, omissions, negligence or willful
misconduct of the said party, its employees or agents in connection with the
performance of this Agreement. Further, Broker and Licensee hereby indemnify and
hold each other harmless against all liability for libel, slander, illegal
competition or trade practices, infringement of trade marks, trade names, or
program titles, violation of rights of privacy, and infringement of copyrights
and property rights resulting from the broadcast of programming furnished or
broadcast by the other party. These mutual obligations shall survive any
termination of this Agreement and shall continue until the expiration of all
applicable statutes of limitation and the conclusion and payment of all
judgments which may be rendered in all litigation which may have commenced prior
to such expiration. However, Broker shall not be liable for nor responsible to
indemnify Licensee for the following: (i) damages arising out of mistakes,
omissions, interruptions, delays, errors or defects in transmission caused by
the negligence or acts or omissions of Licensee or its employees, contractors or
agents; (ii) damages arising out of the failure of equipment not provided by
Broker or not under its control. Further, neither party shall be responsible for
indemnifying the other for damages caused by acts of God, sabotage, vandalism,
or negligence or acts or omissions of any third party.
(b) Procedure. The procedure for indemnification shall be as
follows:
(i) The party claiming indemnification (the
"Claimant") shall give written notice to the party from which indemnification is
sought (the "Indemnitor") promptly after the
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Claimant learns of any claim or proceeding covered by the foregoing agreement 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.
(ii) 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 Paragraph (or any mutually agreed upon extension hereof) the
Claimant may seek appropriate legal remedies.
(iii) 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 any 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
Paragraph 18(b)(iii) to the contrary notwithstanding, (i) if there is a
reasonable probability that a claim may materially and adversely affect the
Claimant other than as a result of money damages or other money payments, 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 Paragraph, the Claimant, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the 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.
20. Events of Default. The following shall, after the expiration of the
applicable cure periods, constitute Events of Default under the Agreement:
20.1. Non-Payment. Broker's failure to timely pay the
consideration provided for in Paragraph 2 hereof.
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20.2. Default in Covenants. Licensee or Broker shall default
in the observance or performance of any material covenant, condition or
agreement contained herein.
20.3. Adverse Financial Condition. Either party shall make a
general assignment for the benefit of creditors or files or has filed against it
a petition for bankruptcy, for reorganization or for the appointment of a
receiver, trustee or similar creditor's representative for the property or
assets of such party under such federal or state insolvency law.
20.4. Cure Periods. An Event of Default under Section 19.1
shall not be deemed to have occurred until five (5) days after the payment is
due. Except for payment of monies by Broker to Licensee, an Event of Default
shall not be deemed to have occurred until fifteen (15) business days after the
non-defaulting party has provided the defaulting party with written notice
specifying the event or events that if not cured would constitute an Event of
Default and specifying the actions necessary to cure within such period. This
period may be extended for a reasonable period of time if the defaulting party
is acting in good faith to cure and such delay is not materially adverse to the
non-defaulting party.
21. Termination Options. The parties shall have the right to terminate
this Agreement under the following circumstances:
21.1 Default. Either party may terminate if the other party
has caused an Event of Default to occur.
21.2 FCC Prohibitions. Either party may terminate this
Agreement if the FCC determines that the Agreement is not consistent with
Licensee's obligations as a licensee and the parties cannot reform the Agreement
to satisfy the FCC's concerns.
21.3 Failure of Broadcast Transmissions. If the Station is 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
five (5) or more Specified Events, as defined below, each lasting more than
eight (8) consecutive hours, then Broker may, at its option terminate this
Agreement. For the purposes of this Agreement, a "Specified Event" shall include
the occurrence and continuance for a period of more than eight (8) hours of any
of the following: (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 authorized antenna height above
average terrain or at less than eighty percent (80%) of its licensed effective
radiated power.
22. Obligation Upon Termination. In the event of termination, the
parties agree as follows:
22.1 Payments. In the event of termination, Broker shall pay
to Licensee any fees due but unpaid as of the date of termination unless
prohibited by the FCC and Licensee shall
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reasonably cooperate with Broker to the extent permitted to enable Broker to
fulfill advertising or other programming contracts then outstanding, in which
event Licensee shall receive as compensation for the carriage of such
advertising or programming that which otherwise would have been paid to Broker
thereunder, unless such termination is due to a sale of the Station to Broker.
22.2 Retention of Ownership Rights. In the event of
termination, Broker reserves the right to ownership of logos and positioning
statements which it develops during the term of this Agreement, and Licensee may
not use any such materials without the consent of Broker.
22.3 Assumption of Contracts. In the event of termination of
this Agreement for any reason other than the Closing of the Asset Purchase
Agreement, Licensee shall be responsible for assuming and fulfilling obligations
under contracts entered into by Broker for the sale of advertising time on the
Station that are in effect as of the date of such termination, provided that
such contracts (i) are disclosed in writing to Licensee, and are for a term of
10 weeks or less or terminable upon 15 days notice or less, and (ii) either (a)
were entered into in the ordinary course of the Station's business, and are
sales of advertising time for cash on commercially reasonable terms, or (b) were
entered into in the ordinary course of the Station's business for consideration
other than cash on commercially reasonable terms, which consideration was or is
used solely in furthering the business of the Station. Notwithstanding the
foregoing, the Licensee shall only be obligated to assume an aggregate of
$20,000 Negative Trade Balance (as that term is defined in the Asset Purchase
Agreement) with respect to the non-cash sales agreements of the Broker. Licensee
shall (a) have the duty to perform all such assumed agreements or contracts, and
(b) be entitled to collect and receive the money thereafter derived therefrom;
and Broker will forthwith assign same to Licensee and turn over to Licensee all
books and records relating to the sale of advertising for broadcast exclusively
on the Station. Broker shall, at such time, pay over to Licensee any money or
other consideration it shall have received as "pre-payment" for such advertising
which Licensee may thereafter undertake to broadcast over the Station. Licensee
shall indemnify and hold Broker harmless against any nonperformance of any
assumed agreement or contract. All uncollected revenue for advertising during
the term of this Agreement prior to such termination shall belong to, be the
property of and be for the benefit of Broker.
23. Representations and Warranties. Each of the parties hereto
represents and warrants to the other the following:
23.1 Music Licenses. Licensee and Broker represent that, as of
the date that this Agreement commences, 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 Licensee and Broker will maintain
their respective licenses in good standing.
23.2 Compliance with FCC Ownership Rules. Broker certifies
that this Agreement complies with the requirements of Section 73.3555 of the
FCC's Rules.
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23.3 Licensee's Certification. Licensee hereby certifies that
it shall maintain the ultimate control over the Station's facilities, including
but not limited to, control over finances, with respect to the operation of the
Station, over the personnel operating the Station and over the programming to be
operated by the Station.
24. 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.
25. 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.
26. Construction. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts, 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 regulations of the FCC and all other governmental bodies or authorities
presently or hereafter to be constituted.
27. Headings. The headings contained in this Agreement and in the
Attachments thereto are included for convenience only and no such heading shall
in any way alter the meaning of any provision.
28. Successors and Assigns. Neither party may assign this Agreement
without the other party's express prior written consent, provided, however,
Broker may assign its rights and obligations pursuant to this Agreement without
Licensee's consent to an entity which is a subsidiary or parent of Broker or to
an entity owned or controlled by Broker or its principals or to Buyer's lenders
as collateral for any indebtedness incurred by Buyer. 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.
29. Counterpart Signatures. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart.
30. Notices. Any notice or other communication authorized or required
hereunder shall be in writing and any payment, notice or other communications
shall be deemed given when delivered
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personally or by facsimile transmission, or if mailed by certified mail with
return receipt requested, then three business days after mailing, or if by
Federal Express, postage prepaid, then the next business day, and addressed as
follows:
If to Licensee:
Mr. Joseph V. Gallagher
Managing Member
KJI Broadcasting, LLC
27 Chastellux Avenue
Newport, RI 02840
Fax: (401) 841-8591
With a copy to:
E. Colby Cameron, Esq.
Cameron & Mittleman
56 Exchange Terrace
Providence, RI 02906
Fax: (401) 331-5787
If to Broker:
Mr. Alfred C. Liggins III
President
Radio One, Inc.
5900 Princess Garden Parkway, 8th Floor
Lanham, MD 20706
Fax: (301) 306-9694
With a copy to:
Linda J. Eckard
General Counsel
Radio One, Inc.
5900 Princess Garden Parkway 8th Floor
Lanham, MD 20706
Fax: (301) 306-9638
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31. Entire Agreement. This Agreement embodies the entire agreement
between the parties 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.
32. 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.
33. No Partnership or Joint Venture Created. Nothing in this Agreement
shall be construed to make Licensee and Broker partners or joint venturers.
Neither party hereto shall have the right to bind the other to transact any
business in the other's name or on its behalf, in any form or manner or to make
any promises or representations on behalf of the other.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
KJI BROADCASTING, LLC
By:
---------------------------------
Joseph V. Gallagher
Managing Member
BUYER:
RADIO ONE, INC.
By:
---------------------------------
Alfred C. Liggins
President
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TIME BROKERAGE AGREEMENT
ATTACHMENT I
PROGRAMMING
Broker shall provide radio programs which Broker deems
appropriate for broadcast. The parties acknowledge and agree that during the
term of the Agreement, Broker, in consultation with Licensee, shall implement a
new programming format on the Station.
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TIME BROKERAGE AGREEMENT
ATTACHMENT II
PAYMENTS FROM BROKER
1. Monthly Payment. Broker shall pay to Licensee a monthly payment in
the amount of Fifteen Thousand Dollars ($15,000). In the event that this
Agreement is still in effect one year from the Effective Date, the monthly
payment shall increase to Twenty Five Thousand Dollars ($25,000). The monthly
payment for any partial month(s) shall be prorated based on the number of days
for which this Agreement is effective during the relevant month(s). The monthly
payment shall be paid on or before the first day of each month.
2. Reduction in Monthly Payment. Licensee shall provide prompt written
notice to Broker specifying the date, time and reason when programs provided by
Broker have not been broadcast. The Monthly Payment shall be reduced in any
calendar month where other than up to two (2) hours per week between 12 midnight
and 5 a.m. for purposes of equipment maintenance or other than during the hours
of 6:00 a.m. and 8:00 a.m. on Sunday, Licensee has preempted, declined or failed
to broadcast the Programs provided by Broker. In such event, the Monthly Payment
then in effect shall be reduced by a percentage equal to the number of hours so
preempted or otherwise not broadcast divided by the total number of hours
available to Broker for broadcast of Programs during that month.
3. Expenses. Licensee is responsible for paying all expenses of the
Station during the term of this Agreement. Within fifteen (15) business days of
receipt by Broker of appropriate written documentation of such expenses from
Licensee, Broker shall reimburse Licensee for the following expenses:
a. Rental payments for Fillebrown Tower license with ADF
Communications.
b. Electric utility bills for Fillebrown Tower Site.
c. Local and long distance telephone bills for telephone use at
the Station's Studio and Transmitter Site.
d. ASCAP, BMI, SESAC music licensing fees.
e. Salaries, payroll taxes, payroll service and health insurance
for Station employees expressly assumed by Broker.
f. General insurance and Workman's Compensation for the Station
employees.
h. FCC Regulatory Fees for FY 1999.
-14-
<PAGE>
i. Personal property tax for the Station equipment.
j. Studio rent.
k. Other expenses as agreed to in writing by the parties.
-15-
<PAGE>
TIME BROKERAGE AGREEMENT
ATTACHMENT III
PROGRAMMING STANDARDS
Broker, at the request of Licensee, will comply with the following
regulations and restrictions in the preparation, writing and provision for
broadcast of the programming on the Station:
I. No Denominational Attacks. Broker's programming will not be used as
a medium for attack on any faith, denomination or sect or upon any individual or
organization.
II. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related endeavor, except where
contained in an actual commercial message of a sponsor, is prohibited. No
commercial messages ("plugs") or undue references shall be made in programming
presented over the Station to any business venture, profit-making activity or
other interest (other than noncommercial announcements for bona fide charities,
church activities or other public service activities) in which Broker is
directly or indirectly interested without the same having been approved in
advance by the Station's General Manager and such broadcast being announced,
logged and sponsored.
III. No Lotteries. Announcements giving any information about lotteries
or games prohibited by federal or state law or regulation are prohibited. This
prohibition includes announcements with respect to bingo parties and the like
which are to be held by a church, if such announcements are prohibited under
Massachusetts or Federal law.
IV. Election Procedures. Broker will clear with the Station's General
Manager the schedule of rates that Broker will charge for the time to be sold to
candidates for public office or their supporters to make certain that such rates
conform with applicable law and Station policy. Licensee in its sole discretion,
may require that Broker grant access for the purchase of time to candidates for
political office or their supporters. In the event that Licensee determines that
any candidates for political office or their supporters are entitled to purchase
time in programming provided by Broker, Broker will provide such access as
reasonably required by Licensee in accordance with applicable law.
V. Required Announcements. Broker will include (i) an announcement in a
form satisfactory to Licensee at the beginning of each hour of programming to
identify the Station's call letters and (ii) an announcement at the beginning of
each broadcast day to indicate that program time has been purchased by Broker,
and (iii) any other announcements required by applicable law.
-16-
<PAGE>
VI. No Illegal Announcements. No announcements or promotions prohibited
by law of any lottery or game shall be made over the Station. Any game, contest,
or promotion relating to or to be presented over the Station must be fully
stated and explained to Licensee upon request by it, which reserves the right,
in its discretion to reject any game, contest, or promotion.
VII. Licensee Discretion Paramount. In accordance with the Licensee's
responsibility under the Communications Act of 1934, as amended, and the rules
and regulations of the FCC, Licensee reserves the right to reject or terminate
any advertising proposed to be presented or being presented over the Station
which is in conflict with Station policy or which, in Licensee's judgment, would
not serve the public interest.
VIII. Programming Prohibitions. Broker shall not knowingly broadcast
any of the following programs or announcements:
A. False Claims. False or unwarranted claims for any product
or service.
B. Unfair Imitation.Infringements of another advertiser's
rights through plagiarism or unfair imitation of either
program idea or copy, or any other unfair competition.
C. Obscenity and Indecency. Any programs or announcements that
(1) have a dominant theme that, taken as a whole, appeals to
the prurient interest in sex, portray sexual conduct in a
patently offensive way, and lack literary, artistic, political
or scientific value or (2) describe in terms patently
offensive as measured by contemporary community standards for
the broadcast medium, sexual or excretory activities or organs
at times of the day when children are likely to be in the
audience.
IX. Waiver. Licensee may waive in writing any of the foregoing
regulations and restrictions in specific instances if, in its opinion, good
broadcasting in the public interest is served. In any case where questions of
policy or interpretation of matters contained in this Attachment arise, Broker
shall submit the same to Licensee for decision before making any commitments in
connection therewith.
-17-
Exhibit 10.54
AGREEMENT AND PLAN OF WARRANT RECAPITALIZATION
This Agreement and Plan of Warrant Recapitalization (this "Agreement")
is made as of the 25th day of February, 1999, by and among (i) Radio One, Inc.,
a Delaware corporation (the "Company"), (ii) Catherine L. Hughes ("Hughes") and
Alfred C. Liggins ("Liggins") (the "Founding Investors" and each a "Founding
Investor"), (iii) Syncom Capital Corporation, Alta Subordinated Debt Partners
III, L.P., BancBoston Investments Inc., Alliance Enterprise Corporation,
Opportunity Capital Corporation, Medallion Capital, Inc., TSG Ventures, L.P.,
Fulcrum Venture Capital Corporation and Grant M. Wilson (the "Preferred
Investors"), (iv) Jerry A. Moore III ("Moore") and (v) Scott R. Royster
("Royster").
W I T N E S S E T H
WHEREAS, reference is made to the Preferred Stockholders' Agreement
dated as of May 14, 1997, by and among the investors listed on the schedules
thereto, the Company, Radio One Licenses, Inc., the Founding Investors and Jerry
A. Moore III, as amended through the date hereof (the "Preferred Stockholders
Agreement");
WHEREAS, reference is made to the Warrantholders' Agreement dated as of
June 6, 1995, by and among the investors listed on the schedules thereto, the
Company, Radio One Licenses, Inc., the Founding Investors and Jerry A. Moore
III, as amended through the date hereof (the "Warrantholders' Agreement");
WHEREAS, the Company's Board of Directors and the holders of its common
stock have approved the adoption of an Amended and Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation");
WHEREAS, the Certificate of Incorporation provides for three classes of
Common Stock, including 1,000 shares of Class B Common which shall entitle its
holders to ten votes per share with respect to most issues presented for a vote
of the Company's stockholders;
WHEREAS, pursuant to a Plan of Recapitalization that will become
effective upon the adoption of the Certificate of Incorporation (the "Plan of
Recapitalization"), substantially all of the outstanding shares of Class B
Common, and a majority of the voting power represented by the Common Stock, will
be held by the Founding Investors;
WHEREAS, pursuant to the Preferred Stockholders' Agreement, adoption of
the Certificate of Incorporation required the approval of the holders of a
majority of the outstanding shares of the Company's Preferred Stock;
WHEREAS, in consideration of the Preferred Investors consenting to the
adoption of the Certificate of Incorporation the Founding Investors are willing
and desire to enter into this Agreement and to become bound by the terms and
provisions hereof;
<PAGE>
WHEREAS, in connection with the recapitalization of the Company's
Common Stock contemplated by the Plan of Recapitalization the Preferred
Investors are willing and desire to recapitalize the Warrants (as such term is
defined in the Warrantholders' Agreement) held by them as provided in this
Agreement; and
WHEREAS, Moore and Royster each wish to grant to Hughes and Liggins
options to purchase Class C Common as provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Definitions. Except as otherwise specifically provided, capitalized
terms used in this Agreement will have the meanings set forth in the
Certificate of Incorporation.
2. Tag-Along Rights.
(a) Right of Participation in Sales by Founding Investor(s). If at
any time after the Initial Public Offering any Founding
Investor(s) or his, her or their Permitted Transferees
described in clause (i) of Section 2(e), below (the "Bound
Permitted Transferees") desire to sell all or any part of the
shares of Common Stock owned by them to any Person other than
to a Permitted Transferee (such Person or entity referred to
herein as a "Third Party Purchaser") for a per share purchase
price greater than Market Value as of the date of the notice
required pursuant to Section 2(b), below (a "Proposed Sale"),
each Preferred Investor shall have the right to sell to the
Third Party Purchaser, as a condition to such Proposed Sale by
the applicable Founding Investor(s) or Bound Permitted
Transferee, at the same price per share and otherwise upon
other terms and conditions that are in the aggregate the same
as involved in such Proposed Sale by such Founding Investor(s)
or Bound Permitted Transferee, up to such Preferred Investor's
Pro Rata Share (as defined below) of the total number of
shares of Common Stock proposed to be sold by such Founding
Investor(s) or Bound Permitted Transferee (subject to
subsection (c) below). For purposes of this Section 2(a), the
term "Pro Rata Share" shall mean, with respect to any
Preferred Investor, the percentage that the Common Stock held
by such Preferred Investor then represents of all of the
Common Stock then held by the Founding Investors, Bound
Permitted Transferees and Preferred Investors as a group, in
each case on a fully-diluted basis.
(b) Notice of Proposed Sale by Founding Investor(s). Written
notice of a Proposed Sale shall be submitted by the Founding
Investor(s) to each Preferred Investor at least 30 days prior
to the Proposed Sale. Such notice shall disclose the identity
of the Third Party Purchaser, the number of shares of Common
Stock proposed to be
2
<PAGE>
sold by such Founding Investor(s), the total number of shares
of Common Stock owned by such Founding Investor(s), the terms
and conditions, including price, of the Proposed Sale, any
other material facts relating to the Proposed Sale, and
calculation as to the number of shares of Common Stock that
may be sold by each Preferred Investor to the Third Party
Purchaser pursuant to this Section 2.
(c) Participation in Proposed Sale by Preferred Investor. Each
Preferred Investor wishing to participate in any Proposed Sale
under this Section 2 shall notify the transferring Founding
Investor(s) in writing within 15 days after the receipt of
such notice described in Section 2(b). No shares of Common
Stock may be purchased by the Third Party Purchaser from the
transferring Founding Investor(s) unless the Third Party
Purchaser simultaneously purchases from the Preferred
Investors all shares of Common Stock which they have elected
to sell pursuant to this Section 2(c), with the sales to such
Third Party Purchaser to be consummated not prior to the
expiration of all notice periods described in this Section 2.
(d) Lapse of Restrictions/Benefits Upon Sale. Any shares of Common
Stock sold to a Third Party Purchaser pursuant to this Section
2 shall no longer be subject to the restrictions or benefits
imposed by this Section 2.
(e) Definitions: Permitted Transferees and Market Value.
(i) For purposes of this Section 2, "Permitted
Transferees" shall mean any recipient of shares of
Common Stock transferred by the Founding Investors:
(i) who is a Class B Permitted Transferee; provided,
that any such Permitted Transferee shall agree in
writing with the Preferred Investors, as a condition
to such transfer, to be bound by all of the
provisions of this agreement with respect to such
shares of Common Stock to the same extent as the
Founding Investors; (ii) by any sale or disposition
of shares of Common Stock pursuant to a registered
public offering in which the Preferred Investors have
rights to participate under any then effective
registration rights agreement; or (iii) by any sale
or disposition of shares of Common Stock in
connection with the exercise of remedies by the
Company's lenders under any of the Company's loan
agreements or credit agreements (including sales or
dispositions of the shares of Common Stock to any of
such lenders, to third parties and subsequent sales
by such lenders or third parties).
(ii) For purposes of this Section 2, "Market Value" as of
any date means the average market trading price of
the Class A Common over the preceding twenty (20)
trading days.
3
<PAGE>
3. Retention of Voting Rights. For so long as any of the Preferred
Investors own any of the Company's Common Stock, determined on a
fully-diluted basis, neither of the Founding Investors shall sell,
assign or otherwise transfer any interest in any shares of Class B
Common to the spouse or former spouse of such Founding Investor, or to
any parent or grandparent or any lineal descendant (including any
adopted child) of any parent or grandparent of such Founding Investor's
spouse or former spouse (unless such lineal descendant is also a lineal
descendant (including any adopted child) of such Founding Investor),
including by gift, will, intestate succession or other operation of
law, unless, as a condition of such transfer (a) such Founding Investor
retains all voting power with respect to such Class B Common so long as
such Founding Investor is living, and (b) the estate of such Founding
Investor, in the case of the death of the Founding Investor, or the
transferee of such interest agrees (I) not to exercise any voting power
with respect to such Class B Common and (II) to cause such Class B
Common to be converted into shares of single vote or non-voting common
stock of the Company upon the death of such Founding Investor. The
Founding Investors agree that all shares of Class B Common held by them
will have affixed a legend describing the restrictions set forth above.
The provisions of this Section 3 will be binding upon the respective
transferees, successors, assigns, heirs and legatees of the Founding
Investors.
4. Recapitalization of Warrants.
(a) Definitions. For purposes of the Section 4, (i) the term
"Recapitalization Warrant" means a warrant to purchase shares
of Class A Common in the form attached hereto as Exhibit A,
and (ii) the term "Contingent Warrant" means a warrant to
purchase shares of Class A Common in the form attached hereto
as Exhibit B.
(b) Exchange of Warrants. Promptly after execution of this
Agreement, and effective as of the date hereof, each Preferred
Investor will surrender all Warrants held by him or it in
exchange for, and the Company will issue to such Preferred
Investor in exchange for the surrender of such Warrants, the
number of Recapitalization Warrants and Contingent Warrants
set forth next to such Preferred Investor's name on the
attached Schedule I. From and after the date hereof, the
Warrants held by each Preferred Investor will represent only
the right to receive the number of Recapitalization Warrants
and Contingent Warrants set forth next to such Preferred
Investor's name on the attached Schedule I.
(c) Continuing Application. The Warrantholders Agreement is hereby
amended by deleting the second parenthetical clause of the
second recital thereof in its entirety and replacing it with
the following:
4
<PAGE>
"(the "Exchange Warrant" and together with
the New Warrants and the Recapitalization
Warrants and Contingent Warrants issued
pursuant to the Agreement and Plan of
Warrant Recapitalization dated as of
February 25, 1999, among the Company and the
Securityholders, the "Warrants")"
provided, however, that references in this Agreement to the
"Warrants" shall not include the Recapitalization Warrants or
the Contingent Warrants.
(d) Recapitalization Treatment. The parties intend that the
transactions described in this Section 4 qualify as a
recapitalization under Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, and each party agrees not to
take any action that would cause such transactions not to so
qualify.
5. Grant of Options.
(a) Moore Options. Moore hereby grants to each of Hughes and
Liggins the right to purchase from Moore, and Moore agrees to
sell to each of Hughes and Liggins on the terms and subject to
the conditions set forth in this Section 5, One-Thousand
Nine-Hundred and Fifty-Five Hundred-Thousandths (0.01955) of a
share of Class C Common (each such right, a "Moore Option").
The exercise price of each such option shall be Ten Dollars
($10.00).
(b) Royster Options. Royster hereby grants to each of Hughes and
Liggins the right to purchase from Royster, and Royster agrees
to sell to each of Hughes and Liggins on the terms and subject
to the conditions set forth in this Section 5, Two-Thousand
and Nine-Hundred and Forty-One Hundred Thousandths (0.02941)
of a share of Class C Common (each such right, a "Royster
Option"). The exercise price of each such option shall be
Four-Thousand Four Hundred and One Dollars ($4,401.00).
(c) Exercise of Options. Provided that the Contingent Warrants
shall have expired prior to such date, each of Hughes and
Liggins may exercise the Moore Option and Royster Option
granted to them at any time on or after January 1, 2000. Each
such option shall be exercised by delivery of written notice,
and the payment of the exercise price for such option in
lawful currency of the United States, to Moore or Royster, as
applicable.
5
<PAGE>
(d) Adjustment. The number of shares of Class C Common subject to
the Moore Options and the Royster Options shall be
proportionally adjusted to reflect any subdivision or
combination of the Class C Common, or any payment of a
dividend with respect to the Class C Common payable in, or any
other distribution with respect to the Class C Common
consisting of, shares of Common Stock.
(e) Termination. If the Contingent Warrants have not expired prior
to January 1, 2000, the Moore Options and the Royster Options
shall be terminated and shall thereafter be of no further
force or effect.
6. Consent to Transfer. Notwithstanding anything to the contrary set forth
in the Warrantholders' Agreement, each of the Preferred Investors
hereby consent to the following:
(a) The transfer by Catherine L. Hughes of (i) 25 shares of Class
B Common to Catherine L. Hughes, as Trustee of the Catherine
L. Hughes Revocable Trust dated March 2, 1999, (ii) 0.4582
shares of Class C Common to Hughes-Liggins & Company, L.L.C.,
and (iii) 49.5418 shares of Class C Common to Hughes-Liggins
Family Partners, L.P.; and
(b) The transfer by Alfred C. Liggins, III of (i) 20.82 shares of
Class B Common to Alfred C. Liggins, III, as Trustee of the
Alfred C. Liggins, III Revocable Trust dated March 2, 1999,
(ii) 0.4582 shares of Class C Common to Hughes-Liggins &
Company, L.L.C., and (iii) 41.1718 shares of Class C Common to
Hughes-Liggins Family Partners, L.P.
7. Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which together shall be deemed to constitute one and the same
agreement.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RADIO ONE, INC.
By:
------------------------------------------
Its:
-----------------------------------------
---------------------------------------------
Catherine L. Hughes
---------------------------------------------
Alfred C. Liggins, III
SYNCOM CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management
Partners III, L.P.
By:
------------------------------------------
Its:
-----------------------------------------
BANCBOSTON INVESTMENTS INC.
By:
------------------------------------------
Its:
-----------------------------------------
<PAGE>
ALLIANCE ENTERPRISE CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
OPPORTUNITY CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
MEDALLION CAPITAL, INC.
By:
------------------------------------------
Its:
-----------------------------------------
TSG VENTURES, L.P.
By: TSGVI Associates, Inc.
Its: General Partner
By:
------------------------------------------
Its:
-----------------------------------------
FULCRUM VENTURE CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
---------------------------------------------
Grant M. Wilson
<PAGE>
---------------------------------------------
Jerry A. Moore III
---------------------------------------------
Scott R. Royster
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
RECAPITALIZATION WARRANTS CONTINGENT WARRANTS
<S> <C> <C>
Syncom Capital Corporation 33.34260 2.77740
Alta Subordinated Debt Partners III,
L.P. 27.25009 2.26991
BancBoston Investments Inc. 18.60059 1.54941
Alliance Enterprise Corporation 17.26209 1.43791
Opportunity Capital Corporation 5.72326 0.47674
Medallion Capital, Inc. 14.06814 1.17186
TSG Ventures, L.P. 3.01856 0.25144
Fulcrum Venture Capital Corporation 14.40969 1.20031
Grant M. Wilson 1.16311 0.09689
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements of the Comapany for the fiscal year ended
December 31, 1998, and for the three and six months ended June 30, 1998 and
1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001041657
<NAME> Radio One, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS 3-MOS 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998 DEC-31-1998 DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 APR-01-1998 APR-01-1999 JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 JUN-30-1998 JUN-30-1999 JUN-30-1998 JUN-30-1999
<EXCHANGE-RATE> 1 1 1 1 1
<CASH> 4,455,000 0 0 0 5,018,000
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 13,269,000 0 0 0 18,856,000
<ALLOWANCES> (1,243,000) 0 0 0 (1,977,000)
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 17,641,000 0 0 0 23,489,000
<PP&E> 11,306,000 0 0 0 20,943,000
<DEPRECIATION> (4,589,000) 0 0 0 (5,594,000)
<TOTAL-ASSETS> 153,856,000 0 0 0 243,776,000
<CURRENT-LIABILITIES> 5,041,000 0 0 0 9,405,000
<BONDS> 131,739,000 0 0 0 96,498,000
0 0 0 0 0
26,684,000 0 0 0 0
<COMMON> 5,000 0 0 0 18,000
<OTHER-SE> (24,864,000) 0 0 0 122,912,000
<TOTAL-LIABILITY-AND-EQUITY> 153,856,000 0 0 0 243,776,000
<SALES> 0 13,231,000 24,083,000 22,328,000 37,473,000
<TOTAL-REVENUES> 0 13,231,000 24,083,000 22,328,000 37,473,000
<CGS> 0 (1,726,000) (3,046,000) (2,800,000) (4,619,000)
<TOTAL-COSTS> 0 (1,726,000) (3,046,000) (2,800,000) (4,619,000)
<OTHER-EXPENSES> 0 7,983,000 16,884,000 15,461,000 28,711,000
<LOSS-PROVISION> 0 402,000 857,000 728,000 1,183,000
<INTEREST-EXPENSE> 0 2,547,000 3,752,000 4,925,000 7,489,000
<INCOME-PRETAX> 0 1,131,000 479,000 (572,000) (3,205,000)
<INCOME-TAX> 0 0 225,000 0 476,000
<INCOME-CONTINUING> 0 1,131,000 254,000 (572,000) (3,681,000)
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 0 1,131,000 254,000 (572,000) (3,681,000)
<EPS-BASIC> 0 0.02 (0.01) (0.25) (0.40)
<EPS-DILUTED> 0 0.02 (0.01) (0.25) (0.40)
</TABLE>
