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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 March 31, 2000
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 May 10, 2000
----- -----------------------------
Class A Common Stock, $.01 Par Value 22,272,622
Class B Common Stock, $.01 Par Value 2,867,463
Class C Common Stock, $.01 Par Value 3,132,458
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RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Form 10-Q
For the Quarter Ended March 31, 2000
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, 1999 and March 31, 2000 (Unaudited)
Consolidated Statements of Operations for the 5
Three months ended March 31, 1999 and 2000 (Unaudited)
Consolidated Statements of Changes in Stockholders' Equity for the 6
three months ended March 31, 2000 (Unaudited)
Consolidated Statements of Cash Flows for the 7
Three months ended March 31, 1999 and 2000 (Unaudited)
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 14
Item 3 Defaults upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
Signature 16
</TABLE>
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(See pages 4-9 -- This page intentionally left blank.)
3
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RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Balance Sheets
---------------------------
As of December 31, 1999, and March 31, 2000
-------------------------------------------
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
-------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,221,000 $125,588,000
Investments, available for sale 256,390,000 274,154,000
Trade accounts receivable, net of allowance for doubtful accounts of $2,429,000 and
$2,877,000, respectively 19,833,000 15,635,000
Prepaid expenses and other 1,035,000 1,061,000
Deferred income taxes 984,000 987,000
-------------- -------------
Total current assets 284,463,000 417,425,000
PROPERTY AND EQUIPMENT, NET 15,512,000 16,797,000
INTANGIBLE ASSETS, NET 218,460,000 292,883,000
OTHER ASSETS 9,101,000 141,199,000
-------------- -------------
Total assets $527,536,000 $868,304,000
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,663,000 $ 1,498,000
Accrued expenses 6,941,000 7,324,000
Income taxes payable 1,532,000 1,369,000
Other current liabilities -- 2,182,000
-------------- -------------
Total current liabilities 10,136,000 12,373,000
LONG-TERM DEBT AND DEFERRED INTEREST, NET OF CURRENT
PORTIONS: 82,626,000 83,697,000
DEFERRED INCOME TAX LIABILITY 14,518,000 14,208,000
-------------- -------------
Total liabilities 107,280,000 110,278,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - Class A, $.001 par value, 30,000,000 shares authorized,
17,221,000 and 22,273,000 shares issued and outstanding 17,000 22,000
Common stock - Class B, $.001 par value, 30,000,000 shares authorized,
2,867,000 and 2,867,000 shares issued and outstanding 3,000 3,000
Common stock - Class C, $.001 par value, 30,000,000 shares authorized,
3,184,000 and 3,132,000 shares issued and outstanding 3,000 3,000
Accumulated comprehensive income adjustments 40,000 (233,000)
Additional paid-in capital 446,400,000 782,377,000
Accumulated deficit (26,207,000) (24,146,000)
-------------- -------------
Total stockholders' equity 420,256,000 758,026,000
-------------- -------------
Total liabilities and stockholders' equity $527,536,000 $868,304,000
============== =============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
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RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Statements of Operations
-------------------------------------
For the Three Months Ended March 31, 1999 and 2000
--------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------
1999 2000
-------------- --------------
(Unaudited)
<S> <C> <C>
REVENUE:
Broadcast revenue, including barter revenue of $298,000 and $853,000, respectively $ 13,390,000 $ 25,124,000
Less: agency commissions 1,573,000 2,972,000
--------------- --------------
Net broadcast revenue 11,817,000 22,152,000
--------------- --------------
OPERATING EXPENSES:
Program and technical 2,472,000 4,240,000
Selling, general and administrative 5,144,000 8,299,000
Corporate expenses 858,000 1,118,000
Stock-based compensation 225,000 --
Depreciation and amortization 3,128,000 5,489,000
--------------- --------------
Total operating expenses 11,827,000 19,146,000
--------------- --------------
Operating (loss) income (10,000) 3,006,000
INTEREST EXPENSE, INCLUDING AMORTIZATION OF DEFERRED FINANCING COSTS 3,737,000 3,582,000
OTHER INCOME, net 63,000 4,237,000
--------------- --------------
(Loss) income before provision for income taxes (3,684,000) 3,661,000
PROVISION FOR INCOME TAXES 251,000 1,600,000
--------------- --------------
NET (LOSS) INCOME $ (3,935,000) $ 2,061,000
=============== ==============
NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS $ (4,940,000) $ 2,061,000
=============== ==============
BASIC AND DILUTED NET (LOSS) INCOME PER COMMON SHARE APPLICABLE TO COMMON STOCKHOLDERS $ (.52) $ .08
=============== ==============
SHARES USED IN COMPUTING BASIC NET (LOSS) INCOME PER COMMON SHARE APPLICABLE TO COMMON 9,429,000 24,536,000
=============== ==============
SHARES USED IN COMPUTING DILUTED NET (LOSS) INCOME PER COMMON SHARE APPLICABLE TO
COMMON STOCK HOLDERS 9,429,000 24,636,000
=============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
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RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Statements of Changes in Stockholders' Equity
----------------------------------------------------------
For the Three Months Ended March 31, 2000
-----------------------------------------
<TABLE>
<CAPTION>
Common Common Stock Common Stock Comprehensive
Stock Class A Class B Class C Income
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE, AS OF
DECEMBER 31,1998 $ - $ 2,000 $ 3,000
Comprehensive income:
Net income - - - $ 133,000
Unrealized gain on securities - - - 40,000
--------------
Comprehensive income - - - $ 173,000
==============
Preferred stock dividends - - -
Issuance of stock for
acquisition 2,000 1,000 -
Stock issued to an officer - - -
Conversion of warrants 5,000 - -
Issuance of common stock 10,000 - -
---------- ---------- ----------
BALANCE, AS OF
DECEMBER 31, 1999 17,000 3,000 3,000
Comprehensive income: - - -
Net income - - - $ 2,061,000
Unrealized loss on securities - - - (273,000)
--------------
Comprehensive income - - - $ 1,788,000
==============
Issuance of common stock 5,000 - -
---------- ---------- ----------
BALANCE, AS OF MARCH 31, $ 22,000 $ 3,000 $ 3,000
========== ========== ==========
2000(Unaudited)
<CAPTION>
Accumulated
Comprehensive Total
Income Additional Paid Accumulated Stockholders'
Adjustments In Capital Deficit Equity
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
BALANCE, AS OF
DECEMBER 31,1998 $ - $ - $ (24,864,000) (24,859,000)
Comprehensive income:
Net income - 133,000 133,000
Unrealized gain on securities 40,000 - - 40,000
Comprehensive income - - - -
Preferred stock dividends - - (1,476,000) (1,476,000)
Issuance of stock for
acquisition - 34,191,000 - 34,194,000
Stock issued to an officer - 225,000 - 225,000
Conversion of warrants - (5,000) - -
Issuance of common stock - 411,989,000 - 411,999,000
------------ -------------- -------------- --------------
BALANCE, AS OF
DECEMBER 31,1999 40,000 446,400,000 (26,207,000) 420,256,000
Comprehensive income: - - - -
Net income - - 2,061,000 2,061,000
Unrealized loss on securities (273,000) - - (273.000)
Comprehensive income - - - -
Issuance of common stock - 335,977,000 - 335,982,000
------------ -------------- --------------
BALANCE, AS OF MARCH 31, $ (233,000) $ 782,377,000 $ (24,146,000) $ 758,026,000
============ ============== ============== ==============
2000(Unaudited)
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
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RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Statements of Cash Flows
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For the Three Months Ended March 31, 1999,
------------------------------------------
and the Three Months Ended March 31, 2000
-----------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------
1999 2000
---------------- ---------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (3,935,000) $ 2,061,000
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization 3,128,000 5,489,000
Amortization of debt financing costs, unamortized discount and deferred interest 1,088,000 1,258,000
Deferred income taxes and reduction in valuation reserve on deferred taxes -- (313,000)
Non-cash compensation to officer 225,000 --
Non-cash advertising revenue in exchange for equity investments -- (322,000)
Effect of change in operating assets and liabilities-
Trade accounts receivable 1,858,000 4,191,000
Prepaid expenses and other 44,000 59,000
Other assets (178,000) (113,000)
Accounts payable (358,000) (168,000)
Accrued expenses and other 2,080,000 211,000
---------------- ---------------
Net cash flows from operating activities 3,952,000 12,353,000
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,285,000) (568,000)
Equity investments (1,000,000) (114,000)
Purchase of available-for-sale investments, net -- (18,037,000)
Deposits and payments for station purchases (5,826,000) (210,231,000)
--------------- ---------------
Net cash flows from investing activities (8,111,000) (228,950,000)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (16,365,000) (18,000)
Proceeds from debt issuances 22,650,000 --
Deferred financing costs (276,000) --
Proceeds from issuance of common stock, net of issuance costs -- 335,982,000
--------------- ---------------
Net cash flows from financing activities 6,009,000 335,964,000
--------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,850,000 119,367,000
CASH AND CASH EQUIVALENTS, beginning of period 4,455,000 6,221,000
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 6,305,000 $ 125,588,000
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 1,011,000 $ 656,000
=============== ===============
Income taxes $ 212,000 $ 2,051,000
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
7
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RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Notes to Consolidated Financial Statements
------------------------------------------
March 31, 2000
--------------
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, Radio One
of Detroit, Inc., Allur-Detroit, Inc. and Allur Licenses, Inc. (Delaware
corporations), Broadcast Holdings, Inc. (a Washington, D.C., corporation), Bell
Broadcasting Company (a Michigan corporation) and 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; Richmond, Virginia; and
Boston, Massachusetts, markets. The Company also operates radio stations in
Richmond, Virginia, through a time brokerage agreement. The Company's operating
results are significantly affected by its market share in the markets that it
has stations.
Basis of Presentation
- ---------------------
The accompanying consolidated financial statements include the accounts of Radio
One 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 and
its wholly owned 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.
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, 1999,
financial statement and notes thereto included in the Company's annual report on
Form 10-K.
Radio One did not have comprehensive income adjustments for the three months
ended March 31, 1999.
8
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2. ACQUISITIONS:
On March 11, 2000, the Company entered into agreements to acquire 21 radio
stations in 10 markets for approximately $1.4 billion. The Company expects to
finance these acquisitions with available cash and other third-party financings.
On February 28, 2000, the Company completed its acquisition of WPLY-FM, located
in the Philadelphia, Pennsylvania market, for approximately $80.0 million. The
acquisition of WPLY-FM resulted in the recording of approximately $78.7 million
of intangible assets.
3. PUBLIC OFFERING:
In March 2000, the Company completed a public offering of 5.0 million shares of
Class A common stock at $70.00 per share. The proceeds from this offering, net
of offering costs, were approximately $336.0 million.
9
<PAGE>
Item 2. 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, 1999.
RESULTS OF OPERATIONS
- ---------------------
Comparison of periods ended March 31, 1999 to the periods
ended March 31, 2000 (all periods are unaudited - all
numbers in 000s except per share data).
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, March 31,
1999 2000
------------------------- -------------------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUE:
Broadcast revenue $ 13,390 $ 25,124
Less: Agency commissions 1,573 2,972
------------------------- -------------------------
Net broadcast revenue 11,817 22,152
------------------------- -------------------------
OPERATING EXPENSES:
Programming and technical 2,472 4,240
Selling, G&A 5,144 8,299
Corporate expenses 858 1,118
Stock-based compensation 225 -
Depreciation & amortization 3,128 5,489
------------------------- -------------------------
Total operating expenses 11,827 19,146
------------------------- -------------------------
Operating income (loss) (10) 3,006
INTEREST EXPENSE 3,737 3,582
OTHER INCOME, net 63 4,237
------------------------- -------------------------
Income (loss) before
Provision for income taxes (3,684) 3,661
PROVISION FOR INCOME TAXES 251 1,600
------------------------- -------------------------
Net income (loss) $ (3,935) $ 2,061
========================= =========================
Net income (loss) applicable
to common shareholders $ (4,940) $ 2,061
========================= =========================
DILUTED PER SHARE DATA:
Net income (loss) per share $ (0.42) $ 0.08
Preferred dividends per share $ (0.10) -
Net income (loss) per share applicable to
After-tax cash flow per share $ (0.06) $ 0.30
BASIC PER SHARE DATA:
Net income (loss) per share $ (0.42) $ 0.08
</TABLE>
10
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<TABLE>
<S> <C> <C>
Preferred dividends per share $ (0.10) -
Net income (loss) per share applicable to common
shareholders $ (0.52) $ 0.08
After-tax cash flow per share $ (0.06) $ 0.30
OTHER DATA:
Broadcast cash flow (a) $ 4,201 $ 9,613
Broadcast cash flow margin 35.6% 43.4%
EBITDA (b) $ 3,343 $ 8,495
EBITDA margin 28.3% 38.3%
After-tax cash flow (c) $ (582) $ 7,450
Weighted average shares outstanding - basic (d) 9,429 24,536
Weighted average shares outstanding - diluted (d) 9,429 24,636
</TABLE>
Net broadcast revenue increased to approximately $22.2 million for the
quarter ended March 31, 2000 from approximately $11.8 million for the quarter
ended March 31, 1999 or 88%. This increase in net broadcast revenue was the
result of continuing broadcast revenue growth in all of the Company's markets in
which it has operated for at least one year 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 mid-1999 acquisitions
in Cleveland and Richmond (where the Company also operates stations under a time
brokerage agreement), as well as the March 1999 acquisition of Radio One of
Atlanta, Inc., and the acquisition of WPLY-FM in Philadelphia which closed on
February 28, 2000.
Operating expenses excluding depreciation, amortization and stock-based
compensation increased to approximately $13.7 million for the quarter ended
March 31, 2000 from approximately $8.5 million for the quarter ended March 31,
1999 or 61%. This increase in expenses was related to the Company's rapid
expansion within all of the markets in which it operates including increased
variable costs associated with increased revenue, as well as start-up and
expansion expenses in its newer markets of Cleveland and Richmond, as well as
higher costs associated with operating as a public company.
Broadcast operating income increased to approximately $3.0 million for
the quarter ended March 31, 2000 from a loss of approximately $10,000 for the
quarter ended March 31, 1999. This increase for the quarter was attributable to
proportionately higher revenue as described above partially offset by higher
depreciation and amortization expenses associated with the Company's several
acquisitions made in 1998 and 1999.
Interest expense decreased to approximately $3.6 million for the
quarter ended March 31, 2000 from approximately $3.7 million for the quarter
ended March 31, 1999 or 3%. This decrease relates primarily to the pay-down of
debt under the Company's bank credit facility with proceeds raised in a
follow-on equity offering in November 1999.
Other income (almost exclusively interest income) increased to
approximately $4.2 million for the quarter ended March 31, 2000 from
approximately $0.1 million for the quarter ended March 31, 1999 or 4,100%. This
increase was due to the Company's high cash balances and investment instruments
following its equity offerings in November 1999 and March 2000.
Income before provision for income taxes increased to approximately
$3.7 million for the quarter ended March 31, 2000 from a loss of approximately
$3.7 million for the quarter ended March 31, 1999. This increase was due to
higher operating income enhanced by higher interest income, as described above.
Net income increased to approximately $2.1 million for the quarter
ended March 31, 2000 from a loss of approximately $3.9 million for the quarter
ended March 31, 1999. This increase in net income for the quarter was due to
higher income before taxes partially offset by an increased provision for income
taxes.
11
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Broadcast cash flow increased to approximately $9.6 million for the
quarter ended March 31, 2000 from approximately $4.2 million for the quarter
ended March 31, 1999 or 129%. This increase was 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 March 31, 2000 from
approximately $3.3 million for the quarter ended March 31, 1999 or 158%. This
increase was attributable to the increase in broadcast revenue and interest
income 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 $7.5 million for the
quarter ended March 31, 2000 from a loss of approximately $0.6 million for the
quarter ended March 31, 1999. This increase was attributable to the increase in
operating income and interest income partially offset by higher interest charges
associated with the financings of various acquisitions as well as the provision
for income taxes, 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.
(d) As of March 31, 2000 the Company had 28,272,543 shares of common stock
outstanding.
12
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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 $6.2
million as of December 31, 1999. The Company's balance of cash and cash
equivalents was approximately $125.6 million as of March 31, 2000. This increase
resulted primarily from the Company's stronger cash flow from operating
activities during the first three months of 2000 as well as the Company's public
offering on March 3, 2000 from which it raised approximately $336.0 million,
partially offset by cash paid for the acquisition of WPLY-FM on February 28,
2000. At March 31, 2000 the entire amount of $100.0 million remained available
(based on various covenant restrictions) to be drawn down from the Company's
bank credit facility. 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
$12.4 million for the three months ended March 31, 2000 from approximately $3.9
million for the three months ended March 31, 1999 for an increase of 218%. This
increase was due to a higher net income resulting from increased revenue and
interest income partially offset by 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 three months of
1999. Non-cash expenses of depreciation and amortization increased to
approximately $5.5 million for the three months ended March 31, 2000 from
approximately $3.1 million for the three months ended March 31, 1999 or 77% due
to various acquisitions made by the Company within the past year.
Net cash flow used in investing activities increased to approximately
$229.0 million for the three months ended March 31, 2000 compared to
approximately $8.1 million for the three months ended March 31, 1999 or 2,727%.
During the three months ended March 31, 2000 the Company acquired radio station
WPLY-FM in the Philadelphia, Pennsylvania market for approximately $80.0
million. The company also made escrow deposits of approximately $133.1 million
on anticipated acquisitions including 12 radio stations in seven markets in the
United States from Clear Channel Communications, Inc. and AMFM, Inc., six radio
stations in the Charlotte, North Carolina and Augusta, Georgia markets through
an acquisition of Davis Broadcasting, Inc., and three radio stations in the
Indianapolis, Indiana market from Shirk, Inc. and IBL, L.L.C. Also during the
three months ended March 31, 2000 the Company made purchases of capital
equipment totaling approximately $0.6 million and net purchases of investment
instruments available for sale for approximately $18.0 million.
Net cash flow from financing activities was approximately $336.0
million for the three months ended March 31, 2000. During the three months ended
March 31, 2000, the Company completed a public offering of common stock and
raised net proceeds of approximately $336.0 million. A portion of the proceeds
was used to fund the escrow deposits mentioned above, with the balance to be
used in part for general operating expenses and to fund future acquisitions.
As a result of the aforementioned, cash and cash equivalents increased
by $119.4 million during the three months ended March 31, 2000 compared to an
approximate $1.9 million increase during the three months ended March 31, 1999.
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.
13
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Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On February 28, 2000 the Company acquired the assets of radio station
WPLY-FM in the Philadelphia, Pennsylvania market, for approximately $80.0
million.
On March 8, 2000 the Company completed an offering of 5,000,000 shares
of Class A Common Stock at an offering price of $70.00 per share. From this
offering, the Company received net proceeds of approximately $336.0 million
after deducting offering costs.
On March 11, 2000 the Company entered into agreements to acquire a
total of 21 radio stations in three separate transactions: (i) we agreed to
acquire from Clear Channel Communications, Inc. and AMFM, Inc. the assets of 12
radio stations located in seven markets in the United States for approximately
$1.3 billion; (ii) we agreed to acquire Davis Broadcasting, Inc. owner of six
radio stations in the Charlotte, North Carolina and Augusta, Georgia markets for
approximately $24.0 million in cash and stock; and (iii) we agreed to acquire
from Shirk, Inc. and IBL, L.L.C. the assets of three radio stations located in
the Indianapolis, Indiana market for approximately $40.0 million in cash and
stock.
Item 6. Exhibits and Reports on Form 8-K
EXHIBITS
3.1 Amended and Restated Certificate of Incorporation of Radio
One, Inc. (dated as of May 4, 2000), as filed with the State
of Delaware on May 9, 2000.
3.2 Amended and Restated By-laws of Radio One, Inc., amended as of
March 17, 2000 (incorporated by reference to Radio One's
Annual Report on Form 10-K for the period ended December 31,
1999 (File No. 000-25969; Film No. 582596)).
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 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)).
14
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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)).
4.7 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 (incorporated
by reference to Radio One's Quarterly Report on Form 10-Q for
the period ended June 30, 1999 (File No. 000-25969; Film No.
99686684)).
10.58 Asset Purchase Agreement dated as of March 11, 2000 relating
to the acquisition of KMJQ-FM and KBXX-FM, licensed to
Houston, Texas, WVCG(AM), licensed to Coral Gables, Florida,
WZAK-FM, licensed to Cleveland, Ohio, WJMO-AM, licensed to
Cleveland Heights, Ohio, KKBT-FM, licensed to Los Angeles,
California, KBFB-FM, licensed to Dallas, Texas, WJMZ-FM ,
licensed to Anderson, South Carolina, WFXC-FM, licensed to
Durham, North Carolina, WFXK-FM, licensed to Tarboro, North
Carolina, WNNL-FM, licensed to Farquay-Varina, North Carolina
and WQOK-FM, licensed to South Boston, Virginia.
10.59 Agreement and Plan of Merger dated as of March 11, 2000
relating to the acquisition of WCCJ-FM, licensed to
Harrisburg, North Carolina, WFXA-FM and WTHB-AM, licensed to
Augusta, Georgia, WAKB-FM, licensed to Wrens, Georgia,
WAEG-FM, licensed to Evans, Georgia and WAEJ-FM, licensed to
Waynesboro, Georgia.
10.60 Asset Purchase Agreement dated as of March 11, 2000 relating
to the acquisition of WHHH-FM, licensed to Indianapolis,
Indiana, WBKS-FM, licensed to Greenwood, Indiana, WYJZ-FM,
licensed to Lebanon, Indiana and W53AV, licensed to
Indianapolis, Indiana.
27.1 Financial data schedule (EDGAR version only).
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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.
_______________________________________________________
May 12, 2000 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
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Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
RADIO ONE, INC.
This Amended and Restated Certificate of Incorporation of Radio One, Inc.,
was duly adopted in accordance with the provisions of Sections 141, 242 and 245
of the Delaware General Corporation Law. The original Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
July 15, 1996, and an Amended and Restated Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on May 6, 1999. The
text of the Corporation's Certificate of Incorporation as heretofore amended is
hereby restated and further amended to read in its entirety as follows:
ARTICLE I
Name
The name of the corporation is Radio One, Inc. (hereinafter referred to as
the "Corporation").
ARTICLE II
Registered Office
The post office address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, Wilmington, New Castle County, Delaware
19805. The name of the registered agent of the Corporation at that address is
Corporation Service Company.
ARTICLE III
Purpose
The purpose of the Corporation is to acquire, operate, and maintain radio
stations and television stations and to engage in any other lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
ARTICLE IV
Capital Stock
Section IV.1. Authorized Shares. The total number of shares of capital
stock which the Corporation has authority to issue is 481,000,000 shares,
consisting of: (i) 30,000,000 shares of Class A Common Stock, par value $.001
per share (the "Class A Common"), (ii) 150,000,000 shares
<PAGE>
of Class B Common Stock, par value $.001 per share (the "Class B Common"), (iii)
150,000,000 shares of Class C Common Stock, par value $.001 per share (the
"Class C Common"), (iv) 150,000,000 shares of Class D Common Stock, par value
$.001 per share (the "Class D Common" and together with the Class A Common, the
Class B Common, and the Class C Common, the "Common Stock"), and (v) 1,000,000
shares of Preferred Stock, par value $.001 per share . The Preferred Stock and
the Common Stock are hereinafter sometimes collectively referred to as "Capital
Stock." Certain capitalized terms used herein are defined in Section 4.7(c) of
ARTICLE IV.
Section IV.2. Preferred Stock The Board of Directors of the Corporation
(the "Board") is hereby authorized, by resolution or resolutions from time to
time adopted and subject to the limitations provided by law, to establish and
designate one or more series of preferred stock (the "Preferred Stock"), and to
fix the designations, powers, preferences, rights, qualifications, limitations
or restrictions thereof and the variations and relative rights, preferences and
limitations as between series. The authority of the Board with respect to each
series of Preferred Stock shall include, but shall not be limited to,
determination of the following:
(a) the designation of such series, which may be by distinguishing number
or letter;
(b) the number of shares initially constituting such series;
(c) the increase, and the decrease to a number not less than the number of
the then outstanding shares of such series, of the number of shares
constituting such series theretofore fixed;
(d) the rate or rates, and the conditions upon and the times at which
dividends on the shares of such series shall be paid, the preference or
relation which such dividends shall bear to the dividends payable on any
other class or classes or on any other series of stock of the Corporation,
and whether or not such dividends shall be cumulative, and, if such
dividends shall be cumulative, the date or dates from and after which they
shall accumulate;
(e) whether or not the shares of such series shall be redeemable and, if
such shares shall be redeemable, the terms and conditions of such
redemption, including, but not limited to, the date or dates upon or after
which such shares shall be redeemable and the amount per share which shall
be payable upon such redemption, which amount may vary under different
conditions and at different redemption dates;
(f) the rights to which the holders of the shares of such series shall be
entitled upon the voluntary or involuntary liquidation, dissolution or
winding up of, or upon any distribution of the assets of, the Corporation,
which rights may be different in the case of a voluntary liquidation,
dissolution or winding up than in the case of such an involuntary event;
(g) whether or not the shares of such series shall have voting rights, in
addition to the voting rights provided by law and, if such shares shall
have such voting rights, the terms and conditions thereof, including, but
not limited to, the right of the holders of such shares to vote as a
separate class either alone or with the holders of shares of one or more
other series of Preferred Stock and the right to have more than one vote
per share;
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(h) whether or not a sinking or a purchase fund shall be provided for the
redemption or purchase of the shares of such series and, if such a sinking
fund or purchase fund shall be provided, the terms and conditions thereof;
(i) whether or not the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series
of the same or any other class or classes of stock or any other security of
the Corporation or any other entity and, if provision be made for
conversion or exchange, the terms and conditions of conversion or exchange,
including, but not limited to, any provision for the adjustment of the
conversion or exchange rate or price; and
(j) any other relative rights, preferences and limitations.
Section IV.3. Common Stock. Except as otherwise provided in Section 4.3
of this ARTICLE IV or as otherwise required by applicable law, all shares of
Class A Common, Class B Common, Class C Common and Class D Common shall be
identical in all respects and shall entitle the holders thereof to the same
rights and privileges and shall be subject to the same qualifications,
limitations and restrictions.
(a) Voting Rights. At every meeting of the stockholders, except as
specifically otherwise required by law, the holders of Class A Common shall be
entitled to one vote per share, and the holders of Class B Common shall be
entitled to ten votes per share, on all matters presented for a vote of the
stockholders of the Corporation, provided that, at every meeting of the
stockholders called for the election of directors the holders of Class A Common,
voting separately as a class, shall be entitled to elect two of the directors to
be elected at such meeting. The holders of Class A Common and Class B Common,
voting together as a class, shall be entitled to elect the remaining number of
directors to be elected at such meeting. Directors elected by the holders of a
class or classes of Common Stock may be removed, with or without cause, only by
a majority vote of the holders of the shares of such class or classes of Common
Stock then outstanding. If, during the interval between annual meetings of
stockholders for the election of directors, the number of directors who have
been elected by the holders of any class or classes of Common Stock shall, by
reason of resignation, death or removal, be reduced, the vacancy or vacancies in
the directors elected by the holders of such class or classes of Common Stock
may be filled by a majority vote of the remaining directors elected by the
holders of such class or classes of Common Stock then in office. Any director
elected to fill any such vacancy by the remaining directors then in office may
be removed from office by a majority vote of the holders of the shares of such
class or classes of Common Stock then outstanding. Except as otherwise required
by law, the holders of the Class A Common and the holders of the Class B Common
shall in all matters not specified in this Section 4.3(a) vote together as a
single class, provided that the holders of shares of the Class A Common shall be
entitled to one (1) vote per share and the holders of shares of the Class B
Common shall be entitled to ten (10) votes per share. Except to the extent
provided in ARTICLE VII of this Amended and Restated Certificate of
Incorporation or as required by applicable law, the holders of Class C Common
and Class D Common shall have no right to vote on any matter presented for a
vote of the stockholders of the Corporation (including, without limitation, the
election or removal of directors of the Corporation), and Class C Common and
Class D Common shall not be included in determining the number of shares voting
or entitled to vote on such matters. The Board of Directors of the Corporation
shall have concurrent power with the holders of Class A Common and Class B
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<PAGE>
Common to adopt, amend or repeal the Bylaws of the Corporation. A consolidation
or merger, or the sale, lease, exchange, mortgage, pledge, or other disposition
of all, or substantially all, of the property or assets of the Corporation, if
not made in the usual and regular course of its business, shall require a
resolution adopted by a majority of the Board of Directors of the Corporation
and the authorization of an affirmative vote of at least two-thirds of the
outstanding shares of Class A Common.
(b) Dividends. As and when dividends are declared or paid with respect to
shares of Common Stock, whether in cash, property or securities of the
Corporation, the holders of Class A Common, the holders of Class B Common, the
holders of Class C Common and the holders of Class D Common shall be entitled to
receive such dividends pro rata at the same rate per share for each such class
of Common Stock; provided that, if such dividends are declared or paid in shares
of Common Stock, such dividends may be paid only (i) in shares of Class D
Common, or (ii) if holders of any class of Common Stock are to receive payment
in shares of any class of Common Stock other than Class D Common, then holders
of shares of each class of Common Stock must receive payment only in shares of
such respective class of Common Stock. The rights of the holders of Common Stock
to receive dividends are subject to the provisions of the Preferred Stock.
(c) Reservation. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock: (i) Class A
Common in a quantity sufficient to provide for the conversion of all outstanding
shares of the Class B Common and Class C Common into Class A Common; and (ii)
Class C Common in a quantity sufficient to provide for the conversion of all
outstanding shares of the Class A Common into Class C Common.
(d) Conversion of Common Stock.
(i) Conversion of Class A Common. Subject to the terms and conditions
stated herein, the holder of any shares of Class A Common shall have the right
at any time, at such holder's option, to convert all or a portion of the shares
of Class A Common so held into the same number of shares of Class C Common. Such
right of conversion shall be exercised (A) by giving written notice (the
"Notice") to the Corporation at least ten (10) days prior to the Conversion Date
(as defined below) specified therein that the holder elects to convert a stated
number of shares of Class A Common into shares of Class C Common on the date
specified in such Notice (the "Conversion Date") and (B) by surrendering the
certificate or certificates representing at least the number of shares of Class
A Common to be converted to the Corporation at its principal office at any time
during the usual business hours on or before the Conversion Date, duly endorsed
in blank by the owner of the certificate so surrendered, together with a
statement of the name or names (with addresses) of the Person or Persons in
whose name or names the certificate or certificates for shares issued on
conversion shall be registered. Shares of Class A Common that have been
converted hereunder shall not be canceled but shall remain as treasury shares
unless retired by resolution of the Board of Directors.
(ii) Conversion of Class B Common. Each share of Class B Common shall
also be convertible, at the option of the holder thereof, into one fully paid
and nonassessable share of Class A Common. The procedures for conversion of
Class A Common into Class C Common, as set forth in paragraph (i) of this
Section 4.3(d), shall also be applicable to the conversion of Class B Common
into Class A Common. Shares of Class B Common that have been converted hereunder
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<PAGE>
shall not be canceled but shall remain as treasury shares unless retired by
resolution of the Board of Directors.
(iii) Class B Stockholders. Class B Stockholders (as hereinafter
defined) and Class B Permitted Transferees (as hereinafter defined) may exercise
their respective rights as a holder of shares of Class C Common to convert such
shares into shares of Class A Common, or otherwise acquire shares of Class A
Common, only in the event that: (A) the Corporation shall merge or consolidate
with or into, or otherwise acquire, any other Person and such Class B
Stockholder or Class B Permitted Transferee receives shares of Class A Common in
exchange for such Class B Stockholder's or Class B Permitted Transferee's
interest in such other Person; (B) such Class B Stockholder or Class B Permitted
Transferee desires to sell shares of Class A Common into which all or part of
its shares of Class C Common are to be converted in connection with any proposed
purchase of Class A Common by another Person (other than a Class B Stockholder
or a Class B Permitted Transferee); or (C) such Class B Stockholder or Class B
Permitted Transferee intends to sell shares of Class A Common into which all or
part of its shares of Class C Common are to be converted pursuant to a
registration statement which has been declared effective.
(iv) Conversion of Class C Common. Each share of Class C Common shall
also be convertible, at the option of the holder thereof, into one fully paid
and nonassessable share of Class A Common. The procedures for conversion of
Class A Common into Class C Common, as set forth in paragraph (i) of this
Section 4.3(d), shall also be applicable to the conversion of Class C Common
into Class A Common. Shares of Class C Common that have been converted hereunder
shall not be canceled but shall remain as treasury shares unless retired by
resolution of the Board of Directors.
(v) Surrender of Certificates. Subject to the other provisions of
this Section 4.3 and of ARTICLE IX of this Amended and Restated Certificate of
Incorporation, promptly after (A) the Conversion Date and (B) the surrender of
such certificate or certificates representing the share or shares of Class A
Common, Class B Common or Class C Common to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the holder requesting
conversion, registered in such name or names as such holder may direct, a
certificate or certificates for the number of shares of the class of Common
Stock issuable upon the conversion of such share or shares, together with a
certificate or certificates evidencing any balance of the shares of the class
surrendered to the Corporation but not then being converted. To the extent
permitted by law, such conversion shall be deemed to have been effected as of
the close of business on the later of the Conversion Date or the date upon which
the Corporation shall have received the certificate or certificates representing
the shares to be converted, and at such time the rights of the holder of such
share or shares as such holder shall cease, and the person or persons in whose
name or names any certificate or certificates for shares shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of such shares of Class A Common or Class C Common, as the case may be.
(vi) Listing. If the shares of Common Stock required to be reserved
for the purpose of conversion hereunder require listing on any national
securities exchange, before such shares are issued upon conversion, the
Corporation will, at its expense and as expeditiously as possible, use its
commercially reasonable best efforts to cause such shares to be listed or duly
approved for listing on such national securities exchange.
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(e) No Charge. The issuance of certificates representing Common Stock upon
conversion of Class A Common, Class B Common or Class C Common, as hereinabove
set forth shall be made without charge or any expense or issuance tax in respect
thereof; provided, however, that the Corporation shall not be required to pay
any taxes which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the holder
of the shares converted.
(f) Transfer of Class B Common.
(i) A Beneficial Owner (as hereinafter defined) of shares of Class B
Common (herein referred to as a AClass B Stockholder") may transfer, directly or
indirectly, Beneficial Ownership (as hereinafter defined) of shares of Class B
Common, whether by sale, assignment, gift or otherwise, only to a Class B
Permitted Transferee (as hereinafter defined) and no Class B Stockholder may
otherwise transfer Beneficial Ownership of any shares of Class B Common. In the
event of any attempted transfer of the Beneficial Ownership of any shares of
Class B Common in violation of the limitation provided in the preceding
sentence, the shares of Class B Common with respect to which the transfer of
such Beneficial Ownership has been attempted shall be deemed to have been
converted automatically, without further deed or action by or on behalf of any
person, into shares of Class A Common. A "Class B Permitted Transferee" shall
be, if the Class B Stockholder is an individual:
(A) the estate of the Class B Stockholder or any legatee, heir or
distributees thereof;
(B) the spouse or former spouse of the Class B Stockholder;
(C) any parent or grandparent and any lineal descendant
(including any adopted child) of any parent or grandparent of the Class B
Stockholder or of the Class B 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 Class B Stockholder and/or any Class B Permitted
Transferee or Class B 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 Class B Stockholder and/or any Class B Permitted
Transferee or Class B Permitted Transferees thereof, including any trust in
respect of which such Class B Stockholder and/or any Class B Permitted
Transferee or Class B 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 Class B
Permitted Transferee or Class B Permitted Transferees;
(F) any corporation, partnership or other business entity if
Substantial Beneficial Ownership thereof is held by such Class B
Stockholder and/or any Class B Permitted Transferee or Class B Permitted
Transferees thereof; provided, however, that if
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<PAGE>
such Class B Stockholder, and all Class B Permitted Transferees thereof,
cease, for whatever reason, to hold Substantial Beneficial Ownership of
such corporation, partnership or other business entity, then any and all
shares of Class B Common that such corporation, partnership or other
business entity is the Beneficial Owner of shall be deemed to be converted
automatically, without further deed or action by or on behalf of any
person, into shares of Class A Common;
(G) any Founding Investor and/or any Class B Permitted Transferee
or Class B Permitted Transferees of a Founding Investor; and
(H) the Corporation.
A "Class B Permitted Transferee" shall be, if the Class B Stockholder is a
corporation, partnership or other business entity:
(1) any employee benefit plan, or trust thereunder or therefor,
sponsored by the Class B Stockholder;
(2) any trust (including any voting or liquidating trust)
principally for the benefit of the Class B Stockholder and/or any Class B
Permitted Transferee or Class B Permitted Transferees thereof;
(3) any corporation, partnership or other business entity if
Substantial Beneficial Ownership thereof is held by such Class B
Stockholder and/or any Class B Permitted Transferee or Class B Permitted
Transferees thereof; provided, however, that if such Class B Stockholder,
and all Class B Permitted Transferees thereof, cease, for whatever reason,
to hold Substantial Beneficial Ownership of such corporation, partnership
or other business entity, then any and all shares of Class B Common that
such corporation, partnership or other business entity is the Beneficial
Owner of shall be deemed to be converted automatically, without further
deed or action by or on behalf of any person, into shares of Class A
Common;
(4) 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 Class B Permitted Transferee pursuant to
any other provision of this paragraph (i) of this Section 4.3(g));
(5) the Corporation; and
(6) any Founding Investor and/or any Class B Permitted Transferee
or Class B Permitted Transferees of a Founding Investor.
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(ii) Any person who holds shares of Class B Common for the Beneficial
Ownership of another, including (A) any broker or dealer in securities; (B) any
clearing house; (C) any bank, trust company, savings and loan association or
other financial institution; (D) any other nominee; and (E) any savings plan or
account or related trust, such as an individual retirement account, principally
for the benefit of any individual, may transfer such shares to the person or
persons for whose benefit it holds such shares. Notwithstanding anything to the
contrary set forth herein, any holder of Class B Common may pledge such shares
to a pledgee pursuant to a bona fide pledge of such shares as collateral
security for indebtedness due to the pledgee, provided that such shares may not
be transferred to or registered in the name of the pledgee unless such pledgee
is a Class B Permitted Transferee. In the event of foreclosure or other similar
action by the pledgee, such pledged shares shall automatically, without any act
or deed on the part of the Corporation or any other person, be converted into
shares of Class A Common unless within five business days after such foreclosure
or similar event such pledged shares are returned to the pledgor or transferred
to a Class B Permitted Transferee. The foregoing provisions of this paragraph
shall not be deemed to restrict or prevent any transfer of such shares by
operation of law upon incompetence, death, dissolution or bankruptcy of any
Class B Stockholder or any provision of law providing for, or judicial order of,
forfeiture, seizure or impoundment.
(iii) Any transferee of shares of Class B Common pursuant to a
transfer made in violation of paragraphs (i) and (ii) of this Section 4.3(g)
shall have no rights as a stockholder of the Corporation and no other rights
against or with respect to the Corporation except the right to receive, in
accordance with paragraph (ii) of Section 4.3(d) or paragraphs (i) and (ii) of
this Section 4.3(g), as applicable, shares of Class A Common upon the conversion
of such transferred shares. Notwithstanding any other provision of this Amended
and Restated Certificate of Incorporation, the Corporation shall, to the full
extent permitted by law, be entitled to issue shares of Class B Common to any
person from time to time.
(iv) The Corporation and any transfer agent of Class B Common may as
a condition to the transfer or the registration of any transfer of shares of
Class B Common permitted by paragraphs (i) and (ii) of this Section 4.3(g)
require the furnishing of such affidavits or other proof as they deem necessary
to establish that such transferee is a Class B Permitted Transferee.
(v) For purposes of paragraph (i) of this Section 4.3(g): (A) the
term "Beneficial Ownership," in respect of shares of Class B Common, 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 such shares and the
term "Beneficial Owner," in respect of shares of Class B Common, shall mean the
person or persons who possess such power and authority; and (B) the term
"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.
Section IV.4. No Interference. Except as otherwise provided in ARTICLE IX
of this Amended and Restated Certificate of Incorporation, the Corporation will
not close its books against the transfer of any share of Common Stock or of any
of the shares of Common Stock issued or issuable upon the conversion of such
shares of Common Stock in any manner which interferes with the timely conversion
of any of such shares.
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Section IV.5. Mergers, Consolidations. In the case of a merger or
consolidation which reclassifies or changes the shares of Common Stock, or in
the case of the consolidation or merger of the Corporation with or into another
corporation or corporations or the transfer of all or substantially all of the
assets of the Corporation to another corporation or corporations, each share of
each class of Common Stock shall thereafter be convertible into the greatest
number or amount of shares of stock or other securities or property to which a
holder of a share of the class of Common Stock entitled to receive the greatest
number or amount of such stock or other securities or property would have been
entitled upon such reclassification, change, consolidation, merger or transfer,
and, in any such case, appropriate adjustment (as determined in good faith by
the Corporation's Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of each class of Common Stock to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any shares of stock or other securities on property
thereafter deliverable upon the conversion of shares of each class of Common
Stock. In case of any such merger or consolidation, the resulting or surviving
corporation (if not the Corporation) shall expressly assume the obligation to
deliver, upon conversion of each class of Common Stock, such stock or other
securities or property as the holders of the each class of Common Stock
remaining outstanding shall be entitled to receive pursuant to the provisions
hereof, and to make provisions for the protection of the conversion rights
provided for in this ARTICLE IV.
Section IV.6. Liquidation, Dissolution or Winding Up. Subject to the
provisions of the Preferred Stock, in the event of any Liquidation of the
Corporation, all remaining assets of the Corporation shall be distributed to
holders of the Common Stock pro rata at the same rate per share of each class of
Common Stock according to their respective holdings of shares of the Common
Stock.
Section IV.7. Miscellaneous. Subject to the provisions of ARTICLE IX of
this Amended and Restated Certificate of Incorporation:
(a) Registration of Transfer. The Corporation shall keep at its principal
office a register for the registration of Capital Stock. Upon the surrender of
any certificate representing Capital Stock at such place, the Corporation shall,
at the request of the record holder of such certificate, execute and deliver (at
the Corporation's expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Capital Stock
represented by such new certificate from the date to which dividends have been
fully paid on such Capital Stock represented by the surrendered certificate. The
issuance of new certificates shall be made without charge to the original
holders of the surrendered certificates for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such issuance.
(b) Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of any class or series of Capital Stock, and in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
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satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class or series represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate, and dividends shall accrue on the Capital Stock
represented by such new certificate from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.
(c) Definitions. The following terms shall have the following meanings:
"Advance of Expenses" has the meaning set forth in Section 8.2.
"Beneficial Ownership" has the meaning set forth in Section 4.3(g)(v).
"Capital Stock" has the meaning set forth in Section 4.1.
"Class A Common" has the meaning set forth in Section 4.1.
"Class B Common" has the meaning set forth in Section 4.1.
"Class B Permitted Transferee" has the meaning set forth in Section
4.3(g).
"Class B Stockholder" has the meaning set forth in Section 4.3(g).
"Class C Common" has the meaning set forth in Section 4.1.
"Class D Common" has the meaning set forth in Section 4.1.
"Common Stock" has the meaning set forth in Section 4.1.
"Communications Act" has the meaning set forth in Section 9.1.
"Conversion Date" has the meaning set forth in Section 4.2(d)(i).
"Corporation" has the meaning set forth in ARTICLE I.
"DGCL" has the meaning set forth in ARTICLE III.
"FCC" has the meaning set forth in Section 9.1.
"Final Adjudication" has the meaning set forth in Section 8.2.
"Founding Investor" means Alfred C. Liggins, III or Catherine L.
Hughes.
"Indemnitee" has the meaning set forth in Section 8.2.
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"Liquidation" with respect to the Corporation, means the liquidation,
dissolution or winding up of the Corporation.
"Notice" has the meaning set forth in Section 4.3(d)(i).
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a joint stock company, a limited liability company,
a trust, an unincorporated association and any other entity or organization.
"Preferred Stock" has the meaning set forth in Section 4.2.
"Proceeding" has the meaning set forth in Section 8.2.
"Subsidiary" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of sufficient
securities to elect directors having a majority of the voting power of the board
of directors of such corporation.
"Substantial Beneficial Ownership" has the meaning set forth in
Section 4.3(g)(v).
"Undertaking" has the meaning set forth in Section 8.2.
ARTICLE V
Existence
The Corporation is to have a perpetual existence.
ARTICLE VI
General Provisions
Section VI.1. Dividends. The Board of Directors of the Corporation shall
have authority from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves as working
capital or for any other purpose or purposes, and to abolish or add to any such
reserve or reserves from time to time as said Board may deem to be in the
interest of the Corporation; and said Board shall likewise have power to
determine in its discretion, except as herein otherwise provided, what part of
the assets of the Corporation available for dividends in excess of such reserve
or reserves shall be declared in dividends and paid to the stockholders of the
Corporation.
Section VI.2. Issuance of Stock. The shares of all classes and series of
Capital Stock of the Corporation may be issued by the Corporation from time to
time for such consideration as from time to time may be fixed by the Board of
Directors of the Corporation, provided that shares having a par value shall not
be issued for a consideration less than such par value, as determined by the
Board. At any time, or from time to time, the Corporation may grant rights or
options to purchase from the Corporation any shares of its Capital Stock of any
class or series to run for such period of time, for
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such consideration, upon such terms and conditions, and in such form as the
Board of Directors of the Corporation may determine. The Board of Directors of
the Corporation shall have authority, as provided by law, to determine that only
a part of the consideration which shall be received by the Corporation for the
shares of its Capital Stock having a par value be capital, provided that the
amount of the part of such consideration so determined to be capital shall at
least be equal to the aggregate par value of such shares. The excess, if any, at
any time, of the total net assets of the Corporation over the amount so
determined to be capital, as aforesaid, shall be surplus. All classes and series
of Capital Stock of the Corporation shall be and remain at all times
nonassessable.
The Board of Directors of the Corporation is hereby expressly authorized,
in its discretion, in connection with the issuance of any obligations or Capital
Stock of the Corporation (but without intending hereby to limit its general
power so to do in other cases), to grant rights or options to purchase Capital
Stock of the Corporation of any class or series upon such terms and during such
period as the Board of Directors of the Corporation shall determine, and to
cause such rights to be evidenced by such warrants or other instruments as it
may deem advisable.
Section VI.3. Inspection of Books and Records. The Board of Directors of
the Corporation shall have power from time to time to determine to what extent
and at what times and places and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred
by the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or the stockholders of the Corporation.
Section VI.4. Location of Meetings, Books and Records. Except as
otherwise provided in the Bylaws, the stockholders of the Corporation and the
Board of Directors of the Corporation may hold their meetings and have an office
or offices outside of the State of Delaware, and, subject to the provisions of
the laws of said State, may keep the books of the Corporation outside of said
State at such places as may, from time to time, be designated by the Board of
Directors.
Section VI.5. Board of Directors Meeting. The Board of Directors shall be
comprised of the number of directors specified in the Corporation's Bylaws, and
such directors shall be elected in the manner contemplated by such Bylaws.
ARTICLE VII
Amendments
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation in
the manner now or hereinafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation. Notwithstanding the foregoing or anything contained in this
Amended and Restated Certificate of Incorporation to the contrary, (i) no
amendment, modification or waiver shall be binding or effective with respect to
Article VIII or clause (i) of this Article VII without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Class A Common
of the Corporation, and (ii) no such action under this
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ARTICLE VII shall change (A) the redemption, conversion, voting or other rights
of any class or series of Preferred Stock without the affirmative vote of the
holders of a majority of each such class or series of Preferred Stock then
outstanding, (B) the conversion or voting rights of any class of Common Stock
without the affirmative vote of the holders of a majority of each class of
Common Stock then outstanding, and (C) the percentage required to approve any
amendment, modification or waiver described herein, without the affirmative vote
of holders of that percentage of the class or series of Capital Stock then
required to approve such amendment, modification or waiver.
ARTICLE VIII
Liability
Section VIII.1. Limitation of Liability.
(a) To the fullest extent permitted by the DGCL as it now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted as of the date this Amended and Restated Certificate of
Incorporation is filed with the State of Delaware), and except as otherwise
provided in the Corporation's Bylaws, no director of the Corporation shall be
liable to the Corporation or its stockholders for monetary damages arising from
a breach of fiduciary duty owed to the Corporation or its stockholders.
(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Section VIII.2. Right to Indemnification. Each person who was or is made
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "Proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "Indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the DGCL, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide for broader
indemnification rights than permitted as of the date this Amended and Restated
Certificate of Incorporation is filed with the State of Delaware), against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that except as provided in
Section 8.3 of this ARTICLE VIII with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part
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thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section 8.2 of this ARTICLE VIII shall be a
contract right and shall include the obligation of the Corporation to pay the
expenses incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "Advance of Expenses"); provided, however, that if
and to the extent that the Board of Directors of the Corporation requires, an
advance of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "Undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"Final Adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Section 8.2 or otherwise. The Corporation may, by
action of its Board of Directors, provide indemnification to employees and
agents of the Corporation with the same or lesser scope and effect as the
foregoing indemnification of directors and officers.
Section VIII.3. Procedure for Indemnification. Any indemnification of a
director or officer of the Corporation or advance of expenses under Section 8.2
of this ARTICLE VIII shall be made promptly, and in any event within forty-five
days (or, in the case of an advance of expenses, twenty days) upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this ARTICLE
VIII is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE VIII shall be enforceable by the director or officer in any court
of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his or her right to indemnification,
in whole or in part, in any such action shall also be indemnified by the
Corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for the advance of expenses where the undertaking
required pursuant to Section 8.2 of this ARTICLE VIII, if any, has been tendered
to the Corporation) that the claimant has not met the standards of conduct which
make it permissible under the DGCL for the Corporation to indemnify the claimant
for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
The procedure for indemnification of other employees and agents for whom
indemnification is provided pursuant to Section 8.2 of this ARTICLE VIII shall
be the same procedure set forth in this Section 8.3 for directors or officers,
unless otherwise set forth in the action of the Board of Directors of the
Corporation providing for indemnification for such employee or agent.
Section VIII.4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the
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Corporation or was serving at the request of the Corporation as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss asserted
against him or her and incurred by him or her in any such capacity, whether or
not the Corporation would have the power to indemnify such person against such
expenses, liability or loss under the DGCL.
Section VIII.5. Service for Subsidiaries. Any person serving as a
director, officer, employee or agent of another Corporation, partnership,
limited liability company, joint venture or other enterprise, at least 50% of
whose equity interests are owned by the Corporation (hereinafter a "subsidiary"
for this ARTICLE VIII) shall be conclusively presumed to be serving in such
capacity at the request of the Corporation.
Section VIII.6. Reliance. Persons who after the date of the adoption of
this provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE VIII in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE VIII shall apply to claims made against an indemnitee arising out of
acts or omissions which occurred or occur both prior and subsequent to the
adoption hereof.
Section VIII.7. Non-Exclusivity of Rights. The rights to indemnification
and to the advance of expenses conferred in this ARTICLE VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under this Amended and Restated Certificate of Incorporation or under any
statute, Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
Section VIII.8. Merger or Consolidation. For purposes of this ARTICLE
VIII, references to "the Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed into the Corporation in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this ARTICLE VIII with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE IX
Alien Ownership of Stock
Section IX.1. Applicability. This ARTICLE IX shall be applicable to the
Corporation so long as the provisions of Section 310 of the Communications Act
of 1934, as the same may be amended from time to time (the "Communications Act")
(or any successor, provisions thereto) are applicable to the Corporation. As
used herein, the term "alien" shall have the meaning ascribed
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thereto by the Federal Communications Commission ("FCC") on the date hereof and
in the future as Congress or the FCC may change such meaning form time to time.
If the provisions of Section 310 of the Communications Act (or any successor
provisions thereto) are amended, the restrictions in this ARTICLE IX shall be
amended in the same way, and as so amended, shall apply to the Corporation. The
Board of Directors of the Corporation may make such rules and regulations as it
shall deem necessary or appropriate to enforce the provisions of this ARTICLE
IX.
Section IX.2. Voting. Except as otherwise provided by law, not more than
twenty percent of the aggregate number of shares of Capital Stock of the
Corporation outstanding in any class or series entitled to vote on any matter
before a meeting of stockholders of the Corporation shall at any time be for the
account of aliens or their representatives or for the account of a foreign
government or representative thereof, or for the account of any corporation
organized under the laws of a foreign country.
Section IX.3. Stock Certificates. Shares of Capital Stock issued to or
held by or for the account of aliens and their representatives, foreign
governments and representatives thereof, and corporations organized under the
laws of foreign countries shall be represented by Foreign Share Certificates.
All other shares of Capital Stock shall be represented by Domestic Share
Certificates. All of such certificates shall be in such form not inconsistent
with this Amended and Restated Certificate of Incorporation as shall be prepared
or approved by the Board of Directors of the Corporation.
Section IX.4. Limitation on Foreign Ownership. Except as otherwise
provided by law, not more than twenty percent of the aggregate number of shares
of Capital Stock of the Corporation outstanding shall at any time be owned of
record by or for the account of aliens or their representatives or by or for the
account of a foreign government or representatives thereof, or by or for the
account of any corporation organized under the laws of a foreign country. Shares
of Capital Stock shall not be transferable on the books of the Corporation to
aliens or their representatives, foreign governments or representatives thereof,
or corporations organized under the laws of foreign countries if, as a result of
such transfer, the aggregate number of shares of Capital Stock owned by or for
the account of aliens and their representatives, foreign governments and
representatives thereof, and corporations organized under the laws of foreign
countries shall be more than twenty percent of the number of shares of Capital
Stock then outstanding. If it shall be found by the Corporation that Capital
Stock represented by a Domestic Share Certificate is, in fact, held by or for
the account of aliens or their representative, foreign governments or
representatives thereof, or corporations organized under the laws of foreign
countries, then such Domestic Share Certificate shall be canceled and a new
certificate representing such Capital Stock marked "Foreign Share Certificate"
shall be issued in lieu thereof, but only to the extent that after such issuance
the Corporation shall be in compliance with this ARTICLE IX; provided, however,
that if, and to the extent, such issuance would violate this ARTICLE IX, then,
the holder of such Capital Stock shall not be entitled to vote, to receive
dividends, or to have any other rights with regard to such Capital Stock to such
extent, except the right to transfer such Capital Stock to a citizen of the
United States.
Section IX.5. Transfer of Foreign Share Certificates. Any Capital Stock
represented by Foreign Share Certificates may be transferred either to aliens or
non-aliens. In the event that any Capital Stock represented by a certificate
marked "Foreign Share Certificate" is sold or transferred to a non-alien, then
such non-alien shall be required to exchange such certificate for a certificate
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marked "Domestic Share Certificate." If the Board of Directors of the
Corporation reasonably determines that a Domestic Share Certificate has been or
is to be transferred to or for the account of aliens or their representatives,
foreign governments or representatives thereof, or corporations organized under
the laws of foreign countries, the Corporation shall issue a new certificate for
the shares of Capital Stock transferred to the transferee marked "Foreign Shares
Certificate," cancel the old Domestic Share Certificate, and record the
transaction upon its books, but only to the extent that after such transfer is
complete, the Corporation shall be in compliance with this ARTICLE IX.
Notwithstanding any other provision of this Amended and Restated
Certificate of Incorporation, the transfer or conversion of the Corporation's
Capital Stock, whether voluntary or involuntary, shall not be permitted, and
shall be ineffective, if such transfer or conversion would (i) violate (or would
result in violation of) the Communications Act or any of the rules or regulation
promulgated thereunder or (ii) require the prior approval of the FCC, unless
such prior approval has been obtained.
ARTICLE X
Section 203 Election
The Corporation expressly elects not to be governed by Section 203 of Title
8 of the DGCL.
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IN WITNESS WHEREOF, said Radio One, Inc. has caused its corporate seal to
be hereunto affixed and this Amended and Restated Certificate of Incorporation
to be signed by Alfred C. Liggins, III, its President, and attested to by Scott
R. Royster, one of its Vice Presidents, this _____ day of May, 2000.
RADIO ONE, INC.
By:
___________________________________
Alfred C. Liggins, III, President
[SEAL]
ATTEST:
By:
__________________________________
Scott R. Royster, Vice President
<PAGE>
Exhibit 10.58
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of March 11,
2000, among the company or companies designated as Seller on the signature page
hereto (collectively, "Seller") and the company or companies designated as Buyer
on the signature page hereto (collectively, "Buyer").
RECITALS
--------
A. Seller owns and operates the following radio broadcast stations
(collectively, the "Stations" and each a "Station") pursuant to certain
authorizations issued by the Federal Communications Commission (the "FCC"):
KMJQ(FM), Houston, Texas
KBXX(FM), Houston, Texas
WVCG (AM), Coral Gables, Florida
WZAK(FM), Cleveland, Ohio
WJMO(AM), Cleveland Heights, Ohio
KKBT(FM), Los Angeles (excluding the FCC licenses, transmitter/antenna equipment
and transmitter/tower site)
KCMG(FM), Los Angeles (FCC licenses (excluding call letters),
transmitter/antenna equipment and transmitter/tower site only to be conveyed to
Buyer)
KBFB(FM), Dallas, Texas
WJMZ-FM, Anderson, South Carolina
WFXC-FM, Durham, North Carolina
WFXK-FM, Tarboro, North Carolina
WNNL-FM, Farquay-Varina, North Carolina
WQOK-FM, South Boston, Virginia
The definition of "Stations" with respect to KKBT(FM) does not refer to the
FCC licenses, transmitter/antenna equipment and transmitter/tower site, and with
respect to KCMG(FM) refers only to the FCC licenses (excluding call letters),
transmitter/antenna equipment and transmitter/tower site.
B. Subject to the terms and conditions set forth herein, Buyer desires
to acquire the Station Assets (defined below).
C. Clear Channel Communications, Inc. and AMFM Inc. (Seller's parents)
and CCU Merger Sub, Inc. are parties to an Agreement and Plan of Merger dated
October 2, 1999 (the "AMFM Agreement").
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AGREEMENT
---------
NOW, THEREFORE, taking the foregoing into account, and in consideration of
the mutual covenants and agreements set forth herein, the parties, intending to
be legally bound, hereby agree as follows
ARTICLE 1: PURCHASE OF ASSETS
------------------
1.1. Station Assets. On the terms and subject to the conditions hereof,
--------------
on the Closing Date (defined below), Seller shall sell, assign, transfer, convey
and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of
the right, title and interest of Seller in and to all of the assets, properties,
interests and rights of Seller of whatsoever kind and nature, real and personal,
tangible and intangible, which are used or held for use exclusively in the
operation of the Stations and specifically described in this Section 1.1, but
excluding the Excluded Assets as hereafter defined (the "Station Assets"):
(a) all licenses, permits and other authorizations which are issued
to Seller by the FCC with respect to the Stations, other than the licenses,
permits and other authorization issued to Seller by the FCC with respect to
KKBT-FM, Los Angeles (except for the KKBT call letters which will be conveyed to
Buyer) (the "FCC Licenses") and described on Schedule 1.1(a), including any
---------------
renewals or modifications thereof between the date hereof and Closing;
(b) all equipment, electrical devices, antennae, cables, tools,
hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and other tangible personal property of
every kind and description which are used or held for use exclusively in the
operation of the Stations and listed on Schedule 1.1(b), except any retirements
---------------
or dispositions thereof made between the date hereof and Closing in the ordinary
course of business and consistent with past practices of Seller and any
equipment, inventory and personal property located at the KKBT-FM tower and/or
transmitter site (the "Tangible Personal Property");
(c) all Time Sales Agreements and Trade Agreements (both defined in
Section 2.1), Real Property Leases (defined in Section 7.7), and other
contracts, agreements, and leases which are used in the operation of the
Stations and listed on Schedule 1.1(c), together with all contracts, agreements,
---------------
and leases made between the date hereof and Closing in the ordinary course of
business that are used in the operation of the Stations (the "Station
Contracts"), provided that Seller will not enter into any new Station
Contract(s) with a (i) term greater than one year, (ii) an individual aggregate
value greater than $ 50,000 per market or (iii) total aggregate value greater
than $250,000 for the Stations combined without obtaining Buyer's prior consent,
or enter into any new Trade Agreements under which the aggregate barter payable
exceeds the aggregate barter receivable on a per market basis without obtaining
Buyer's prior consent;
(d) all of Seller's rights in and to the Stations' call letters and
Seller's rights in
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and to the trademarks, trade names, service marks, franchises, copyrights,
computer software, programs and programming material, jingles, slogans, logos,
domain names, registrations, websites and other intangible property which are
used or held for use exclusively in the operation of the Stations, other than
the KCMG call letters and intellectual property associated with the current
operation of KCMG, and listed on Schedule 1.1(d) (the "Intangible Property");
--------------
(e) Seller's rights in and to all the files, documents, records,
and books of account (or copies thereof) relating exclusively to the operation
of the Stations, including the Stations' local public files, programming
information and studies, blueprints, technical information and engineering data,
advertising studies, marketing and demographic data, sales correspondence, lists
of advertisers, credit and sales reports, and logs, but excluding records
relating to Excluded Assets (defined below), and access to records described in
Section 1.2(e) that pertain to the Stations; and
(f) any real property which is used exclusively in the operation of
the Stations (including any of Seller's appurtenant easements and improvements
located thereon) and described on Schedule 1.1(f) (the "Real Property").
---------------
The Station Assets shall be transferred to Buyer free and clear
of liens, claims and encumbrances ("Liens") except for (i) Assumed Obligations
(defined in Section 2.1), (ii) liens for taxes not yet due and payable and for
which Buyer receives a credit pursuant to Section 3.3, (iii) such liens (not
related to Seller's indebtedness), easements, rights of way, building and use
restrictions, exceptions, reservations and limitations that do not in any
material respect detract from the value of the property subject thereto or
impair the use thereof in the ordinary course of the business of the Stations,
and (iv) any items listed on Schedule 1.1(b) (collectively, "Permitted Liens").
---------------
1.2. Excluded Assets. Notwithstanding anything to the contrary contained
---------------
herein, the Station Assets shall not include the following assets along with all
rights, title and interest therein (the "Excluded Assets"):
(a) all cash and cash equivalents of Seller, including without
limitation certificates of deposit, commercial paper, treasury bills, marketable
securities, asset or money market accounts and all such similar accounts or
investments;
(b) all accounts receivable or notes receivable arising in the
operation of the Stations prior to Closing;
(c) all tangible and intangible personal property of Seller
disposed of or consumed in the ordinary course of business and consistent with
past practices of Seller between the date of this Agreement and Closing;
(d) all Station Contracts that terminate or expire prior to Closing
in the ordinary course of business of Seller, except which Seller is required to
extend pursuant to
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Section 9.1(g);
(e) Seller's name, corporate minute books, charter documents,
corporate stock record books and such other books and records as pertain to the
organization, existence or share capitalization of Seller, duplicate copies of
the records of the Stations, and all records not relating exclusively to the
operation of the Stations;
(f) contracts of insurance, and all insurance proceeds or claims
made thereunder except to the extent such proceeds are paid to Buyer pursuant to
Section 17.1;
(g) except as provided in Section 10.4, all pension, profit sharing
or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and
any other employee benefit plan or arrangement and the assets thereof, if any,
maintained by Seller;
(h) all Seller's owned FM towers and FM tower sites, all rights,
properties and assets described on Schedule 1.2(h), and all rights, properties
---------------
and assets not specifically described in Section 1.1;
(i) all of Seller's right, title and interest in and to the call
letters KCMG-FM and all intellectual property currently used in the operation of
KCMG-FM by Seller;
(j) all of Seller's right, title and interest in and to the KKBT
tower and/or transmitter site; and
(k) all of Seller's right, title and interest in the KKBT
intellectual property as described on Schedule 1.2(h).
---------------
1.3. Lease Agreements. At Closing, Buyer and Seller shall negotiate in
----------------
good faith and enter into the lease agreements described on Schedule 1.2(h)
---------------
pursuant to leases substantially in the form of Exhibit A (tower lease), Exhibit
--------- -------
A-1 (tower lease for WZAK) and Exhibit A-2 (Raleigh studio lease) attached
- --- -----------
hereto.
1.4. KKBT Intellectual Property. At Closing, Buyer and Seller to enter
--------------------------
into a non-exclusive perpetual license agreement whereby Seller grants Buyer the
non-exclusive right to use the KKBT intellectual property described on Schedule
--------
1.2(h) ("KKBT I/P") for $1.00 per year in any market that Seller does not use or
- ------
has not licensed the KKBT I/P to a third party. Seller may use or license the
KKBT I/P for use in any market in which Buyer does not use the KKBT I/P, and
such use or license for use by Seller will preclude Buyer's use of the KKBT I/P
in such market, provided that Buyer shall have exclusive rights to the KKBT I/P
in the Los Angeles market and in any other market where the KKBT I/P is licensed
to Buyer.
ARTICLE 2: ASSUMPTION OF OBLIGATIONS
-------------------------
2.1. Assumed Obligations. On the Closing Date, Buyer shall assume the
-------------------
obligations
4
<PAGE>
of Seller (the "Assumed Obligations") arising after Closing under the Station
Contracts, including without limitation all agreements for the sale of
advertising time on the Stations for cash at commercially reasonable rates in
the ordinary course of business ("Time Sales Agreements") and all agreements for
the sale of advertising time on the Stations for non-cash consideration ("Trade
Agreements").
2.2. Retained Obligations. Buyer does not assume or agree to discharge or
--------------------
perform and will not be deemed by reason of the execution and delivery of this
Agreement or any agreement, instrument or document delivered pursuant to or in
connection with this Agreement or otherwise by reason of the consummation of the
transactions contemplated hereby, to have assumed or to have agreed to discharge
or perform any liabilities, obligations or commitments of Seller of any nature
whatsoever whether accrued, absolute, contingent or otherwise and whether or not
disclosed to Buyer, other than the Assumed Obligations (the "Retained
Obligations").
ARTICLE 3: PURCHASE PRICE
--------------
3.1. Purchase Price. In consideration for the sale of the Station Assets
--------------
to Buyer, in addition to the assumption of the Assumed Obligations, Buyer shall
at Closing (defined below) deliver to Seller by wire transfer of immediately
available funds, ONE BILLION THREE HUNDRED TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS $1,302,500,000), subject to adjustment pursuant to Sections 3.3, 10.4
and 10.7 (the "Purchase Price").
3.2. Deposit. Within one (1) business day from the date of this Agreement
-------
with no Cure Period as defined below, Buyer shall deposit an amount equal to 10%
of the Purchase Price (the "Deposit") with NationsBank/Bank of America (the
"Escrow Agent") pursuant to the Escrow Agreement, attached hereto as Exhibit C
---------
(the "Escrow Agreement") of even date herewith among Buyer, Seller and the
Escrow Agent. At Closing, the Deposit shall be applied to the Purchase Price and
any interest accrued thereon shall be disbursed to Buyer. If this Agreement is
terminated by Seller due to Buyer's failure to consummate the Closing on the
Closing Date or if this Agreement is otherwise terminated by Seller pursuant to
Section 16.1(c), the Deposit and any interest accrued thereon shall be disbursed
to Seller as partial payment of liquidated damages pursuant to Section 16.3. If
this Agreement is terminated for any other reason, the Deposit and any interest
accrued thereon shall be disbursed to Buyer.
3.3. Prorations and Adjustments. Except as otherwise provided herein, all
--------------------------
deposits, reserves and prepaid and deferred income and expenses relating to the
Station Assets or the Assumed Obligations and arising from the conduct of the
business and operations of the Stations shall be prorated between Buyer and
Seller in accordance with generally accepted accounting principles as of 11:59
p.m. on the date immediately preceding the Closing Date. Such prorations shall
include, without limitation, all ad valorem, real estate and other property
taxes (but excluding taxes arising by reason of the transfer of the Station
Assets as contemplated hereby which shall be paid as set forth in Section 13.1),
business and license fees, music and other license fees (including any
retroactive adjustments thereof), utility expenses, amounts due or to
5
<PAGE>
become due under Station Contracts, rents, lease payments and similar prepaid
and deferred items. Real estate taxes shall be apportioned on the basis of taxes
assessed for the preceding year, with a reapportionment, if any, as soon as the
new tax rate and valuation can be ascertained. Except as otherwise provided
herein, the prorations and adjustments contemplated by this Section 3.3, to the
extent practicable, shall be made on the Closing Date. As to those prorations
and adjustments not capable of being ascertained on the Closing Date, an
adjustment and proration shall be made within ninety (90) calendar days of the
Closing Date. In the event of any disputes between the parties as to such
adjustments, the amounts not in dispute shall nonetheless be paid at the time
provided herein and such disputes shall be conclusively determined within thirty
(30) days thereafter by an independent certified public accountant mutually
acceptable to the parties, and the fees and expenses of such accountant shall be
paid one-half by Seller and one-half by Buyer.
3.4. Allocation. The Purchase Price shall be allocated among the Station
----------
Assets in a manner as mutually agreed between the parties based upon an
appraisal prepared by Bond & Pecaro (who shall be jointly retained by Seller and
Buyer with respect to the Stations and whose fees shall be paid one-half by
Seller and one-half by Buyer). Seller and Buyer agree to use the allocations
determined pursuant to this Section 3.4 for all tax purposes, including without
limitation, those matters subject to Section 1060 of the Internal Revenue Code
of 1986, as amended; such appraisal shall be completed on the earlier of (i) one
hundred eighty (180) days following the Closing, or (ii) December 31, 2000.
ARTICLE 4: CLOSING
-------
4.1. Closing. The consummation of the sale and If Closing occurs prior to
-------
the FCC Consent purchase of the Station Assets (the "Closing") becoming a final
order (i.e., no longer shall occur on a date (the "Closing Date") and at subject
to appeal), and prior to such a time and place designated solely by Seller
finality the FCC Consent is reversed or after FCC Consent (defined below),
subject to otherwise set aside pursuant to a final order satisfaction or waiver
of the conditions to of the FCC (or court of competent Closing contained herein
(other than those to be jurisdiction), then the parties shall comply satisfied
at Closing). Seller shall provide with such order in a manner that otherwise
Buyer with notice of the Closing Date at least complies with applicable law and
returns the three (3) business days prior to Closing, parties to the status quo
ante in all however, Seller reserves the right to extend the material respects
(it being understood that Closing Date without penalty. If requested by in such
event Buyer may designate one or more Seller, prior to Closing the parties shall
hold a third parties as the transferees of the pre-closing conference at a time
and place Stations). designated by Seller, at which the parties shall provide
(for review only) all documents to be delivered at Closing under this Agreement,
each duly executed but undated, and otherwise review their ability to timely
consummate the Closing.
ARTICLE 5: GOVERNMENTAL CONSENTS
---------------------
Closing is subject to and conditioned upon (i) prior FCC consent (the "FCC
Consent") to
6
<PAGE>
the assignment of the FCC Licenses to Buyer, (ii) United States Department of
Justice ("DOJ") prior approval (the "DOJ Consent") of the transactions
contemplated hereby, including without limitation any such approval as may be
necessary to enable Seller to consummate the merger under the AMFM Agreement,
and (iii) expiration or termination of any applicable waiting period ("HSR
Clearance") under the HSR Act (defined below).
5.1. FCC. On a date designated by Seller, Buyer and Seller shall file an
---
application with the FCC (the "FCC Application") requesting the FCC Consent.
Buyer and Seller shall diligently prosecute the FCC Application and otherwise
use their best efforts to obtain the FCC Consent as soon as possible. If the FCC
Consent imposes upon Buyer any condition (including without limitation any
divestiture condition), Buyer shall timely comply therewith.
5.2. HSR. If not previously filed, then within five (5) business days
---
after the execution of this Agreement, Buyer and Seller shall make any required
filings with the Federal Trade Commission and the DOJ pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with respect to the transactions contemplated hereby (including a request for
early termination of the waiting period thereunder), and shall thereafter
promptly respond to all requests received from such agencies for additional
information or documentation.
5.3. General. Buyer and Seller shall notify each other of all documents
-------
filed with or received from any governmental agency with respect to this
Agreement or the transactions contemplated hereby. Buyer and Seller shall
furnish each other with such information and assistance as the other may
reasonably request in connection with their preparation of any governmental
filing hereunder. If Buyer becomes aware of any fact relating to it which would
prevent or delay the FCC Consent, the DOJ Consent or HSR Clearance, Buyer shall
promptly notify Seller thereof and take such steps as necessary by the Closing
Date to remove such impediment, including but not limited to divesting any
stations and terminating any agreements to acquire or program or market any
stations.
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby makes the following representations and warranties to Seller:
6.1. Organization and Standing. Buyer is duly organized, validly existing
-------------------------
and in good standing under the laws of the jurisdiction of its organization, and
on the Closing Date will be qualified to do business in each jurisdiction in
which the Station Assets are located. Buyer has the requisite power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto
(collectively, the "Buyer Ancillary Agreements"), to consummate the transactions
contemplated hereby and thereby and to comply with the terms, conditions and
provisions hereof and thereof.
6.2. Authorization. The execution, delivery and performance of this
-------------
Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized
and approved by all
7
<PAGE>
necessary action of Buyer and do not require any further authorization or
consent of Buyer. This Agreement is, and each Buyer Ancillary Agreement when
executed and delivered by Buyer and the other parties thereto will be, a legal,
valid and binding agreement of Buyer enforceable in accordance with its
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
6.3. No Conflicts. Neither the execution and delivery by Buyer of this
------------
Agreement and the Buyer Ancillary Agreements or the consummation by Buyer of any
of the transactions contemplated hereby or thereby nor compliance by Buyer with
or fulfillment by Buyer of the terms, conditions and provisions hereof or
thereof will: (i) conflict with any organizational documents of Buyer or any
law, judgment, order or decree to which Buyer is subject; or (ii) require the
approval, consent, authorization or act of, or the making by Buyer of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental or regulatory authority or body,
except the FCC Consent and DOJ Consent, and, if applicable, HSR Clearance.
6.4. Qualification. Buyer is legally, financially and otherwise
-------------
qualified to be the licensee of, acquire, own and operate the Stations under the
Communications Act of 1934, as amended (the "Communications Act") and the rules,
regulations and written policies of the FCC. There are no facts that would,
under existing law and the existing rules, regulations, written policies and
procedures of the FCC, disqualify Buyer as an assignee of the FCC Licenses or as
the owner and operator of the Stations. No waiver of any FCC rule or written
policy on behalf of Buyer is necessary for the FCC Consent to be obtained. There
is no action, suit or proceeding pending or threatened against Buyer which
questions the legality or propriety of the transactions contemplated by this
Agreement or could materially adversely affect Buyer's ability to perform its
obligations hereunder. Buyer will have available on the Closing Date sufficient
funds to enable it to consummate the transactions contemplated hereby.
6.5. No Finder. No broker, finder or other person is entitled to a
---------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Buyer or any party acting on Buyer's behalf for which Seller could
become liable or obligated.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller makes the following representations and warranties to Buyer:
7.1. Organization. Seller is duly organized, validly existing and in good
------------
standing under the laws of the jurisdiction of its organization, and is
qualified to do business in the applicable jurisdiction in which its Station
Assets are located. Seller has the requisite power and authority to execute and
deliver this Agreement and all of the other agreements and instruments
8
<PAGE>
to be executed and delivered by Seller pursuant hereto (collectively, the
"Seller Ancillary Agreements"), to consummate the transactions contemplated
hereby and thereby and to comply with the terms, conditions and provisions
hereof and thereof.
7.2. Authorization. The execution, delivery and performance of this
-------------
Agreement and the Seller Ancillary Agreements by Seller have been duly
authorized and approved by all necessary action of Seller and do not require any
further authorization or consent of Seller. This Agreement is, and each Seller
Ancillary Agreement when executed and delivered by Seller and the other parties
thereto will be, a legal, valid and binding agreement of Seller enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
7.3. No Conflicts. Neither the execution and delivery by Seller of this
------------
Agreement and the Seller Ancillary Agreements or the consummation by Seller of
any of the transactions contemplated hereby or thereby nor compliance by Seller
with or fulfillment by Seller of the terms, conditions and provisions hereof or
thereof will: (i) conflict with any organizational documents of Seller or any
law, judgment, order, or decree to which Seller is subject or, except as set
forth on Schedule 1.1(c), any Station Contract; or (ii) require the approval,
---------------
consent, authorization or act of, or the making by Seller of any declaration,
filing or registration with, any third party or any foreign, federal, state or
local court, governmental or regulatory authority or body, except the FCC
Consent and DOJ Consent and, if applicable, HSR Clearance.
7.4. FCC Licenses. Seller (or one of the companies comprising Seller) is
------------
the holder of the FCC Licenses described on Schedule 1.1(a). The FCC Licenses
---------------
comprise all of those licenses from the FCC materially necessary to operate the
Stations as currently operated, are in full force and effect and have not been
revoked, suspended, canceled, rescinded or terminated and have not expired.
There is not pending any action by or before the FCC to revoke, suspend, cancel,
rescind or materially adversely modify any of the FCC Licenses (other than
proceedings to amend FCC rules of general applicability), and there is not now
issued or outstanding, by or before the FCC, any order to show cause, notice of
violation, notice of apparent liability, or notice of forfeiture against Seller
with respect to the Stations. The Stations are operating in compliance in all
material respects with the FCC Licenses, the Communications Act, and the rules,
regulations and policies of the FCC.
7.5. Taxes. Seller has, in respect of the Stations' business, filed all
-----
foreign, federal, state, county and local income, excise, property, sales, use,
franchise and other tax returns and reports which are required to have been
filed by it under applicable law and has paid all taxes which have become due
pursuant to such returns or pursuant to any assessments which have become
payable. Seller agrees to indemnify Buyer for any costs or expenses assessed
against or incurred by Buyer as a result of any tax payment or lien related to
Stations' business.
9
<PAGE>
7.6. Personal Property. Schedule 1.1(b) contains a list of all material
----------------- ---------------
items of Tangible Personal Property included in the Station Assets. Seller has
title to the Tangible Personal Property free and clear of Liens other than
Permitted Liens. The Tangible Personal Property is in good condition and working
order, subject to normal wear and tear.
7.7. Real Property. Schedule 1.1(f) contains a description of all Real
------------- ---------------
Property included in the Station Assets. Seller has fee simple title to the
owned Real Property ("Owned Real Property") free and clear of Liens other than
Permitted Liens. Schedule 1.1(f) includes a description of each lease of Real
---------------
Property or similar agreement included in the Station Assets (the "Real Property
Leases"). The Owned Real Property includes, and the Real Property Leases
provide, access to the Stations' facilities. To Seller's knowledge, the Real
Property is not subject to any suit for condemnation or other taking by any
public authority.
7.8. Contracts. Each of the Station Contracts (including without
---------
limitation each of the Real Property Leases), as well as licenses with respect
to the Intangible Property, is in effect and is binding upon Seller and, to
Seller's knowledge, the other parties thereto (subject to bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally). Seller has performed its
obligations under each of the Station Contracts in all material respects, and is
not in material default thereunder, and to Seller's knowledge, no other party to
any of the Station Contracts is in default thereunder in any material respect.
7.9. Environmental. Except as set forth in any environmental report
-------------
delivered by Seller to Buyer prior to the date of this Agreement and except as
set forth on Schedule 1.1(f), to Seller's knowledge, no hazardous or toxic
---------------
substance or waste regulated under any applicable environmental, health or
safety law has been generated, stored, transported or released on, in, from or
to the Real Property included in the Station Assets. Except as set forth in any
environmental report delivered by Seller to Buyer prior to the date of this
Agreement and except as set forth on Schedule 1.1(f), to Seller's knowledge,
---------------
Seller has complied in all material respects with all environmental, health and
safety laws applicable to the Stations.
7.10. Intangible Property. Schedule 1.1(d) contains a description of the
------------------- ---------------
material Intangible Property included in the Station Assets. Except as set forth
on Schedule 1.1(d), Seller has received no notice of any claim that its use of
---------------
the Intangible Property infringes upon any third party rights. Except as set
forth on Schedule 1.1(d), Seller owns or has the right to use through valid
---------------
licensing agreements the Intangible Property free and clear of Liens other than
Permitted Liens.
7.11. Compliance with Law. Seller has complied in all material respects
-------------------
with all laws, regulations, rules, writs, injunctions, ordinances, franchises,
decrees or orders of any court or of any foreign, federal, state, municipal or
other governmental authority which are applicable to the operation of the
Stations. There is no action, suit or proceeding pending or threatened against
Seller in respect of the Stations that will subject Buyer to liability or which
questions the legality
10
<PAGE>
or propriety of the transactions contemplated by this Agreement. To Seller's
knowledge, there are no governmental claims or investigations pending or
threatened against Seller in respect of the Stations (except those affecting the
industry generally).
7.12. No Finder. No broker, finder or other person is entitled to a
---------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Seller or any party acting on Seller's behalf.
7.13. Financial Statements. Seller has delivered to Buyer copies of the
--------------------
unaudited results of operations of the Stations for the twelve months ended
December 30, 1998 and 1999, prepared, to the best of Seller's knowledge,
materially in accordance with Generally Accepted Accounting Principles. Seller
will, each month following the date hereof, provide to Buyer copies of the
unaudited results of operations of the Stations for each month between the date
hereof and the Closing Date prepared in accordance with the books and records of
the Stations, within thirty (30) days of the end of each month.
7.14. Collective Bargaining Agreements. Except as disclosed on Schedule
--------------------------------
1.1(c) with respect to KKBT-FM, none of the Stations is a party to or bound by
any collective bargaining agreements or relationships. To the best of Seller's
knowledge, there are neither pending grievances with respect to the KKBT union
agreement disclosed on Schedule 1.1(c) except for the wage grievance from Monica
Dyson, nor are there union organizing efforts underway at the Stations.
ARTICLE 8: ACCOUNTS RECEIVABLE
-------------------
8.1. Accounts Receivable. All accounts receivable arising prior to the
-------------------
Closing Date in connection with the operation of the Stations, including but not
limited to accounts receivable for advertising revenues for programs and
announcements performed prior to the Closing Date and other broadcast revenues
for services performed prior to the Closing Date, shall remain the property of
Seller (the "Accounts Receivable") and Buyer shall not acquire any right or
interest therein. For a period of six months from Closing (the "Collection
Period"), Buyer shall collect the Accounts Receivable in the normal and ordinary
course of Buyer's business and shall apply all such amounts collected to the
debtor's oldest account receivable first, except that any such accounts
collected by Buyer from persons who are also indebted to Seller may be applied
to Buyer's account if so directed by the debtor if such debtor indicates there
is a bona fide dispute between Seller and such account debtor with respect to
such account and in which case the Buyer shall notify the Seller of such dispute
and after such notification Seller shall have the right to pursue collection of
such account and to avail itself of all legal remedies available to it. Buyer's
obligation shall not extend to the institution of litigation, employment of
counsel or a collection agency or any other extraordinary means of collection.
During the Collection Period, neither Seller nor its agents shall make any
direct solicitation of any such account debtor for collection purposes or
institute litigation for the collection of amounts due. Any amounts relating to
the
11
<PAGE>
Accounts Receivable that are paid directly to Seller shall be retained by
Seller, with notice to Buyer. Within twenty calendar days after the end of each
month, Buyer shall make a payment to Seller equal to the amount of all
collections of Accounts Receivable during the preceding month less any
commissions owing and paid to salespersons or agencies for ads to which such
Accounts Receivable related. At the end of the Collection Period, any remaining
Accounts Receivable shall be returned to Seller for collection.
ARTICLE 9: COVENANTS OF SELLER
-------------------
9.1. Seller's Covenants. Seller covenants and agrees with respect
------------------
to the Stations that, between the date hereof and Closing, except as permitted
by this Agreement or with the prior written consent of Buyer, which shall not be
unreasonably withheld, Seller shall:
(a) operate the Stations in the ordinary course of business
consistent with past practice and in compliance with Section 1.1(c) with respect
to the Station Contracts, and in all material respects in accordance with FCC
rules and regulations, in compliance with the Communications Act, and with all
other applicable laws, regulations, rules and orders;
(b) not, other than in the ordinary course of business in
accordance with past practice, sell, lease or dispose of or agree to sell, lease
or dispose of any of the Station Assets, or create, assume or permit to exist
any Liens upon the Station Assets, except for Permitted Liens, or apply for
material modification of any FCC Licenses;
(c) furnish Buyer with such information relating to the Station
Assets as Buyer may reasonably request, and permit Buyer's on-site access to the
Station Assets with Seller's prior approval after the FCC Application is filed,
including access to conduct any environmental assessment or survey of the real
property, at Buyer's expense and provided such request and on-site visits do not
interfere unreasonably with the business of the Stations;
(d) give or cause the Stations to give Buyer and Buyer's
accountants, at Buyer's expense, and reasonable request and upon reasonable
notice, full and reasonable access during normal business hours to Seller's
financial records that Buyer may reasonably request. The rights of Buyer under
this Section shall not be exercised in such a manner as to interfere
unreasonably with the business of the Stations. Any investigation by Buyer in
accordance with the foregoing shall not diminish or negate, in any way, any of
the representations or warranties of Seller set forth in this Agreement or in
connection herewith;
(e) cooperate, and use its reasonable best efforts to cause its
independent auditors to reasonably cooperate, with Buyer in order to enable
Buyer to have independent auditors selected by Buyer, and at Buyer's expense,
prepare audited financial statements for the Stations for the three (3) most
recently completed fiscal year-ends and any quarter and related year to date
period during the current fiscal year. Without limiting the generality of the
foregoing, Seller agrees that it will: (i) consent to the use of and execute
documents in support of such audited financial statements in any registration
statement or other document filed by Buyer
12
<PAGE>
under Securities Act of 1933 and the Securities and Exchange Act of 1934 or any
document relating to a private placement of Buyer's securities;
(f) upon the written request of Buyer, promptly send notices of
non-renewal or early termination in respect of any Station Contract in which
such notice would not constitute a breach of such Station Contract; and
(g) exercise any rights it has to renew the terms of the KBFB
tower/transmitter lease, the KCMG tower/transmitter lease and the KCMG
translator lease as identified on Schedule 1.1(f).
ARTICLE 10: JOINT COVENANTS
---------------
Buyer and Seller hereby covenant and agree that between the date hereof and
Closing:
10.1. Cooperation. Subject to express limitations contained elsewhere
-----------
herein, each party (i) shall cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the prompt satisfaction of any condition
to Closing set forth herein, and (ii) shall not take any action that conflicts
with its obligations hereunder or that causes its representations and warranties
to become untrue in any material respect.
10.2. Control of Stations. Buyer shall not, directly or indirectly,
-------------------
control, supervise or direct the operations of the Stations prior to Closing.
Such operations, including complete control and supervision of all Station
programs, employees and policies, shall be the sole responsibility of Seller.
10.3. Consents to Assignment. The parties shall use commercially
----------------------
reasonable efforts to obtain any third party consents necessary for the
assignment of any Station Contract (which shall not require any payment to any
such third party). To the extent that any Station Contract may not be assigned
without the consent of any third party, and such consent is not obtained prior
to Closing, this Agreement and any assignment executed pursuant hereto shall not
constitute an assignment thereof, but to the extent permitted by law shall
constitute an equitable assignment by Seller and assumption by Buyer of Seller's
rights and obligations under the applicable Station Contract, with Seller making
available to Buyer the benefits thereof and Buyer performing the obligations
thereunder on Seller's behalf; provided, however, that Seller shall indemnify
Buyer from and against all loss, costs, expenses and damages incurred by Buyer
during the first twelve (12) months following the Closing Date as a result of
Seller's failure to have obtained a consent to assignment with respect to any of
the leases for the main transmitter sites listed on Schedule 1.1(f) from which
---------------
the Stations' signals are broadcast. Seller shall be released from all
indemnification obligations with respect to Seller's failure to have obtained a
consent to assignment with respect to any of the leases for the main transmitter
sites from which the
13
<PAGE>
Stations' signals are broadcast twelve (12) months after the Closing Date,
except to the extent that written notice of such indemnification claim is given
by Buyer to Seller within the twelve month time period.
10.4. Employee Matters.
----------------
(a) Prior to Closing, Seller shall deliver to Buyer a list of: (i)
all of the employees who work exclusively for the Stations including all
employees as of the date of this Agreement, and (ii) pro rata distribution of
certain "shared" employees selected by Seller. Buyer may interview and elect to
hire such listed employees. Buyer is obligated to hire only those employees that
are under employment contracts (and assume Seller's obligations and liabilities
under such employment contracts) which are included in the Station Contracts.
With respect to employees hired by Buyer ("Transferred Employees"), to the
extent permitted by law, Seller shall provide Buyer access to its personnel
records and such other information as Buyer may reasonably request prior to
Closing and transfer such records to Buyer at Closing. With respect to such
hired employees, Seller shall be responsible for the payment of all compensation
and accrued employee benefits payable by it until Closing and thereafter Buyer
shall be responsible for all such obligations payable by it. Buyer shall cause
all employees it hires to be eligible to participate in its "employee welfare
benefit plans" and "employee pension benefit plans" (as defined in Section 3(1)
and 3(2) of ERISA, respectively) in which similarly situated employees are
generally eligible to participate; provided, however, that all such employees
and their spouses and dependents shall be eligible for coverage immediately
after Closing (and shall not be excluded from coverage on account of any pre-
existing condition) to the extent permitted under such plans. For purposes of
any length of service requirements, waiting periods or vesting periods based on
length of service in any such plan for which such employees may be eligible
after Closing, Buyer shall ensure that service with Seller shall be deemed to
have been service with the Buyer. In addition, Buyer shall ensure that each such
employee receives credit under any insured or self-insured plan of Buyer for any
deductibles or co-payments paid by such employees and dependents for the current
plan year under a plan maintained by Seller to the extent permitted by such
plans. Notwithstanding any other provision contained herein, Buyer shall grant
credit to each such employee for all unused sick leave accrued as of Closing as
an employee of Seller. Buyer shall receive a credit at Closing for the payment
of all unused vacation leave accrued by such employees as of Closing.
(b) At such time as the Seller can represent to the Buyer as to the
tax-qualified status of the 401(k) savings plan(s) (as to form and operation) in
which Transferred Employees retain account balances with the Seller or its
subsidiaries (the "Saving Plan(s)") and furnish to Buyer a favorable Internal
Revenue Service determination letter as to the tax-qualified status of such
Savings Plan(s) under Section 401(a) of the Code (or an opinion of counsel that
the form of the Savings Plan(s) is so qualified), Buyer and Seller to negotiate
in good faith to enter into a 401(k) plan asset transfer agreement pursuant to
which Buyer's existing 401(k) plan shall accept a transfer of assets from
Seller's Savings Plan(s)attributable to the accounts of Transferred Employees
provided that if the Savings Plan(s) have protected benefits under (S)411(d)(6)
of the
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<PAGE>
Code which are inconsistent with Buyer's existing 401(k) saving plan(s), then,
in its sole discretion, Buyer need not agree to such transfer.
(c) Following execution of the agreement contemplated in clause (b)
above, Seller shall cause to be transferred from the Savings Plan(s) to the plan
covering the Savings Plan Employees (the "Transferee Savings Plan") the
liability for the account balances of the Savings Plan Employees (including
outstanding loan balances of Savings Plan Employees), together with cash or
other mutually acceptable property, the value of which on such transfer date is
equal to such liability, and Buyer shall cause the Transferee Savings Plan to
accept such transfer, all in accordance with the rules and regulations under
Section 414(l) of the Code.
(d) Pending completion of the transfers described in this Section,
Seller and Buyer shall make arrangements for distributions, if any, to the
Savings Plan Employees from the Savings Plan(s). Seller and Buyer shall provide
each other with access to information reasonably necessary in order to carry out
the provisions of this paragraph. In addition, until the asset transfer is
effectuated, Buyer shall cooperate with the reasonable requests of Seller to
continue to withhold established loan payments from the pay checks of
Transferred Employees' who have outstanding loan balances in the Savings Plan(s)
and Buyer shall remit such withheld amounts to the Seller in a timely fashion
such that the outstanding loans do not go into default.
10.5. 1031 Exchange. At or prior to Closing, Seller may assign its rights
-------------
under this Agreement (in whole or in part) to a qualified intermediary (as
defined in Treasury regulation section 1.1031(k)-1(g)(4)) or similar entity or
arrangement ("Qualified Intermediary"). Upon any such assignment, Seller shall
promptly give written notice thereof to Buyer, and Buyer shall cooperate with
the reasonable requests of Seller and any Qualified Intermediary in connection
therewith. Without limiting the generality of the foregoing, if Seller gives
notice of such assignment, Buyer shall (i) promptly provide Seller with written
acknowledgment of such notice and (ii) at Closing, pay the Purchase Price (or
any portion thereof designated by the Qualified Intermediary) to or on behalf of
the Qualified Intermediary (which payment shall, to the extent thereof, satisfy
the obligations of Buyer to make such payment hereunder). Seller's assignment to
a Qualified Intermediary will not relieve Seller of any of its duties or
obligations herein. Except for the obligations of Buyer set forth in this
Section, Buyer shall not have any liability or obligation to Seller for the
failure of the contemplated exchange to qualify as a like-kind exchange under
Section 1031 of the Internal Revenue Code unless such failure is the result of
the material breach or default by Buyer under this Agreement.
10.6. Trust. Notwithstanding anything in this Agreement to the contrary,
-----
Seller may at it option assign this Agreement (in whole or part) and assign and
transfer the Station Assets (in whole or in part) to a trustee to hold and
operate pursuant to a trust agreement, provided such trustee assumes Seller's
duties and obligations hereunder with respect to the Station Assets held in such
trust. Seller shall provide Buyer with written notice of the assignment to such
trust, and further provided that Seller shall perform the obligations described
in Section 15 below.
15
<PAGE>
10.7. KKBT Frequency Change. For one (1) year following the Closing, Buyer
---------------------
shall submit to Seller for reimbursement invoices totaling in the aggregate no
more than Five Million Dollars ($5,000,000), such invoices must relate to
promotional expenses related to the KKBT(FM), Los Angeles frequency change and
at least twenty (20%) of the aggregate of invoices reimbursed to Buyer by Seller
must be spent on promotional services provided by Eller Media at its standard
competitive rates. At the end of the one year period, if Buyer has not submitted
to Seller invoices, which in the aggregate equal or exceed Five Million Dollars,
Seller shall pay to Buyer the difference between total invoices reimbursed by
Seller and Five Million Dollars ($5,000,000). Buyer acknowledges that it will be
operating Station KKBT on the frequency of 100.3 MHZ as of the Closing Date.
Seller agrees that the operations of Station KKBT will only be moved to the new
frequency in accordance with a transition plan developed by Buyer and Seller.
10.8. Eller Media Expenditure. At Closing, Buyer shall deposit three
-----------------------
million dollars ($3,000,000) (the "Eller Deposit") into an escrow account
established between Buyer, Seller and a mutually agreeable escrow agent. Buyer
shall spend the Eller Deposit during the period fifteen (15) months from the
Closing Date on promotional services provided by Eller Media nationwide at its
standard competitive rates. At the end of the fifteen (15) month period, the
balance of the Eller Deposit, if any, shall be returned to Seller.
ARTICLE 11: CONDITIONS OF CLOSING BY BUYER
------------------------------
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to Closing, of each of the following conditions:
11.1. Representations, Warranties and Covenants. The representations and
-----------------------------------------
warranties of Seller made in this Agreement and any exhibit or schedule
delivered pursuant thereto shall be true and correct in all material respects as
of the Closing Date except for changes permitted or contemplated by the terms of
this Agreement, and the covenants and agreements to be complied with and
performed by Seller at or prior to Closing shall have been complied with or
performed in all material respects. Buyer shall have received a certificate
dated as of the Closing Date from Seller, executed by an authorized officer of
Seller to the effect that the conditions set forth in this Section have been
satisfied.
11.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if
---------------------
applicable, HSR Clearance, shall have been obtained, and no court or
governmental order prohibiting Closing shall be in effect.
ARTICLE 12: CONDITIONS OF CLOSING BY SELLER
-------------------------------
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to Closing, of each of the following conditions:
12.1. Representations, Warranties and Covenants. The representations and
-----------------------------------------
warranties
16
<PAGE>
of Buyer made in this Agreement shall be true and correct in all material
respects as of the Closing Date except for changes permitted or contemplated by
the terms of this Agreement, and the covenants and agreements to be complied
with and performed by Buyer at or prior to Closing shall have been complied with
or performed in all material respects. Seller shall have received a certificate
dated as of the Closing Date from Buyer, executed by an authorized officer of
Buyer, to the effect that the conditions set forth in this Section have been
satisfied.
12.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if
---------------------
applicable, HSR Clearance, shall have been obtained, and no court or
governmental order prohibiting Closing shall be in effect.
12.3. AMFM Closing. The closing under the AMFM Agreement shall have been
------------
consummated.
ARTICLE 13: EXPENSES
--------
13.1. Expenses. Each party shall be solely responsible for all costs and
--------
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement, except that (i)
all recordation, transfer and documentary taxes, fees and charges, and any
excise, sales or use taxes, applicable to the transfer of the Station Assets
shall be paid equally by Buyer and Seller, (ii) all FCC filing fees shall be
paid equally by Buyer and Seller, and (iii) all HSR Act filing fees and expenses
shall be paid by Buyer.
ARTICLE 14: DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
14.1. Seller's Documents. At Closing, Seller shall deliver or cause to be
------------------
delivered to Buyer:
(i) certified copies of resolutions authorizing its execution,
delivery and performance of this Agreement, including the consummation of the
transactions contemplated hereby;
(ii) the certificate described in Section 11.1;
(iii) such bills of sale, assignments, special warranty deeds,
documents of title and other instruments of conveyance, assignment and transfer
as may be necessary to convey, transfer and assign the Station Assets to Buyer,
free and clear of Liens, except for Permitted Liens;
(iv) a written opinion of Clear Channel Broadcasting, Inc.'s and
Clear Channel Broadcasting Licenses, Inc.'s counsel in the form of Exhibit B,
---------
dated as of the Closing Date;
(v) a written opinion of AMFM Operating, Inc., AMFM Ohio, Inc.,
AMFM Houston, Zebra Broadcasting Corporation, AMFM Radio Licenses, LLC,
Cleveland Radio
17
<PAGE>
Licenses, LLC and Capstar TX Limited Partnership counsel in the form of Exhibit
-------
D, dated as of the Closing Date; and
- -
(vi) the leases described in Section 1.3.
14.2. Buyer's Documents. At Closing, Buyer shall deliver or cause to be
-----------------
delivered to Seller:
(i) the certified copies of resolutions authorizing its execution,
delivery and performance of this Agreement, including the consummation of the
transactions contemplated hereby;
(ii) the certificate described in Section 12.1; and
(iii) such documents and instruments of assumption as may be
necessary to assume the Assumed Obligations, and the Purchase Price in
accordance with Section 3.1 hereof.
ARTICLE 15: SURVIVAL; INDEMNIFICATION.
-------------------------
15.1. Survival. The covenants, agreements, representations and warranties
--------
in this Agreement shall survive Closing for a period of twelve (12) months from
the Closing Date whereupon they shall expire and be of no further force or
effect, except those under (i) this Article 15 that relate to Damages (defined
below) for which written notice is given by the indemnified party to the
indemnifying party prior to the expiration, which shall survive until resolved,
(ii) Sections 7.2 and 7.9 shall survive the Closing through the applicable
statute of limitations period, and (iii) Sections 2.1 (Assumed Obligations), 2.2
(Retained Obligations), 3.3 (Adjustments), 3.4 (Allocation), 8.1 (Accounts
Receivable) and 13.1 (Expenses), and indemnification obligations with respect to
such provisions, which shall survive until performed.
15.2. Indemnification.
---------------
(a) From and after the Closing, Seller shall defend, indemnify and
hold harmless Buyer from and against any and all losses, costs, damages,
liabilities and expenses, including reasonable attorneys' fees and expenses
("Damages") incurred by Buyer arising out of or resulting from: (i) any breach
or default by Seller under this Agreement; (ii) the Retained Obligations; or
(iii) the business or operation of the Stations before Closing; provided,
however, that (i) Seller shall have no liability to Buyer hereunder until, and
only to the extent that, Buyer's aggregate Damages exceed $500,000 and (ii) the
maximum liability of Seller hereunder shall be $25,000,000, except that such
limitations in (i) and (ii) shall not apply to Seller's obligations under
Section 10.3 with respect to consent to assignment for the transmitter site
leases or Section 7.5 with respect to tax payments and liens.
(b) From and after the Closing, Buyer shall defend, indemnify and
hold
18
<PAGE>
harmless Seller from and against any and all Damages incurred by Seller arising
out of or resulting from: (i) any breach or default by Buyer under this
Agreement; (ii) the Assumed Obligations; or (iii) the business or operation of
the Stations after Closing provided, however, that Buyer shall have no liability
to Seller hereunder until, and only to the extent that, Seller's aggregate
Damages exceed $500,000 and (ii) the maximum liability of Buyer hereunder shall
be $25,000,000.
15.3. Procedures. The indemnified party shall give prompt written notice
----------
to the indemnifying party of any demand, suit, claim or assertion of liability
by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party (a "Claim"),
but a failure to give such notice or delaying such notice shall not affect the
indemnified party's right to indemnification and the indemnifying party's
obligation to indemnify as set forth in this Agreement, except to the extent the
indemnifying party's ability to remedy, contest, defend or settle with respect
to such Claim is thereby prejudiced. The obligations and liabilities of the
parties with respect to any Claim shall be subject to the following additional
terms and conditions:
(a) The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense or opposition
to such Claim, except with respect to any Claim brought by Buyer pursuant to
Section 10.3 above which Buyer shall have the right to undertake, by counsel or
other representatives of its own choosing, the defense or opposition to such
Claim at its own expense.
(b) In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or, within twenty (20) days after written
notice (which shall include sufficient description of background information
explaining the basis for such Claim) of any such Claim from the indemnified
party, the indemnifying party shall fail to undertake to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, 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 indemnifying party (subject to the right
of the indemnifying party to assume defense of or opposition to such Claim at
any time prior to settlement, compromise or final determination thereof).
(c) Anything herein to the contrary notwithstanding and except as
set forth in the exception of 15.3(a) above: (i) the indemnified party shall
have the right, at its own cost and expense, to participate in the defense,
opposition, compromise or settlement of the Claim; (ii) the indemnifying party
shall not, without the indemnified party'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 claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such Claim; and
(iii) in the event that the indemnifying party undertakes defense of or
opposition to any Claim, the indemnified party, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to
19
<PAGE>
consult with the indemnifying party and its counsel or other representatives
concerning such Claim and the indemnifying party and the indemnified party and
their respective counsel or other representatives shall cooperate in good faith
with respect to such Claim.
(d) All claims not disputed shall be paid by the indemnifying party
within thirty (30) days after receiving notice of the Claim. "Disputed Claims"
shall mean claims for Damages by an indemnified party which the indemnifying
party objects to in writing within thirty (30) days after receiving notice of
the Claim. In the event there is a Disputed Claim with respect to any Damages,
the indemnifying party shall be required to pay the indemnified party the amount
of such Damages for which the indemnifying party has, pursuant to a final
determination, been found liable within ten (10) days after there is a final
determination with respect to such Disputed Claim. A final determination of a
Disputed Claim shall be (i) a judgment of any court determining the validity of
a Disputed Claim, if no appeal is pending from such judgment and if the time to
appeal therefrom has elapsed; (ii) an award of any arbitration determining the
validity of such disputed claim, if there is not pending any motion to set aside
such award and if the time within which to move to set aside such award has
elapsed; (iii) a written termination of the dispute with respect to such claim
signed by the parties thereto or their attorneys; (iv) a written acknowledgment
of the indemnifying party that it no longer disputes the validity of such claim;
or (v) such other evidence of final determination of a disputed claim as shall
be acceptable to the parties. No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
ARTICLE 16: TERMINATION
-----------
16.1. Termination. This Agreement may be terminated at any time prior
-----------
to Closing as follows:
(a) by mutual written consent of Buyer and Seller;
(b) by written notice of Buyer to Seller if Seller (i) does not
satisfy the conditions or perform the obligations to be satisfied or performed
by it on the Closing Date; or (ii) otherwise breaches in any material respect
any of its representations or warranties or defaults in any material respect in
the performance of any of its covenants or agreements herein contained and such
breach or default is not cured within the Cure Period (defined below);
(c) by written notice of Seller to Buyer if Buyer (i) does not
satisfy the conditions or perform the obligations to be satisfied or performed
by it on the Closing Date; or (ii) otherwise breaches in any material respect
any of its representations or warranties or defaults in any material respect in
the performance of any of its covenants or agreements herein contained and such
breach or default is not cured within the Cure Period (defined below);
(d) by written notice of Buyer to Seller, or by Seller to Buyer, if
the FCC
20
<PAGE>
denies the FCC Application;
(e) by written notice of Seller to Buyer if the Closing shall not
have been consummated on or before the date four months after the date of this
Agreement; (j)
(f) by written notice of Seller to Buyer if the AMFM Agreement is
terminated or expires; or
(g) by written notice of Buyer to Seller or Seller to Buyer if the
Closing is not consummated on or before the date thirteen months after the date
of this Agreement.
The term "Cure Period" as used herein means a period commencing the date
Buyer or Seller receives from the other written notice of breach or default
hereunder and continuing until the earlier of (i) thirty (30) days thereafter or
(ii) the Closing Date; provided, however, that if the breach or default cannot
reasonably be cured within such period but can be cured before the Closing Date,
and if diligent efforts to cure promptly commence, then the Cure Period shall
continue as long as such diligent efforts to cure continue, but not beyond the
Closing Date. Except as set forth below, the termination of this Agreement shall
not relieve any party of any liability for breach or default under this
Agreement prior to the date of termination. Notwithstanding anything contained
herein to the contrary, Section 13.1 shall survive any termination of this
Agreement.
16.2. Remedies. The parties recognize that if either party refuses to
--------
consummate the Closing pursuant to the provisions of this Agreement or either
party otherwise breaches or defaults such that the Closing has not occurred
("Breaching Party"), monetary damages alone will not be adequate to compensate
the non-breaching party ("Non-Breaching Party") for its injury. Such Non-
Breaching Party shall therefore be entitled to obtain specific performance of
the terms of this Agreement in lieu of, and not in addition to, any other
remedies, including but not limited to monetary damages, that may be available
to it; provided however, that Seller may elect to recover liquidated damages as
its sole remedy in lieu of obtaining specific performance. If any action is
brought by the Non-Breaching Party to enforce this Agreement, the Breaching
Party shall waive the defense that there is an adequate remedy at law. In the
event of a default by the Breaching Party which results in the filing of a
lawsuit for damages, specific performance, or other remedy, the Non-Breaching
Party shall be entitled to reimbursement by the Breaching Party of reasonable
legal fees and expenses incurred by the Non-Breaching Party, provided that the
Non-Breaching Party is successful in such lawsuit.
16.3. Liquidated Damages. If Seller terminates this Agreement due to
------------------
Buyer's failure to consummate the Closing on the Closing Date or if this
Agreement is otherwise terminated by Seller pursuant to Section 16.1(c), then
Buyer shall pay Seller as liquidated damages an amount equal to THREE HUNDRED
TWENTY FIVE MILLION SIX HUNDRED TWENTY FIVE THOUSAND DOLLARS ($325,625,000). If
elected by and paid to Seller, such liquidated damage payment shall be Seller's
sole remedy hereunder. It is understood and agreed that such
21
<PAGE>
liquidated damages amount represents Buyer's and Seller's reasonable estimate of
actual damages and does not constitute a penalty.
ARTICLE 17: MISCELLANEOUS PROVISIONS
------------------------
17.1. Casualty Loss. In the event any loss or damage of the Station
-------------
Assets exists on the Closing Date, Buyer and Seller shall consummate the Closing
and Seller shall assign to Buyer the proceeds of any insurance, including
business interruption, payable to Seller on account of such damage or loss. If
insurance proceeds payable with respect to the lost or damaged asset and/or lost
revenue are insufficient to repair or replace such asset, or are insufficient to
satisfy lost revenue, Buyer shall receive a credit at Closing against the
Purchase Price equal to the cost of repair or replacement and lost revenue less
the amount of insurance proceeds assigned to Buyer.
17.2. Further Assurances.
------------------
(a) After the Closing, Seller shall from time to time, at the
request of and without further cost or expense to Buyer, execute and deliver
such other instruments of conveyance and transfer and take such other actions as
may reasonably be requested in order to more effectively consummate the
transactions contemplated hereby to vest in Buyer good title to the Station
Assets, and Seller shall cooperate with Buyer and cause its independent
accountant to cooperate, at Buyer's expense, to assist Buyer with its reporting
requirements to governmental agencies, and Buyer shall from time to time, at the
request of and without further cost or expense to Seller, execute and deliver
such other instruments and take such other actions as may reasonably be
requested in order to more effectively to relieve Seller of any obligations
being assumed by Buyer hereunder.
(b) Following the Closing, Buyer and Seller shall cooperate with
each other in the event and for so long as any party is actively contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand in connection with this Agreement or any transaction
contemplated under the Agreement all at the sole cost of the contesting or
defending party (unless the contesting party or defending party is entitled to
indemnification therefor under Article 15 above).
17.3. Assignment. Except as set forth in Sections 10.5 (1031 Exchange) and
----------
10.6 (Trust), neither party may assign this Agreement without the prior written
consent of the other party hereto; provided, however, that either party may
assign this Agreement to one or more direct or indirect subsidiaries so long as
(i) the assigning party remains liable hereunder, (ii) the assignment is made
prior to any filings with the FTC or DOJ, including any HSR filing, and (ii)
such assignment will not delay any consent required to be obtained hereunder,
including but not limited to HSR Clearance, DOJ Consent and FCC Consent, or
delay the Closing in any respect; and provided, further, after Closing Buyer may
collaterally assign its rights hereunder to secure its obligations to
institutional or bank lenders (a "Collateral Assignment") without consent of
22
<PAGE>
Seller. With respect to any permitted assignment, the parties shall take all
such actions as are reasonably necessary to effectuate such assignment,
including but not limited to cooperating in any appropriate filings with the FCC
or other governmental authorities. All covenants, agreements, statements,
representations, warranties and indemnities in this Agreement by and on behalf
of any of the parties hereto shall bind (except under a Collateral Assignment)
and inure to the benefit of their respective successors and permitted assigns of
the parties hereto.
17.4. Amendments. No amendment, waiver of compliance with any provision or
----------
condition hereof or consent pursuant to this Agreement shall be effective unless
evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.5. Headings. The headings set forth in this Agreement are for
--------
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.6. Governing Law. The construction and performance of this Agreement
-------------
shall be governed by the laws of the State of Texas without giving effect to the
choice of law provisions thereof.
17.7. Notices. Any notice, demand or request required or permitted to be
-------
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been received on the date of personal
delivery, on the third day after deposit in the U.S. mail if mailed by
registered or certified mail, postage prepaid and return receipt requested, on
the day after delivery to a nationally recognized overnight courier service if
sent by an overnight delivery service for next morning delivery or when
delivered by facsimile transmission, and shall be addressed as follows (or to
such other address as any party may request by written notice):
if to Seller: c/o Clear Channel Broadcasting, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: President
Facsimile: (210) 822-2299
with a copy (which shall not
constitute notice) to: Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: John J. Kropp, Esq.
Facsimile: (513) 651-3836
if to Buyer: Radio One, Inc.
5900 Princess Garden Parkway - 8/th/ Floor
23
<PAGE>
Lanham, MD 20706
Attention: Alfred C. Liggins
Facsimile: (301) 306-9694
with a copy (which shall not
constitute notice) to: Radio One, Inc.
5900 Princess Garden Parkway - 8/th/ Floor
Lanham, MD 20706
Attention: Linda J. Eckard, Esq.
Facsimile: (301) 306-9638
Kirkland & Ellis
655 Fifteenth Street, N.W.
Washington, DC 20005
Attention: Terrance L. Bessey, Esq.
Facsimile: (202) 879-5200
17.8. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
17.9. No Third Party Beneficiaries. Nothing herein expressed or implied is
----------------------------
intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.10. Severability. The parties agree that if one or more provisions
------------
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.11. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding of the parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to the matters provided for herein.
This Agreement does not supersede any confidentiality agreement relating to the
Stations, and any such confidentiality agreement is to expire at Closing.
17.12. No Liability. The parties agree that no past, present or future
------------
stockholder, director or officer of Seller or Buyer or of their respective
affiliates shall have any personal or individual liability for the obligations
of Seller or Buyer, as applicable, under this Agreement or any other agreement
entered into in connection with this Agreement.
[SIGNATURE PAGE FOLLOWS]
24
<PAGE>
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
------------------------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
SELLER: CLEAR CHANNEL BROADCASTING, INC.
By: /s/ Jerome L. Kerstine
------------------------------------
Name: Jerome L. Kerstine
-----------------------------
Title: SVP
-----------------------------
CLEAR CHANNEL BROADCASTING LICENSES, INC.
By: /s/ Jerome L. Kerstine
------------------------------------
Name: Jerome L. Kerstine
-----------------------------
Title: SVP
-----------------------------
AMFM OPERATING, INC.
By: ____________________________________
Name: _____________________________
Title: _____________________________
AMFM OHIO, INC.
By: ____________________________________
Name: _____________________________
Title: _____________________________
AMFM HOUSTON, INC.
By: ____________________________________
Name: _____________________________
Title: _____________________________
AMFM RADIO LICENSES, LLC
By: ____________________________________
Name: _____________________________
Title: _____________________________
ZEBRA BROADCASTING CORPORATION
By: ____________________________________
Name: _____________________________
Title: _____________________________
<PAGE>
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
------------------------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
SELLER: CLEAR CHANNEL BROADCASTING, INC.
By: ____________________________________
Name: _____________________________
Title: _____________________________
CLEAR CHANNEL BROADCASTING LICENSES, INC.
By: ____________________________________
Name: _____________________________
Title: _____________________________
AMFM OPERATING, INC.
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
AMFM OHIO, INC.
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
AMFM HOUSTON, INC.
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
AMFM RADIO LICENSES, LLC
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
ZEBRA BROADCASTING CORPORATION
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
CLEVELAND RADIO LICENSE, LLC
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name:
Title: _____________________________
CAPSTAR TX LIMITED PARTNERSHIP
By: /s/ William S. Banowsky, Jr.
------------------------------------
Name: William S. Banowsky, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
<PAGE>
BUYER: RADIO ONE, INC.
By: /s/ Alfred C. Liggins
-----------------------------
Name: Alfred C. Liggins
----------------------
Title: President
----------------------
27
<PAGE>
Schedules
- ---------
1.1(a) - FCC Licenses
1.1(b) - Tangible Personal Property
1.1(c) - Station Contracts
1.1(d) - Intangible Property
1.1(f) - Real Property
1.2(h) - Excluded Assets
Exhibit A Tower Lease
Exhibit A-1 WZAK Tower Lease
Exhibit A-2 Studio Lease
Exhibit B Clear Channel Opinion Letter
Exhibit C Escrow Agreement
Exhibit D AMFM Opinion Letter
28
<PAGE>
Exhibit 10.59
AGREEMENT AND PLAN OF MERGER
----------------------------
By and Among
Davis Broadcasting, Inc.
Gregory A. Davis
and
Radio One, Inc.
March 11, 2000
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
<S> <C>
Recitals............................................................................ 1
Agreement........................................................................... 2
ARTICLE 1: THE MERGERS......................................................... 2
1.1 The Mergers........................................................... 2
1.2 Effective Time........................................................ 2
1.3 Effect of the Mergers................................................. 2
1.4 Certificates of Incorporation and of Formation and Company Agreement.. 2
1.5 Managers, Members, Directors and Officers............................. 3
1.6 Stock................................................................. 3
1.7 Merger Consideration.................................................. 3
1.8 Post-Closing Escrow................................................... 4
1.9 Deposit............................................................... 4
1.10 Adjustment............................................................ 5
1.11 Closing............................................................... 5
1.12 FCC Applications...................................................... 6
1.13 Hart-Scott-Rodino..................................................... 6
1.14 Employment Agreement.................................................. 6
1.15 Preclosing Reorganizations............................................ 6
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 2: COMPANY REPRESENTATIONS AND WARRANTIES.............................. 6
2.1 Organization.......................................................... 6
2.2 Capitalization........................................................ 7
2.3 Subsidiaries and Investments.......................................... 7
2.4 Books and Records..................................................... 7
2.5 Authority............................................................. 7
2.6 No Conflicts.......................................................... 7
2.7 Financial Statements.................................................. 8
2.8 Tax Matters........................................................... 9
2.9 Assets................................................................ 10
2.10 FCC Authorizations................................................... 10
2.11 Personal Property.................................................... 11
2.12 Real Property........................................................ 11
2.13 Contracts............................................................ 12
2.14 Intangible Property.................................................. 12
2.15 Employees............................................................ 12
2.16 Employee Benefit Matters............................................. 13
2.17 Compliance with Law; Litigation...................................... 13
2.18 Insurance............................................................ 13
2.19 Environmental........................................................ 13
2.20 Affiliates........................................................... 14
2.21 Guaranties, Indemnities, Etc......................................... 14
2.22 No Finder............................................................ 14
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
2.23 Powers of Attorney.................................................. 14
2.24 Year 2000 Compliance................................................ 14
2.25 Disclosure.......................................................... 14
ARTICLE 3: MAJORITY SHAREHOLDER REPRESENTATIONS AND WARRANTIES................ 14
3.1 Authority............................................................ 14
3.2 Binding Effect....................................................... 15
3.3 No Conflicts......................................................... 15
ARTICLE 4: RADIO ONE REPRESENTATIONS AND WARRANTIES........................... 15
4.1 Organization......................................................... 15
4.2 Authority............................................................ 15
4.3 No Conflicts......................................................... 15
4.4 No Finder............................................................ 16
4.5 Qualification........................................................ 16
4.6 Reorganizations...................................................... 16
ARTICLE 5: COVENANTS OF COMPANY AND THE SHAREHOLDERS.......................... 16
5.1 Operation of the Business............................................ 16
5.2 Reports.............................................................. 17
5.3 Access............................................................... 17
5.4 Confidentiality...................................................... 18
5.5 Consents............................................................. 18
5.6 Estoppel Certificates; Title Insurance; Liens........................ 18
5.7 Environmental........................................................ 18
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
5.8 Employment Matters................................................... 19
5.9 Exclusive Dealing.................................................... 19
5.10 Shareholders' Approval.............................................. 19
5.11 Inter-Davis Companies Debt.......................................... 19
5.12 Cancellation of Subordinated Lenders' Conversion, Purchase Option
and Put Rights Agreement............................................ 19
5.13 Qualification....................................................... 20
5.14 FCC Compliance...................................................... 20
5.15 Bank Accounts....................................................... 20
ARTICLE 6: ADDITIONAL COVENANTS............................................... 20
6.1 Representations and Warranties....................................... 20
6.2 Notice of Proceedings................................................ 20
ARTICLE 7: SHAREHOLDERS CONDITIONS............................................ 20
7.1 Representations, Warranties and Covenants............................ 20
7.2 Proceedings.......................................................... 21
7.3 FCC Consent.......................................................... 21
7.4 Hart-Scott-Rodino.................................................... 21
7.5 Deliveries........................................................... 21
7.6 Columbus Sub......................................................... 21
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ARTICLE 8: RADIO ONE CONDITIONS........................................... 21
8.1 Representations, Warranties and Covenants........................ 21
8.2 Proceedings...................................................... 21
8.3 FCC Consent...................................................... 21
8.4 Hart-Scott-Rodino................................................ 21
8.5 Deliveries....................................................... 21
8.6 Required Consents................................................ 22
8.7 Material Adverse Change.......................................... 22
8.8 Title Commitments................................................ 22
8.9 Surveys.......................................................... 22
8.10 Estoppel Certificates........................................... 22
8.11 Environmental................................................... 22
8.12 Net Operating Losses............................................ 22
8.13 Subordinated Lenders' Conversion Rights......................... 22
8.14 Inter-Company Debt.............................................. 22
8.15 Shareholders' Approval.......................................... 22
8.16 Liens........................................................... 22
ARTICLE 9: ITEMS TO BE DELIVERED AT THE CLOSING........................... 23
9.1 Deliveries by the Company and the Shareholders................... 23
9.2 Deliveries by Radio One.......................................... 24
9.3 Satisfaction of Davis Companies Indebtedness for Long Term Debt.. 24
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
ARTICLE 10: SURVIVAL; RELEASE; INDEMNIFICATION............................ 24
10.1 Survival; Release............................................... 24
10.2 Indemnification................................................. 24
10.3 Deficiencies.................................................... 25
10.4 Exceptions...................................................... 26
10.5 Procedures...................................................... 26
(a) Third Party Claims.......................................... 26
(b) Direct Claims............................................... 26
10.6 Payment......................................................... 26
10.7 Legal Expenses.................................................. 27
10.8 Sole Remedy..................................................... 27
ARTICLE 11: MISCELLANEOUS................................................ 27
11.1 Termination..................................................... 27
11.2 Specific Performance............................................ 27
11.3 Expenses........................................................ 28
11.4 Further Assurances.............................................. 28
11.5 Broadcast Transmission Interruption............................. 28
11.6 Risk of Loss.................................................... 28
11.7 Cooperation..................................................... 29
11.8 Tax Matters..................................................... 29
ARTICLE 12: GENERAL PROVISIONS........................................... 30
12.1 Successors and Assigns.......................................... 30
12.2 Amendments; Waivers............................................. 30
</TABLE>
-vi-
<PAGE>
<TABLE>
<S> <C>
12.3 Notices......................................................... 30
12.4 Captions........................................................ 31
12.5 Governing Law................................................... 31
12.6 Entire Agreement................................................ 31
12.7 Counterparts.................................................... 31
</TABLE>
-vii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
March 11, 2000 among Davis Broadcasting, Inc., a Delaware corporation (the
"Company"), Gregory A. Davis (the "Majority Shareholder"), and Radio One, Inc.,
a Delaware corporation ("Radio One").
Recitals
--------
The other shareholders of the Company are listed on Schedule 2.2 of
------------
this Agreement (the "Minority Shareholders") (the Majority Shareholder and the
Minority Shareholders, collectively, the "Shareholders"). The Shareholders own
all of the issued and outstanding shares of capital stock of the Company as of
the date hereof (the "Company Stock"). The Company owns all of the issued and
outstanding shares of capital stock of Davis Broadcasting of Charlotte, Inc., a
Delaware corporation ("DBC") and Davis Broadcasting, Inc. of Augusta, a Delaware
corporation ("DBA"). DBA owns all of the issued and outstanding shares of
capital stock of Davis Broadcasting Inc., of Evans, a Delaware corporation
("DBE") (DBC, DBA and DBE, collectively, the "Station Subs").
The Station Subs own and operate the following radio broadcast
stations (the "Davis Stations") pursuant to certain licenses, permits and
authorizations issued by the Federal Communications Commission (the "FCC"):
DBC: WCCJ(FM), Harrisburg, North Carolina
DBA: WFXA-FM, Augusta, Georgia
WTHB(AM), Augusta, Georgia
WAKB(FM), Wrens, Georgia
DBE: WAEG(FM), Evans, Georgia
WAEJ(FM), Waynsboro, Georgia
The Company also owns all of the issued and outstanding shares of
capital stock of Davis Broadcasting, Inc. of Columbus, a Delaware corporation
(the "Columbus Sub"). The Columbus Sub owns and operates the following radio
broadcast station and the Company owns and operates the following Columbus radio
broadcast stations (the "Columbus Stations") pursuant to licenses, permits and
authorizations issued by the FCC:
Company: WFXE(FM), Columbus, Georgia
WOKS(AM), Columbus, Georgia
Columbus Sub: WKZJ(FM), Greenville, Georgia
The parties have determined that it is in their respective best
interests to merge the Company with and into a limited liability company to be
formed ("Radio One of Charlotte, LLC"), which will be a subsidiary of a new
corporation to be formed ("NewCo"), which NewCo just prior to the Merger of the
Company into Radio One of Charlotte, LLC, will be a wholly-owned subsidiary of
the Company. On the day following the merger of the Company with and into Radio
One of Charlotte, LLC, NewCo will be merged with and into Radio One, all in
accordance with the Delaware Limited Liability Company Act and the Delaware
General Corporation Law (the "Delaware Laws") on the terms and conditions of
this Agreement. The parties have, or their respective boards of directors have,
approved such mergers (the "Mergers").
<PAGE>
The parties intend that the Mergers shall constitute a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the respective boards of directors have adopted this Agreement as a
plan of reorganization under the treasury regulations.
Agreement
---------
NOW, THEREFORE, taking the foregoing into account, and in
consideration of the mutual covenants and agreements set forth herein, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1: THE MERGERS
-----------
1.1 The Mergers. Upon the terms and conditions of this
-----------
Agreement, and in accordance with the Delaware Laws, on the day before the
Closing Date (defined below) the Company shall be merged with and into Radio One
of Charlotte, LLC, (the "Company/LLC Merger") and upon Closing (defined below)
NewCo shall be merged with and into Radio One (the "NewCo/ROI Merger"). As a
result of the Mergers, the separate existence of the Company and NewCo shall
cease and Radio One of Charlotte, LLC, and Radio One shall continue as the
surviving companies of the Mergers. Radio One of Charlotte, LLC, and Radio One
as the surviving companies after the Mergers are hereinafter sometimes referred
to as a "Surviving Company" or the "Surviving Companies." Capitalized terms
used in this Agreement and not otherwise defined shall have the respective
meanings set forth in Annex A attached hereto.
-------
1.2 Effective Time. The parties hereto shall cause the Mergers to be
--------------
consummated by filing certificates of merger (the "Certificates of Merger") with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with the relevant provisions of, the Delaware Laws.
The "Effective Time" of the Company/LLC Merger shall be on the day before the
Closing Date, and the "Effective Time" of the NewCo/ROI Merger shall be Closing.
Such effective times shall be specified in the Certificates of Merger.
1.3 Effect of the Mergers. As of the respective effective times, the
---------------------
Mergers shall have the effects set forth in the Delaware Laws. Without limiting
the generality of the foregoing, and subject thereto, as of the Effective Time
of the Company/LLC Merger all the property, rights, privileges, powers and
franchises of the Company shall vest in Radio One of Charlotte, LLC, the
Surviving Company, and all debts, liabilities and duties of the Company shall
become the debts, liabilities and duties of the Surviving Company. As of the
Effective Time of the NewCo/ROI Merger, all property, rights, privileges, powers
and franchises of NewCo shall vest in Radio One, the Surviving Company, and all
debts, liabilities and duties of NewCo shall become the debts, liabilities and
duties of the Surviving Company.
1.4 Certificates of Incorporation and of Formation and Company
----------------------------------------------------------
Agreement:
- ---------
(a) As of the Effective Time of the Company/LLC Merger, the
Certificate of Formation of Radio One of Charlotte, LLC, as in effect
immediately prior to the Effective Time, shall be the Certificate of Formation
of the Surviving Company, until thereafter amended as provided by law and such
Certificate of Formation. As of the Effective Time of the Company/LLC Merger,
the limited liability company agreement of Radio One of Charlotte, LLC, as in
effect immediately prior to the Effective Time, shall be the limited liability
company agreement of the Surviving Company, until thereafter amended as provided
by law, the Certificate of Formation of Radio One of Charlotte, LLC, and such
limited liability company agreement.
-2-
<PAGE>
(b) As of the Effective Time of the NewCo/ROI Merger, the
Certificate of Incorporation of Radio One, as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Company, until thereafter amended as provided by law and such Certificate of
Incorporation. As of the Effective Time of the NewCo/ROI Merger, the by-laws of
Radio One, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Company, until thereafter amended as provided by law,
the Certificate of Incorporation of Radio One and such by-laws.
1.5. Managers, Members, Directors and Officers.
-----------------------------------------
(a) As of the Effective Time of the Company/LLC Merger, the managers
designated by Radio One shall be the managers of Radio One of Charlotte, LLC,
each to hold office in accordance with the Certificate of Formation and limited
liability company agreement of Radio One of Charlotte, LLC, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be. As of the Effective
Time of the Company/LLC Merger, the officers designated by Radio One shall be
the officers of Radio One of Charlotte, LLC, each to hold office in accordance
with the Certificate of Formation and limited liability company agreement of
Radio One of Charlotte, LLC, until the earlier of their resignation or removal
or until their respective successors are duly elected or appointed and
qualified, as the case may be. As of the Effective Time of the Company/LLC
Merger, the sole member of Radio One of Charlotte, LLC, shall be NewCo.
(b) The officers and directors of Radio One immediately prior to the
Effective Time of the NewCo/ROI Merger shall be the officers and directors of
Radio One as of the Effective Time of the NewCo/ROI Merger, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be, in accordance with the
Certificate of Incorporation and by-laws of Radio One.
1.6. Stock. As of the Effective Time of the NewCo/ROI Merger, by virtue
-----
of the Mergers and without need for any action by any party, all shares of
Company Stock shall be converted as provided by Section 1.7 and shall no longer
be outstanding, all such Company Stock being automatically canceled and retired
and ceasing to exist, and the Shareholders shall no longer have any rights with
respect thereto, except to receive the Merger Consideration as set forth herein.
1.7. Merger Consideration.
--------------------
(a) As of the Closing, each Shareholder shall cease to have any
rights with respect to its shares of Company Stock, and for all purposes, the
Company Stock shall be converted into the right to receive the consideration
provided for pursuant to Sections 1.7(b) and 1.7(c) below (the "Merger
Consideration").
(b) Each share of Class A Common Stock shall be converted into the
right to receive a pro rata share (as among the other shares of Class A Common
Stock) of the Minority Cash Amount; provided, however, that each holder of Class
-------- -------
A Common Stock may elect, upon written notice to Radio One given not less than
thirty (30) days after the date hereof, to forego all of the cash consideration
due such holder hereunder and for its shares of Class A Common Stock to instead
be converted into the right to receive, upon the due execution and delivery of a
Subscription Agreement, the number of shares of Radio One's common stock
determined by dividing the cash consideration that would have been paid
hereunder to such holder by the Closing Price.
-3-
<PAGE>
(c) Each share of Class B Common Stock shall be converted into the
right to receive a pro rata share (as among the other shares of Class B Common
Stock) of (i) the Cash Amount minus the aggregate amount cash to be paid to the
-----
holders of Class A Common Stock pursuant to Section 1.7(b), (ii) upon the due
execution and delivery of a Subscription Agreement, the Stock Consideration
minus the number of shares of Radio One common stock issued to the holders of
- -----
the Class A Common Stock pursuant to Section 1.7(b) minus the Escrowed Shares,
-----
(iii) the rights to the Escrowed Shares under Section 1.8, and (iv) plus or
minus the amount of any adjustment to the Merger Consideration to be paid or
received pursuant to Section 1.10.
(d) Radio One shall issue the Stock Consideration and pay the Cash
Amount on the Closing Date upon presentation and surrender to Radio One of the
certificates representing all of the issued and outstanding Company Stock duly
endorsed in blank or with separate executed stock powers attached. Payment of
the Cash Amount shall be in immediately available funds pursuant to written
instructions of the Majority Shareholder to be delivered to Radio One no later
than three (3) business days prior to Closing.
1.8. Post-Closing Escrow. As of the Effective Time, the Escrowed Shares
-------------------
shall be delivered to the Escrow Agent (as hereinafter defined) pursuant to the
Post-Closing Escrow Agreement as an indemnification and adjustment fund (without
limiting Radio One's other rights under this Agreement). The Escrowed Shares
shall be distributed as follows: (i) if after Closing the Merger Consideration
is adjusted in favor of Radio One under Section 1.10, then Radio One shall be
entitled to redeem shares from the Escrowed Shares equal to the amount of such
adjustment; (ii) if after Closing a Deficiency (as defined in Section 10.3(a))
is established pursuant to Article 10, then Radio One shall be entitled to
redeem shares from the Escrowed Shares equal to the amount of such Deficiency;
and (iii) on the date twelve months after Closing, the Escrow Agent shall
release to the holders of Class B Common Stock shares from the Escrowed Shares
in excess of any such adjustment and Deficiency amounts delivered to Radio One
and the amount of any pending indemnification claims made under Section 10.2(a).
The number of shares of Radio One common stock to be redeemed shall be
determined by dividing the amount of the adjustment, Deficiency or claim
therefor by the Closing Price.
1.9. Deposit. One business day after the date of this Agreement, Radio
-------
One shall deposit the Escrow Amount in cash (the "Deposit") into escrow with
Wilmington Trust Company (the "Escrow Agent"), pursuant to the Escrow Agreement
of even date herewith among Radio One, the Majority Shareholder, and the Escrow
Agent. At Closing, the Deposit and all interest earned thereon shall be
disbursed to or at the direction of Radio One (and Radio One may elect to apply
all or part of such amounts to payment of the Cash Amount). If this Agreement
is terminated by the Majority Shareholder pursuant to Section 11.1(g) or
11.1(h), then the indebtedness of the Davis Companies to Radio One in the amount
of $350,000 together with accrued interest thereon shall be forgiven and the
note dated December 15, 1999, representing same returned marked paid and the
Deposit shall be disbursed to the Shareholders as liquidated damages and such
forgiveness and disbursement shall be the sole and exclusive remedy of the
Shareholders and the Company. The Majority Shareholder and the Company hereby
waive all other legal and equitable rights and remedies each may otherwise have
as a result of any breach or default by Radio One under this Agreement. If this
Agreement is terminated without a Closing for any other reason, then the Deposit
and all interest thereon shall be returned to Radio One. The parties shall each
instruct the Escrow Agent to disburse the Deposit and all interest thereon to
the party entitled thereto and shall not, by any act or omission, delay or
prevent any such disbursement.
-4-
<PAGE>
1.10. Adjustment.
----------
(a) Not later than five (5) business days before Closing, the
Majority Shareholder shall deliver to Radio One a statement (the "Preliminary
Adjustment Statement") that sets forth a good faith estimate of the amount of
the Consolidated Accounts Payable, the Consolidated Accounts Receivable, the
Consolidated Current Assets, the Consolidated Liabilities (including the
Transaction Fees and Costs) at Closing and the Majority Shareholder's
calculation of the Adjusted Consideration and the Merger Consideration. The
Preliminary Adjustment Statement shall show the Majority Shareholder's
calculations in reasonable detail and shall be accompanied by a good faith,
estimated balance sheet of the Davis Companies (as of the date of the
Preliminary Adjustment Statement) prepared by the Company Accountant in
accordance with GAAP and other supporting documentation. The Preliminary
Adjustment Statement shall also be accompanied by a certificate of the Majority
Shareholder (the "Preliminary Adjustment Certificate") certifying that the
Shareholders' calculations are in accordance with the provisions of this
Agreement.
(b) Not later than 90 days after Closing, Radio One shall deliver to
the Majority Shareholder a statement (the "Final Adjustment Statement") that
sets forth the amount of the Consolidated Accounts Payable, the Consolidated
Accounts Receivable, the Consolidated Current Assets and the Consolidated
Liabilities at Closing and Radio One's calculation of the Adjusted Consideration
and the Merger Consideration for each Shareholder. The Final Adjustment
Statement shall show Radio One's calculations in reasonable detail and shall be
accompanied by a balance sheet of the Company (as of the Closing Date) prepared
by Radio One's Accountant in accordance with GAAP and other supporting
documentation. The Final Adjustment Statement shall also be accompanied by a
certificate of Radio One certifying that Radio One's calculations are in
accordance with the provisions of this Agreement.
(c) If the Majority Shareholder disputes any item in the Final
Adjustment Statement, the Majority Shareholder shall notify Radio One in writing
thereof (specifying the amount of each item in dispute and setting forth in
detail the basis for each item in dispute) within ten (10) business days of the
Majority Shareholder's receipt of the Final Adjustment Statement. If the
Majority Shareholder does not notify Radio One of any such dispute within such
time, then the Final Adjustment Statement shall be deemed to be final and
binding on the parties. In the event of such a dispute, the parties shall
negotiate in good faith to attempt to reconcile their differences. If such
dispute has not been resolved within twenty (20) business days, the parties
shall submit the items remaining in dispute for resolution to the Independent
Accounting Firm, which shall, as promptly as practicable but in any event within
twenty (20) business days, resolve the disputed items and report to the parties,
and such report shall have the effect of an arbitral award and shall be final
and binding on the parties. The fees and disbursements of the Independent
Accounting Firm shall be allocated between the parties in the same proportion as
the award of the amount in dispute.
(d) If the Merger Consideration as determined in accordance with
Section 1.10(c) differs from the amount calculated at the Effective Time, then
within five (5) business days of such determination, the parties shall make
appropriate settlement thereof. In any such settlement, the number of shares of
Radio One stock subject to settlement shall be determined by dividing the amount
of the settlement by the Closing Price.
1.11 Closing. The consummation of the Mergers (the "Closing") shall take
-------
place at a date and time designated by Radio One after the date of the FCC
Consent pursuant to the FCC's initial order, but in no event later than the
earlier of: (a) nine months after the date the FCC gives public notice of the
filing of the FCC Applications (the "Final Closing Date"), (b)
-5-
<PAGE>
ten business days after the date the FCC Consent becomes Final, or (c) at Radio
One's election, upon ten business days notice after the date the FCC Consent is
granted by initial order, in any case subject to the satisfaction or waiver of
the last of the conditions required to be satisfied or waived pursuant to
Articles 7 or 8 below (other than those requiring a delivery of a certificate or
other document, or the taking of other action, at the Closing). Alternatively,
the Closing may take place at such other place, time or date as the parties may
mutually agree upon in writing. The date on which the Closing is to occur is
referred to herein as the "Closing Date."
1.12. FCC Applications. As soon as possible (but in no event later than
----------------
five business days after the date of this Agreement) the parties shall file
applications with the FCC (the "FCC Applications") requesting the FCC's written
consent to the transfer of control of the Company to Radio One pursuant to this
Agreement, including the Merger Reorganization. The parties shall diligently
take all steps that are necessary, proper or desirable to expedite the
prosecution of the FCC Applications to a favorable conclusion. Each party shall
promptly provide the other with a copy of any pleading, order or other document
served on it relating to the FCC Applications, shall furnish all information
required by the FCC, and shall be represented at all meetings or hearings
scheduled to consider the FCC Applications. The FCC's written consent to the
FCC Applications is referred to herein as the "FCC Consent."
1.13. Hart-Scott-Rodino. If necessary, as soon as possible (but in no
-----------------
event later than ten business days after the date of this Agreement), the
parties shall prepare and file with the Federal Trade Commission and the United
States Department of Justice any documents that may be necessary to comply with
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
(including a request for early termination of the waiting period thereunder) and
shall thereafter promptly furnish all materials thereafter requested by such
agencies.
1.14. Employment Agreement. At Closing, Radio One and the Majority
--------------------
Shareholder shall enter into an Employment Agreement in the form attached hereto
as Exhibit A.
---------
1.15. Preclosing Reorganizations. Notwithstanding anything herein to
--------------------------
the contrary, prior to and at Closing, the Company, the Majority Shareholder and
Radio One shall undertake the transactions when and as described in Schedule
--------
1.15 ("Merger Reorganizations").
- ----
ARTICLE 2: COMPANY REPRESENTATIONS AND WARRANTIES
--------------------------------------
To induce Radio One to enter into this Agreement and to consummate the
transactions contemplated hereby, the Majority Shareholder and the Company
represent and warrant to Radio One as follows:
2.1 Organization. The Davis Companies are duly organized, validly
------------
existing and in good standing under the laws of the jurisdiction of their
organization (as first set forth above), and, except as set forth in Schedule
--------
2.1, are in good standing in each state or other jurisdiction in which their
- ---
assets are located or in which their business or operations as presently
conducted make such qualification necessary. The Davis Companies have the
requisite power and authority to own and operate the Davis Stations, to carry on
the Davis Stations' business as now conducted by them, and to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by the Company pursuant hereto (collectively, the
"Company Ancillary Agreements"), to consummate the transactions contemplated
hereby and thereby and to comply with the terms, conditions and provisions
hereof and thereof.
2.2 Capitalization. The entire authorized capital stock and the
--------------
entire issued and outstanding capital stock of the Davis Companies are described
on Schedule 2.2. The
------------
-6-
<PAGE>
Shareholders own and hold all legal and beneficial right, title and interest in
and to the Company Stock (being all of the issued and outstanding shares of
stock of the Company), the Company owns and holds all legal and beneficial
right, title and interest in and to all of the issued and outstanding shares of
capital stock of DBA (the "DBA Stock") and DBC (the "DBC Stock"), and DBA owns
and holds all legal and beneficial right, title and interest in and to all of
the issued and outstanding shares of capital stock of DBE (the "DBE Stock") (the
Company Stock, DBA Stock, DBC Stock and DBE Stock, collectively, the "Davis
Company Shares"), in each case free and clear of Liens except as set forth in
Schedule 2.2. All Davis Company Shares have been duly authorized, are validly
- ------------
issued, fully paid, and nonassessable, and the Company Stock is held of record
by the persons set forth on Schedule 2.2. No shares of the Davis Companies are
------------
held in treasury. Except as provided by this Agreement, there are no outstanding
subscriptions, options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for the
purchase, issuance or sale of any shares of the Davis Companies. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Davis Companies. Except as
set forth in Schedule 2.2, there are no stockholder agreements, voting trusts,
------------
proxies, or other agreements or understandings with respect to the voting or
transfer of any shares of the Davis Companies. Schedule 2.2 contains a complete
------------
listing of all the officers and directors of the Davis Companies.
2.3 Subsidiaries and Investments. Except for the Station Subs and the
----------------------------
Columbus Sub, the Davis Companies have no Subsidiaries. None of the Davis
Companies is a member of (nor is any part of their business conducted through)
any partnership, nor are any of the Davis Companies a participant in any joint
venture or similar arrangement. None of the Davis Companies owns directly or
indirectly, any other capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture.
2.4 Books and Records. The minute books of the Davis Companies, true and
-----------------
correct copies of which have been provided to Radio One, contain materially
accurate records of all meetings of, and corporate actions taken by, (including
actions taken by written consent) the shareholders and directors of the Davis
Companies. At Closing all of the books and records of the Davis Companies will
be in the possession of the Company.
2.5 Authority. The execution, delivery and performance of this
---------
Agreement and the Company Ancillary Agreements by the Company have been duly
authorized and approved by the board of directors of the Company and do not
require any further authorization or consent of the Company except as provided
in Section 5.10 below. This Agreement is, and each Company Ancillary Agreement
when executed and delivered by the Company and the other parties thereto will
be, a legal, valid and binding agreement of the Company enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
2.6 No Conflicts. Except as set forth in Schedule 2.6, neither the
------------ ------------
execution and delivery by the Company of this Agreement and the Company
Ancillary Agreements nor the consummation by the Company of any of the
transactions contemplated hereby or thereby nor compliance by the Company with
or fulfillment by the Company of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of
-7-
<PAGE>
any Lien upon any of the Assets under, the charter or other organizational
documents of any of the Davis Companies, or any contract, lease, agreement or
instrument, or any governmental license, permit or authorization, or any
judgment, order, award or decree to which any of the Davis Companies are a party
or any of the Assets are subject or by which any of the Davis Companies are
bound, or any statute, other law or regulatory provision affecting any of the
Davis Companies or the Assets; or
(ii) require the approval, consent, authorization or act of, or the
making by any of the Davis Companies of any declaration, filing or registration
with, any third party or any foreign, federal, state or local court,
governmental or regulatory authority or body, except for such of the foregoing
as are necessary pursuant to the HSR Act and the Communications Act.
2.7 Financial Statements.
--------------------
(a) The Majority Shareholder has furnished Radio One with audited
financial statements used by the Davis Companies in the preparation of its
federal and state tax returns and copies of its filed federal and state tax
returns for fiscal years ending June 30, 1996, 1997, 1998 and 1999 as well as
unaudited monthly financial statements for the period from July 1, 1999 through
February 29, 2000. The financial statements described in the preceding sentences
and in Section 5.2 shall be collectively referred to as "Financial Statements."
The Financial Statements: (x) have been and will be prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved and as
compared with prior periods subject in the case of unaudited statements to the
absence of notes and normal year-end adjustments after audit; and (y) fairly
present the Davis Companies' financial position, income, expenses, assets,
liabilities, and the results of operations of the Davis Companies as of the
dates and for the periods indicated. There has been no sale of material
properties or assets, other than broadcast time, or loss or material injury to
the business and no material adverse change in the business, assets, properties
or condition (financial or otherwise) of the Davis Companies since the
preparation of the most recent annual or monthly Financial Statement. No event
has occurred that would make any Financial Statement misleading in any material
respect.
(b) Except as reflected in the balance sheets included in the
Financial Statements dated January 31, 2000 (the "Balance Sheet Date"),
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 Davis Companies (not
including for this purpose any tort-like liabilities or breach of contract)
since the Balance Sheet Date, there exist no liabilities or obligations of the
Davis Companies, contingent or absolute, matured or unmatured, known or unknown
of the type that would, in accordance with GAAP, consistently applied, be
required to be set forth in the Financial Statements. Since the Balance Sheet
Date: (i) the Davis Companies have not made any contract, agreement or
commitment or incurred any liability or obligation of any kind or nature 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 the Davis Companies, which is not in the ordinary course of
business or which is inconsistent with past business practices; (iii) there has
been no material damage, destruction or loss to any of the Assets or any asset
or property, tangible or intangible, of the Davis Companies; (iv) the Davis
Companies have operated their business in the ordinary course; and (v) the Davis
Companies have not increased the salaries or any other compensation of any of
its employees or agreed to the payment of any bonuses, except in the ordinary
course of business consistent with existing employment practices. The monthly
balance sheets: (x) have been and will be prepared on a consistent basis
throughout the periods involved and as compared with prior periods; and (y)
fairly present the Davis Companies' financial position, income, expenses,
assets, liabilities, and
-8-
<PAGE>
results of operations as of the dates and for the periods indicated, subject to
year end adjustments which do not materially affect the operations of the Davis
Companies.
2.8 Tax Matters.
-----------
(a) The Davis Companies have been corporations for U.S. federal
income tax purposes at all times since their formation up to and including the
Closing Date and have never elected to be treated as another kind or type of
entity.
(b) The Davis Companies have duly filed or caused to be filed all
Tax Returns required to have been filed by or with respect to the Davis
Companies, and each such Tax Return correctly and completely reports the Tax
liability required to be reported thereon. The Davis Companies have paid all
Taxes (whether or not shown on any Tax Return) owed by or with respect the Davis
Companies.
(c) The amount of the liability of the Davis Companies for unpaid
Taxes as of the Balance Sheet Date did not exceed the current liability accruals
for Taxes (excluding any reserves for deferred Taxes) set forth on the Financial
Statements dated as of the Balance Sheet Date. The amount of the liability of
the Davis Companies for unpaid Taxes as of the date of any Financial Statements
provided pursuant to Section 5.2 will not exceed the current liability accruals
for Taxes (excluding any reserves for deferred Taxes) set forth on such
Financial Statements. The amount of the liability of the Davis Companies for
unpaid Taxes as of the Closing Date will not exceed the current liability
accruals for Taxes (excluding any reserves for deferred Taxes) set forth on the
Financial Statements dated as of the Balance Sheet Date, as such accruals are
adjusted on the books and records of the Davis Companies through the Closing
Date in accordance with past custom and practice, excluding, however, Taxes
arising from the spinoff of the Columbus Stations and the Columbus Sub.
(d) The Davis Companies are not a party or subject to any agreement
extending the time within which to file any Tax Return. No claim has ever been
made by any Tax Authority in any jurisdiction in which the Davis Companies do
not file Tax Returns that they are or may be subject to taxation by that
jurisdiction. The Davis Companies have not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency.
(e) The Davis Companies have withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and record-keeping requirements with respect to, any amounts paid or
owing to any employee, creditor, independent contractor or other third party.
(f) No Tax Proceedings are pending with regard to any Tax Returns or
Taxes of the Davis Companies, and no notice has been received by the Davis
Companies (whether in writing or orally) of the expected commencement of a Tax
Proceeding. No issues have been raised in any audit or examination by or with
respect to the Davis Companies which, by application of similar principles,
could be reasonably expected to result in a proposed deficiency for any other
period not so examined. The Davis Companies have neither received any written
ruling of a Tax Authority relating to Taxes nor entered into any closing
agreement or similar written binding agreement with a Tax Authority relating to
Taxes.
(g) Schedule 2.8 attached hereto lists all material federal, state,
------------
local and foreign income and franchise Tax Returns required to be filed by or
with respect to the Davis Companies for the prior three Taxable Periods. With
respect to each such Tax Return, Schedule 2.8 indicates if such Tax Return has
------------
been audited and, if so, whether it is open or closed. The Davis Companies have
delivered to Radio One complete and correct copies of all
-9-
<PAGE>
federal, state, local and foreign income and franchise Tax Returns filed by or
with respect to, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, the Davis Companies for the prior three
Taxable Periods.
(h) The Davis Companies are neither a party to any Tax allocation,
Tax indemnity, Tax sharing agreement, or any similar arrangement pursuant to
which any of them have agreed to be liable for Taxes of any other person or
entity nor do any of them have any liability for Taxes of any other person or
entity as a transferee or successor.
(i) Except for an adjustment of not more than $200,000 to convert
from the cash to the accrual method of accounting, the Davis Companies will not
be required to include any adjustment in taxable income in any Taxable Period
ending after the Closing Date under Section 481 of the Code (or any similar
provision of the Tax laws of any jurisdiction) as a result of any change in any
method of accounting occurring in a Taxable Period ending on or before the
Closing Date. No Tax Authority has proposed any such change in any accounting
method. The Davis Companies use the cash method of accounting for income Tax
purposes.
(j) There are (and immediately following the Closing there will be)
no Liens on any of the assets of the Davis Companies relating or attributable to
Taxes (other than liens for Taxes not yet due and payable). No deficiencies for
any Taxes have been asserted or assessed against the Davis Companies which, if
unpaid, might result in a Lien on any of the assets of the Davis Companies
relating or attributable to the taxes (other than Liens for Taxes not yet due
and payable).
(k) There is no contract or agreement covering any employee or
former employee of the Davis Companies that, individually or collectively, could
give rise to the payment of any amount (or portion thereof) that would not be
deductible pursuant to Sections 280G, 404 or 162 of the Code.
(l) The Davis Companies' net operating losses as of June 30, 1999
for federal and Georgia state tax purposes are as set forth on Schedule 2.8.
------------
2.9 Assets. The Assets include all the assets used or held for use in
------
the business or operation of the Davis Stations. The Davis Companies have no
business or operations other than the business and operation of the Davis
Stations. The Davis Companies have good title to and ownership of the Assets,
free and clear of Liens, except for those described in Schedule 2.9 and for
------------
the Permitted Encumbrances.
2.10 FCC Authorizations.
------------------
(a) The Station Subs are the holders of the FCC Authorizations
listed and described on Schedule 2.10. Such FCC Authorizations constitute all of
-------------
the licenses and authorizations required under the Communications Act of 1934,
as amended (the "Communications Act"), or the rules, regulations and policies of
the FCC for, and used in the operation of, the Davis Stations. The FCC
Authorizations are in full force and effect and have not been revoked,
suspended, canceled, rescinded or terminated and have not expired. There is not
pending or threatened any action by or before the FCC to revoke, suspend,
cancel, rescind or modify any of the FCC Authorizations (other than proceedings
to amend FCC rules of general applicability), and there is not now issued or
outstanding or pending or threatened, by or before the FCC, any order to show
cause, notice of violation, notice of apparent liability, or notice of
forfeiture or complaint against the Davis Companies or the Davis Stations.
(b) Except as set forth in Schedule 2.10: (i) all reports and
-------------
filings required to be filed with, and all regulatory fees required to be paid
to, the FCC by the Davis
-10-
<PAGE>
Companies with respect to the Davis Stations have been timely filed and paid;
(ii) all such reports and filings are accurate and complete; (iii) the Davis
Companies maintain public files for the Davis Stations as required by FCC rules;
(iv) with respect to FCC licenses, permits and authorizations, the Davis
Companies are operating only those facilities for which an appropriate FCC
Authorization has been obtained and is in effect, and the Davis Companies are
meeting the conditions of each such FCC Authorization; and (v) the Davis
Stations are operating in compliance in all material respects with the FCC
Authorizations, the Communications Act, and the rules, regulations and policies
of the FCC.
(c) The Majority Shareholder and the Davis Companies are aware of no
facts indicating that the Shareholders, the Davis Companies or the Davis
Stations are not in compliance with all requirements of the FCC, the
Communications Act, or any other applicable federal, state and local statutes,
regulations and ordinances. The Majority Shareholder and the Davis Companies are
aware of no facts and Company has received no notice or communication, formal or
informal, indicating that the FCC is considering revoking, suspending,
canceling, rescinding or terminating any FCC Authorization.
(d) The operation of the Davis Stations does not cause or result in
exposure of workers or the general public to levels of radio frequency radiation
in excess of the "Radio Frequency Protection Guides" recommended in "American
National Standard Safety Levels with Respect to Human Exposure to Radio
Frequency Electromagnetic Fields 3 kHz to 300 GHz" (ANSI/IEEE C95.1-1992) issued
by the American National Standards Institute, adopted by the FCC effective
October 15, 1997, and described in OET Bulletin No. 65. Renewal of the FCC
Authorizations would not constitute a "major action" within the meaning of
Section 1.1301, et seq., of the FCC's rules.
-- ---
(e) Each communications tower structure used in the operation of the
Davis Stations (whether owned or leased) has been registered under the rules and
regulations of the FCC, and the Federal Aviation Administration has issued a
determination of no hazard to air navigation with respect to each such tower for
which such a determination is required.
2.11 Personal Property. Schedule 2.11 contains a list of all machinery,
----------------- -------------
equipment, vehicles, furniture and other tangible personal property owned by the
Davis Companies as of the date hereof with a value in excess of $2,500. Each
item of Tangible Personal Property is in good operating condition and repair, is
free from material defect or damage, is functioning in the manner and purposes
for which it was intended, and has been maintained in accordance with industry
standards.
2.12 Real Property. Schedule 2.12 contains a description of all real
------------- -------------
property owned or leased by the Davis Companies. One of the Davis Companies has
good and marketable fee simple title to all owned Real Property (the "Owned Real
Property"), including all real property described on Schedule 2.12 as owned, and
-------------
including all buildings and other improvements thereon. Schedule 2.12 includes
-------------
a description of each lease or similar agreement under which any of the Davis
Companies are lessee or licensee of, or holds, uses or operates, any real
property in the business or operation of the Davis Stations (the "Real Property
Leases"). The Owned Real Property includes, and the Real Property Leases
provide, sufficient access to the Davis Stations' facilities without the need to
obtain any other access rights. Neither the whole nor any part of any Real
Property is subject to any pending, or to the knowledge of the Company
threatened, suit for condemnation or other taking by any public authority. All
buildings and other improvements included in the Real Property are in good
operating condition and repair, and free from material defect or damage, and
comply with applicable zoning, health and safety laws and codes. The Majority
Shareholder has delivered to Radio One copies of all title insurance policies in
its possession that are applicable to the Real Property.
-11-
<PAGE>
2.13 Contracts. Schedule 2.13 contains a complete and correct list of
--------- -------------
all Station Contracts as of the date hereof (other than Time Sales Agreements).
Each of the Station Contracts (including without limitation each of the Real
Property Leases) constitutes a valid and binding obligation of Company and, to
the best knowledge of Company, the other parties thereto (subject to bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally) and is in full force and effect and
(except as set forth in Schedule 2.6 and except for those Station Contracts
------------
which by their terms will expire prior to the Closing Date or will be otherwise
terminated prior to the Closing Date in accordance with the provisions hereof)
may be assigned or transferred to the Surviving Companies pursuant to this
Agreement and will be in full force and effect at the time of such transfer or
assignment, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. The
Davis Companies have performed in all material respects their obligations under
each of the Station Contracts, and the Davis Companies are not in, or to the
best knowledge of the Company alleged to be in, breach or default under any of
the Station Contracts, and, to the best knowledge of the Company, no other party
to any of the Station Contracts has breached or defaulted thereunder, and no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by the Davis Companies or, to the best knowledge of the Company, by
any such other party. Complete and correct copies of each of the Station
Contracts, together with all amendments thereto, have been delivered to Radio
One by the Majority Shareholder and the Company.
2.14 Intangible Property. The Davis Companies have all right, title and
-------------------
interest in and to all trademarks, service marks, trade names, copyrights,
Websites and all other intangible property necessary to conduct its business and
operations as presently operated. Schedule 2.14 contains a description of all
-------------
material Intangible Property. The Davis Companies have received no notice of
any claim that any Intangible Property or the use thereof conflicts with, or
infringes upon, any rights of any third party (and there is no basis for any
such claim of conflict) other than any claim which could not reasonably be
expected to have a material adverse effect on the Davis Companies. The Davis
Companies have the sole and exclusive right to use the Intangible Property. No
service provided by the Davis Companies or any programming or other material
used, broadcast or disseminated by the Davis Stations infringes upon any
copyright, patent or trademark of any other party.
2.15 Employees. Schedule 2.15 contains a list of all employees of the
--------- -------------
Davis Companies as of the date hereof and their position and rate of
compensation, and a description of all the Davis Companies' employee benefit
plans. The Majority Shareholder and the Company have delivered to Radio One
copies of all the Davis Companies' handbooks, policies and procedures. The
Davis Companies have complied in all material respects with all labor and
employment laws, rules and regulations applicable to their business, including
without limitation those which relate to prices, wages, hours, discrimination in
employment and collective bargaining, and are not liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the foregoing.
The Davis Companies are not a party to any collective bargaining agreement and
no collective bargaining agreement is currently being negotiated by the Davis
Companies. There is no (i) unfair labor practice charge or complaint against
the Davis Companies in respect of its business pending or threatened before the
National Labor Relations Board, any state labor relations board or any court or
tribunal, or (ii) strike, dispute, request for representation, slowdown or
stoppage pending or threatened in respect of its business, in each case, other
than any such items which could not reasonably be expected to result in a
material adverse effect upon the Davis Companies.
2.16 Employee Benefit Matters. Except as set forth in Schedule 2.15, the
------------------------ -------------
Davis
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<PAGE>
Companies have never maintained, sponsored or contributed to, or been
obligated to contribute to, any employee pension benefit plan as defined in
Section 3(2) of ERISA. All employee benefit plans (including those defined in
Section 3(3) of ERISA) and all benefits arrangements that have been maintained,
sponsored or contributed to by the Davis Companies have been maintained,
administered and funded in material compliance with their terms and, both as to
form and operation, with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such plans, including but
not limited to ERISA and the Code. There are no unfunded benefit liabilities
and no accumulated funding deficiencies in respect of any such employee benefit
plans. As to each employee benefit for which an annual report, including
schedules, or comparable report is required to be filed under ERISA or the Code,
no liabilities, with respect to such plan, existed on the dates of such annual
report except as disclosed therein, and no material adverse change has occurred
with respect to the financial data covered by such annual report since the date
thereof. Neither the Davis Companies nor any such employee benefit plan will
have at Closing any present or future obligation to make any payment to or with
respect to any present or former employee of the Davis Companies pursuant to any
retiree medical benefit plan, or other retiree welfare plan (within the meaning
of Section 3(1) of ERISA), and no condition exists which would prevent the Davis
Companies from amending or terminating any such employee benefit plan, including
any such welfare plan. Each such welfare plan has been operated in compliance
with the provisions of Part 6 of Title I of ERISA and Sections 162 and 4980B of
the Code at all times.
2.17 Compliance with Law; Litigation. The Davis Companies have complied
-------------------------------
in all material respects with all laws, regulations, rules, writs, injunctions,
ordinances, franchises, decrees or orders of any court or of any foreign,
federal, state, municipal or other governmental authority which are applicable
to them, the Assets, the Davis Stations or their business. Except as set forth
in Schedule 2.17, as of the date hereof there is no action, suit or proceeding
-------------
pending, or to the best knowledge of the Company threatened, against the Davis
Companies, and there are no claims or investigations pending, or to the best
knowledge of the Company threatened, against the Davis Companies. There are no
unsatisfied judgments issued or outstanding against the Davis Companies.
2.18 Insurance. The Davis Companies maintain insurance policies bearing
---------
the policy numbers with the companies set forth on Schedule 2.18 hereto. All of
-------------
such policies are in full force and effect and the Davis Companies are not in
default thereunder. The Davis Companies have not received notice from any
issuer of any such policies of its intention to cancel, terminate or refuse to
renew any policy issued by them.
2.19 Environmental. No hazardous or toxic substance or waste (including
-------------
without limitation petroleum products) or other material regulated under any
applicable environmental, health or safety law (each a "Contaminant") has been
generated, stored, transported or released (each a "Release") on, in, from or to
any of the Assets in material violation of applicable law. Neither the Davis
Companies nor any of the Assets are subject to any order from or agreement with
any governmental authority or private party respecting (i) any environmental,
health or safety law, (ii) any environmental clean-up, removal, prevention or
other remedial action or (iii) any obligation or liability arising from the
Release of a Contaminant. Neither the Davis Companies nor any of the Assets
includes any underground storage tanks installed or used by the Davis Companies
or surface impoundment containing hazardous materials installed or used by the
Davis Companies, or to the best knowledge of the Company installed by others or
any asbestos containing material, or any polychlorinated biphenyls. The Davis
Companies have not received any notice or claim to the effect that they are or
may be liable as a result of the Release of a Contaminant. To the best
knowledge of the Company neither the Davis Stations nor any of the Assets is the
subject of any investigation by any governmental authority with respect to a
Release of a Contaminant. The Majority Shareholder and the Company have
delivered to Radio One copies of all environmental
-13-
<PAGE>
surveys, analyses and assessments in their possession relating to any of the
Real Property.
2.20 Affiliates. No Shareholders or relative of any of the Shareholders
----------
and no Affiliate of the Davis Companies has an interest in, or option to
acquire, any of the Assets. None of the Davis Companies, the Shareholders, any
Affiliate of the Davis Companies or the Shareholders, or any officer or director
of the Davis Companies possesses, directly or indirectly, any ownership interest
in, or is a director, officer or employee of, any person which is a supplier,
advertiser, customer, lessor, lessee, licensor, licensee, developer, competitor
or potential competitor of the Davis Companies. Ownership of securities of a
company whose securities are registered under the Securities Exchange Act of
1934 of 5% or less of any class of such securities shall not be deemed to be a
financial interest for purposes of this Section.
2.21 Guaranties, Indemnities, Etc. The Davis Companies are not a
----------------------------
guarantor nor otherwise liable for any liability or obligation (including
indebtedness) of any other person. The Davis Companies have not agreed to
indemnify or otherwise hold harmless any person from any liability, known or
unknown, existing or future, direct or indirect, contingent or primary. The
Davis Companies are not a party to any non-competition, covenant-not-to-compete
or similar agreement except as the beneficiary of any such agreement.
2.22 No Finder. No broker, finder or other person is entitled to a
---------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of the Shareholders or the Davis Companies or any party acting on
their behalf.
2.23 Powers of Attorney The Davis Companies have not granted a power of
------------------
attorney to any person or entity.
2.24 Year 2000 Compliance. All of the Assets (including all systems,
--------------------
machinery, information technology, computer software and hardware, and other
data sensitive technology) are operating without error or interruption related
to date data (meaning data or input that includes an indication of or reference
to a date) and without other problems commonly referred to as "year 2000
problems."
2.25 Disclosure. With respect to the Davis Companies, the Shareholders,
----------
the Company Stock, the Davis Stations and the Assets, this Agreement, the
Company Ancillary Agreements and all information and other materials delivered
to Radio One pursuant to this Agreement do not and will not contain any untrue
statement of material fact or omit to state a material fact required to be made
in order to make the statements herein and therein not misleading in light of
the circumstances in which they are made.
ARTICLE 3: MAJORITY SHAREHOLDER REPRESENTATIONS AND WARRANTIES
---------------------------------------------------
To induce Radio One to enter into this Agreement and to consummate the
transactions contemplated hereby, the Majority Shareholder represents and
warrants to Radio One as follows:
3.1 Authority. Each Shareholder resides in the jurisdiction set forth
---------
on Schedule 2.2 hereto and has the requisite power and authority to execute and
------------
deliver all of the agreements and instruments to be executed and delivered by
each such Shareholder (collectively, the "Shareholder Ancillary Agreements"), to
consummate the transactions contemplated hereby and thereby and to comply with
the terms, conditions and provisions hereof and thereof.
3.2 Binding Effect. Each of the Shareholder Ancillary Agreements when
--------------
executed
-14-
<PAGE>
and delivered by each such Shareholder and the other parties thereto will be, a
legal, valid and binding agreement of each such Shareholder enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
3.3 No Conflicts. Each Shareholder has the full legal right, power and
------------
authority to consummate the Mergers without the consent of any other person.
ARTICLE 4: RADIO ONE REPRESENTATIONS AND WARRANTIES
----------------------------------------
To induce the Majority Shareholder and the Company to enter into this
Agreement and to perform and consummate the transactions contemplated hereby,
Radio One represents and warrants to the Shareholders and the Company as
follows:
4.1 Organization. Radio One is duly organized, validly existing and in
------------
good standing under the laws of the jurisdiction of its organization (first set
forth above). Radio One has the requisite power and authority to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by them (collectively, the "Radio One Ancillary
Agreements"), to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.
4.2 Authority. The execution, delivery and performance of this Agreement
---------
and the Radio One Ancillary Agreements by Radio One have been duly authorized
and approved by all necessary action of Radio One and does not require any
further authorization or consent of Radio One. This Agreement is, and each
Radio One Ancillary Agreement when executed and delivered by Radio One and the
other parties thereto will be, a legal, valid and binding agreement of Radio One
enforceable in accordance with its respective terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization or other similar laws affecting or limiting the enforcement of
creditors' rights generally and except as such enforceability is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Upon issuance of the Stock
Consideration, the shares comprising the Stock Consideration will be duly
authorized, validly issued and fully paid and non-assessable.
4.3 No Conflicts. Neither the execution and delivery by Radio One of
------------
this Agreement and the Radio One Ancillary Agreements nor the consummation by
Radio One of any of the transactions contemplated hereby or thereby nor
compliance by Radio One with or fulfillment by Radio One of the terms,
conditions nd provisions hereof or thereof will: (i) conflict with the charter
or other organizational documents of Radio One or any judgment, order or decree
to which Radio One is subject; or (ii) require the approval, consent,
authorization or act of, or the making by Radio One of any declaration, filing
or registration with, any third party or any foreign, federal, state or local
court, governmental or regulatory authority or body, except for such of the
foregoing as are necessary pursuant to the HSR Act and the Communications Act.
4.4 No Finder No broker, finder or other person is entitled to a
--------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Radio One or any party acting on its behalf.
-15-
<PAGE>
4.5 Qualification Radio One is qualified under the Communications Act
-------------
and the rules, regulations and policies of the FCC to control the FCC
Authorizations.
4.6 Representations Neither Radio One nor any of its Affiliates has
---------------
taken, or agreed to take, any action that will prevent the Mergers from
qualifying as reorganization under Section 368(a) of the Code, and Radio One
will use commercially reasonable efforts to cause the Mergers to constitute a
reorganization under such section.
ARTICLE 5: COVENANTS OF COMPANY AND THE SHAREHOLDERS
-----------------------------------------
The Company and the Majority Shareholder covenant and agree that from the date
hereof until the completion of the Closing:
5.1 Operation of the Business
-------------------------
(a) Subject to Section 1.15 the Davis Companies shall: (i) continue
to carry on their business and keep their books and accounts, records and files
in the usual and ordinary manner in which the business has been conducted in the
past; (ii) operate their business in all material respects in accordance with
the terms of the FCC Authorizations and in compliance in all material respects
with the Communications Act, FCC rules, regulations and policies, and all other
applicable laws, rules and regulations, and maintain the FCC Authorizations in
full force and effect and timely file and prosecute any necessary applications
for renewal of the FCC Authorizations; (iii) use best efforts to preserve their
business organization intact, retain substantially as at present their
employees, consultants and agents, preserve the goodwill of their suppliers,
advertisers, customers and others having business relations with it, and
broadcast all time due under barter time sales agreements to the extent possible
and permissible under such barter agreements; (iv) keep all Tangible Personal
Property and Real Property in good operating condition (ordinary wear and tear
excepted) and repair and maintain adequate and usual supplies of inventory,
office supplies, spare parts and other materials as have been customarily
maintained in the past; (v) preserve intact the Assets and maintain in effect
its current insurance policies with respect to the Davis Stations and the
Assets; and (vi) collect accounts receivable only in the ordinary course of
business consistent with past practice. Nothing contained in this Agreement
shall give Radio One any right to control the programming, operations or any
other matter relating to the Davis Stations prior to the Closing, and the Davis
Companies shall have complete control of the programming, operations and all
other matters relating to the Davis Stations up to the Closing.
(b) Subject to Section 1.15 and notwithstanding Section 5.1(a), the
Davis Companies shall not, without the prior written consent of Radio One: (i)
sell, lease, transfer, or agree to sell, lease or transfer, any Assets except
for non-material sales or leases, in the ordinary course of business of items
which are being replaced by assets of comparable or superior kind, condition and
value; (ii) grant any raises to employees, pay any substantial bonuses or enter
into any contract of employment with any employee or employees other than in the
ordinary course of business consistent with existing employment practices; (iii)
adopt or increase any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
of its employees; (iv) amend or terminate any existing Time Sales Agreements
except in the ordinary course of business; (v)
-16-
<PAGE>
amend or terminate any of the Station Contracts or enter into any contract,
lease or agreement except those entered into in the ordinary course of business
consistent with past practices and except for barter time sales agreements that
will be paid and performed in full before Closing; (vi) by any act or omission
cause any representation or warranty made herein to become untrue or inaccurate;
(vii) discount, or otherwise reduce the amount receivable in respect of, any
accounts receivable; (viii) increase its indebtedness for borrowed money, except
current borrowings in the ordinary course of business; (ix) cancel, compromise
or waive any claim or right of substantial value; (x) except as set forth in
Section 1.15, declare or make any dividend or other distribution of any kind or
for any purpose to any stockholder; (xi) redeem, purchase or otherwise acquire
any of its capital stock; (xii) make any change in accounting methods or
practices, except as required by law or generally accepted accounting
principles; (xiii) issue or sell any shares of capital stock or any other
securities, or issue any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or enter into any arrangement or contract
with respect to the issue or sale of, any shares of its capital stock or any
other securities, or make any other changes in its capital structure; or (xiv)
amend or modify its certificate of incorporation or bylaws.
(c) The Majority Shareholder and the Davis Companies shall not, and
shall not solicit, negotiate or enter into any agreement to, sell, transfer,
assign, encumber or pledge the Company Stock or any of the other Davis Company
Shares.
5.2 Reports The Majority Shareholder shall furnish to Radio One by the
-------
end of each calendar month for the preceding calendar month: (a) unaudited
monthly Financial Statements for the Davis Companies and for the year to date
period, and (b) such other reports as Radio One may reasonably request relating
to the Davis Companies. The Financial Statements so delivered shall include the
comparable month and year to date period for the previous fiscal year. Each of
the Financial Statements delivered pursuant to this Section shall be prepared in
accordance with GAAP subject to the absence of notes and normal year-end
adjustments after audit (except as disclosed therein).
5.3 Access Between the date hereof and the Closing Date, Radio One and
------
the officers, employees, accountants, counsel, agents, consultants and
representatives of Radio One shall be given reasonable access to all Assets,
employees of the Davis Companies, accounts, statements, books, records, minutes,
deeds, title papers, insurance policies, licenses, agreements, contracts,
commitments, state and federal tax returns, records and files of every
character, equipment, machinery, fixtures, furniture, vehicles, notes and
accounts payable and receivable of the Davis Companies, and any other
information concerning the affairs of the Davis Companies as Radio One may
reasonably request provided that Radio One does not unreasonably interfere with
the business and operations of the Davis Companies. It is expressly understood
that, pursuant to this Section, Radio One, at its expense, shall be entitled to
conduct such inspections and reviews of the Davis Companies, the Davis Stations,
the Assets, and financial records relating to the Davis Companies and the Davis
Stations as Radio One may desire, so long as the same do not unreasonably
interfere with the operation of the Davis Stations. No inspection or
investigation made by or on behalf of Radio One, or Radio One's failure to make
any inspection or investigation, shall affect the Majority Shareholder's or the
Company's representations, warranties and covenants hereunder or be deemed to
constitute a waiver of any of those representations, warranties and covenants.
Immediately after the date hereof, the Majority Shareholder and the Company
shall also cooperate, and shall cause their respective accountants to cooperate,
with Radio One to conduct an audit by Radio One's accountants at Radio One's
expense of the Financial Statements for the Davis Stations for the years 1996,
1997, 1998 and 1999, and Radio One may disclose such financial
-17-
<PAGE>
statements provided or created hereunder in reports filed by Radio One with any
governmental or regulatory authority, including the Securities and Exchange
Commission.
5.4 Confidentiality Until the Closing, Radio One agrees to, and to
---------------
cause its employees and agents to, protect the confidentiality of all
proprietary and confidential information received from the Davis Companies
pursuant to this Agreement or otherwise, using the same care and procedures used
to protect Radio One's own proprietary and confidential information, and agrees
not to disclose, and to cause its Affiliates, employees and agents not to
disclose, such proprietary and confidential information to any other persons
except as may be reasonably necessary in connection with the transactions
contemplated herein or except to the extent (i) such information is or becomes
publicly available or obtainable from independent, nonconfidential sources and
not in breach of Radio One's obligations hereunder or any other party's
confidentiality obligations owed to the Davis Companies and known by Radio One;
(ii) such information is required to be disclosed by law or by governmental
authorities having jurisdiction over Radio One; (iii) such information was known
by Radio One prior to any disclosure by the Davis Companies; (iv) disclosure is
necessary for Radio One to enforce any or all of its rights under this
Agreement; or (v) such disclosure is consistent with Radio One's usual and
customary disclosure practices with respect to its own information. In the event
this Agreement is terminated prior to the Closing Date, Radio One shall return
to the Davis Companies all written confidential information provided to Radio
One by the Davis Companies and all copies thereof.
5.5 Consents The Majority Shareholder and the Company shall use their
--------
reasonable best efforts to obtain all necessary consents to the assignment and
transfer of Station Contracts and all of the consents noted on Schedules 2.6,
-------------
2.12 and 2.13 hereto. Marked with an asterisk on Schedules 2.12 and 2.13 are
- ------------- -----------------------
those consents the receipt of which is a condition precedent to Radio One's
obligation to close under this Agreement (the "Required Consents").
5.6 Estoppel Certificates; Title Insurance; Liens The Majority
---------------------------------------------
Shareholder and the Company, at the Shareholders' expense, will use their
reasonable best efforts to obtain and deliver to Radio One: (i) written
estoppel certificates (the "Estoppel Certificates") duly executed by the lessors
under the Real Property Leases, in form and substance satisfactory to Radio One;
and (ii) all UCC, litigation, judgment and state and federal tax lien search
reports showing searches in such names and jurisdictions as shall be reasonably
necessary to assure that no Liens are filed or recorded against the Davis
Company Shares or the Assets (the "Lien Search Reports"). The Estoppel
Certificates shall be dated within fifteen days prior to Closing. The Lien
Search Reports shall be delivered within thirty days after the date of this
Agreement and shall be updated within fifteen days prior to Closing.
5.7 Environmental Subject to the receipt of any permits or approvals
-------------
required by governmental authorities and, as to any leased Real Property, any
landlord, Radio One shall have the right at its expense to conduct one or more
reviews of the Real Property and take soil and water samples (including
groundwater samples) from the Real Property, and to test and analyze those
samples to determine the extent of any contamination of the soils and water
(including groundwater) on or about the Real Property. Any such reviews and
tests shall be undertaken and completed within forty-five days after the date
hereof. If, based on the results of those inspections and/or tests, Radio One
reasonably determines that the condition of the Owned Real Property is
unsatisfactory or if Radio One believes that its ownership of any parcel of
Owned Real Property would expose Radio One to undue risks of government
-18-
<PAGE>
intervention or third-party liability, Radio One may notify the Majority
Shareholder and the Company that it desires to terminate this Agreement unless
such environmental hazard or violation is remediated prior to the Closing Date.
No information contained in any report of an environmental review shall relieve
Company of any obligation with respect to any representation, warranty or
covenant herein or waive any condition to Radio One's obligations hereunder. The
Majority Shareholder and Company shall use their reasonable best efforts to
remove any such hazardous material or correct any violations noted prior to the
Closing Date, provided, however, in the event that Radio One's environmental
-------- -------
consultant's written estimate of the cost to remediate the hazardous materials
or violations exceeds $100,000, the Majority Shareholder and Company may elect
by written notice to Radio One to refuse to undertake or pay for such
remediation in excess of $100,000 and in such event Radio One may terminate this
Agreement upon written notice to the Majority Shareholder and the Company. In
the event that the cost is estimated to be less than $100,000, or if it is
greater and Radio One does not terminate this Agreement, the Majority
Shareholder and the Company shall remediate such environmental hazard or
violation, and if they are unable to accomplish same prior to the Closing Date,
an appropriate adjustment to the Merger Consideration shall be made as a part of
the adjustments and they shall indemnify and hold Radio One harmless from and
against any and all costs and expenses incurred by Radio One in order to
complete such remediation action following the Closing Date, up to a maximum
aggregate cost of $100,000, to the extent an adjustment is not made. Absent a
termination of this Agreement, Radio One shall be responsible for any costs in
excess of $100,000.
5.8 Employment Matters Radio One shall have the right, but not the
------------------
obligation, to retain all or any of the employees of the Davis Companies as
employees after the Closing.
5.9 Exclusive Dealing None of the Shareholders, the Davis Companies,
-----------------
any of its respective affiliates or representatives or any officers or directors
of the Davis Companies shall take any action directly or indirectly, to
encourage, initiate, solicit or engage in discussions or negotiations with, or
provide any information to any person other than Radio One and its affiliates
and representatives concerning any purchase of any capital stock of the Davis
Companies or any merger, asset sale or similar transaction involving the Company
or any of the Assets.
5.10 Shareholders' Approval. The Majority Shareholder and the Board of
----------------------
Directors of the Company shall submit this Agreement and the Mergers to the
Stockholders for approval within thirty (30) days after the date of this
Agreement. The Majority Shareholder and the Company shall recommend that the
Shareholders vote to approve this Agreement and the Mergers. The Majority
Shareholder shall vote his shares of the Company Stock in favor of the Mergers
and for approval of this Agreement. Following approval by the Shareholders,
the Majority Shareholder shall request each of the Minority Shareholders to
execute an agreement or a power of attorney appointing the Majority Shareholder
as the custodian of the Minority Shareholders' Company Stock for all purposes of
this Agreement and the Mergers, with full right, power and authority to perform
any act arising under this Agreement which the Minority Shareholders themselves
could do including the right, power and authority to deliver the Minority
Shareholders' Company Stock upon Closing and the right to receive the issuance
and payment of the Merger Consideration on their behalf and in connection
therewith to direct Radio One as to the specific Merger Consideration to be
received by each Shareholder. Prior to or at such time that the Minority
Shareholders deliver the custodial agreement, they shall further execute such
document or documents as may be necessary or appropriate to waive any appraisal
rights they may have under Delaware law, and they shall deliver to the Majority
Shareholder the certificates representing their shares of Company Stock either
endorsed in
-19-
<PAGE>
blank or with separate executed stock powers attached, and with signatures
guaranteed if requested by Radio One.
5.11 Inter-Davis Companies Debt Prior to the Closing Date, the Majority
--------------------------
Shareholder and the Company shall cause the Davis Companies to take whatever
actions may be necessary or appropriate in order to cancel and eliminate all
inter-company debt and other obligations.
5.12 Cancellation of Subordinated Lenders' Conversion, Purchase Option
-----------------------------------------------------------------
and Put Rights Agreement Between the date hereof and the Closing Date,
- ------------------------
Majority Shareholder and the Company shall use their best and all reasonable
efforts to obtain from DBC's subordinated lenders, Syndicated Communications
Venture Partners III, L.P., Medallion Capital, Inc. (successor in interest to
Capital Dimensions Venture Fund, Inc.), Alliance Enterprise Corporation and
Mesbic Ventures, Inc., (collectively the "Subordinated Lenders") waivers of
their rights to convert their subordinated indebtedness into common stock of DBC
and of their right and option to acquire the Charlotte Station pursuant to the
Conversion, Purchase Option and Put Rights Agreement dated October 22, 1997. As
of the date hereof, Majority Shareholder and Company have obtained all such
waivers, copies of which are contained in Schedule 5.12 hereto.
-------------
5.13 Qualification The Majority Shareholder and the Company shall
-------------
cause DBE to qualify to do business in South Carolina within thirty (30) days
after the date hereof.
5.14 FCC Compliance The Majority Shareholder and the Company shall
--------------
cure any exceptions to FCC compliance described in Schedule 2.10 as promptly as,
-------------
and to the extent, possible and prior to the Closing Date.
5.15 Bank Accounts Within thirty (30) days after the date hereof the
-------------
Majority Shareholder and the Company shall deliver to Radio One an accurate
and complete list showing the name and address of each bank in which the Davis
Companies have an account or safe deposit box, the number of any such account or
box and the names of all persons authorized to draw thereon or to have access
thereto.
ARTICLE 6: ADDITIONAL COVENANTS
--------------------
Radio One, the Company and the Majority Shareholder covenant and agree
that from the date hereof until the completion of the Closing:
6.1 Representations and Warranties Each party shall give the other
------------------------------
detailed written notice promptly upon learning of the occurrence of any event
that would cause or constitute a breach (or would have caused a breach had such
event occurred or been known to it prior to the date hereof) of any of its
representations and warranties contained in this Agreement.
6.2 Notice of Proceedings Each party shall promptly notify the other
---------------------
in writing upon: (a) becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated
-20-
<PAGE>
hereunder; or (b) receiving any notice from any governmental department, court,
agency or commission of its intention (i) to institute an investigation into, or
institute a suit or proceeding to restrain or enjoin, the consummation of this
Agreement or such transactions, or (ii) to nullify or render ineffective this
Agreement or such transactions if consummated.
ARTICLE 7: SHAREHOLDERS CONDITIONS
----------------------
The obligations of the Shareholders under this Agreement are, at their option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
7.1 Representations, Warranties and Covenants Each of the
-----------------------------------------
representations and warranties of Radio One contained in this Agreement shall
have been true and correct as of the date when made and shall be true and
correct in all material respects on the Closing Date as if made on the Closing
Date, except to the extent changes are permitted pursuant to this Agreement.
Radio One shall have performed and complied with each and every covenant and
agreement required by this Agreement to be performed or complied with by them
prior to or on the Closing Date. Radio One shall have furnished the Majority
Shareholder with a certificate, dated the Closing Date and duly executed by an
officer of Radio One authorized on behalf of Radio One to give such a
certificate, to the effect that the conditions set forth in this Section have
been satisfied.
7.2 Proceedings None of the parties shall be subject to any restraining
----------
order or injunction restraining or prohibiting the consummation of the
transactions contemplated hereby. In the event such a restraining order or
injunction is in effect, this Agreement may not be terminated by Company or the
Majority Shareholder pursuant to this Section prior to the Final Closing Date,
but the Closing shall be delayed during such period. This Agreement may be
terminated after the Final Closing Date if such restraining order or injunction
remains in effect.
7.3 FCC Consent The FCC Consent shall have been granted by the FCC by
-----------
initial order.
7.4 Hart-Scott-Rodino If applicable, the waiting period under the
-----------------
HSR Act shall have expired or been terminated.
7.5 Deliveries Radio One shall have complied with its obligations
----------
set forth in Section 9.2.
7.6 Columbus Sub The distribution of the Columbus Stations and the
------------
Columbus Sub pursuant to Section 1.15 shall have been consummated prior to the
Closing Date.
ARTICLE 8: RADIO ONE CONDITIONS
-------------------
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<PAGE>
The obligations of Radio One under this Agreement are, at its option, subject to
the fulfillment of the following conditions prior to or on the Closing Date:
8.1 Representations, Warranties and Covenants Each of the
-----------------------------------------
representations and warranties of the Company and the Majority Shareholder
contained in this Agreement shall have been true and correct as of the date when
made and shall be true and correct in all material respects on the Closing Date
as if made on the Closing Date, except to the extent changes are permitted
pursuant to this Agreement. The Company and the Shareholders shall have
performed and complied with each and every covenant and agreement required by
this Agreement to be performed or complied with by each prior to or on the
Closing Date. The Majority Shareholder shall have furnished Radio One with a
certificate, dated the Closing Date and duly executed by the Company to the
effect that the conditions set forth in this Section have been satisfied.
8.2 Proceedings None of the parties shall be subject to any
-----------
restraining order or injunction restraining or prohibiting the consummation of
the transactions contemplated hereby. In the event such a restraining order or
injunction is in effect, this Agreement may not be terminated by Radio One
pursuant to this Section prior to the Final Closing Date, but the Closing shall
be delayed during such period. This Agreement may be terminated after such date
if such restraining order or injunction remains in effect.
8.3 FCC Consent The FCC Consent shall have been granted by the FCC
-----------
by Final order, without any conditions materially adverse to Radio One.
8.4 Hart-Scott-Rodino If applicable, the waiting period under the
-----------------
HSR Act shall have expired or been terminated.
8.5 Deliveries The Company and the Shareholders shall have complied
----------
with their obligations set forth in Section 9.1.
8.6 Required Consents The Majority Shareholder and the Company shall
-----------------
have obtained and delivered to Radio One all of the Required Consents.
8.7 Material Adverse Change None of the Davis Companies, the Davis
-----------------------
Stations, nor any of the Assets shall have suffered a material adverse change
since the date hereof in the business, operations, condition (financial or
otherwise), properties, assets, liabilities, capitalization or ownership of the
Davis Companies, the Davis Stations or any of the Assets, except changes
permitted by this Agreement and changes which are not (either individually or in
the aggregate) materially adverse to the Davis Stations.
8.8 Title Commitments Radio One shall have obtained commitments from a
-----------------
title insurance company acceptable to Radio One to issue to Radio One or its
designee at standard rates ALTA extended coverage owner's and leasehold title
insurance policies with respect to the owned and leased Real Property with no
exceptions other than Permitted Encumbrances (the "Title Commitments").
-22-
<PAGE>
8.9 Surveys Radio One shall have obtained an ALTA survey of each
-------
parcel of Owned Real Property (the "Surveys").
8.10 Estoppel Certificates The Majority Shareholder and the Company
---------------------
shall have obtained and delivered to Radio One the Estoppel Certificates.
8.11 Environmental The Shareholders and the Company shall have
-------------
remediated any environmental hazards or violations required to be remediated or
cured by them pursuant to Section 5.6 or the estimated costs and expenses
thereof in an amount acceptable to Radio One shall have been set forth in the
Preliminary Adjustment Statement as a credit to Radio One to the extent required
by Section 5.7.
8.12 Net Operating Losses As of the Closing on the Closing Date, the
--------------------
Davis Companies then current net operating losses for tax purposes shall not be
less than the amounts set forth on Schedule 2.8, minus the amounts of such net
------------
operating losses used to offset (i) earnings for the Davis Companies since June
30, 1999, and (ii) gain from the spin off of the Columbus Sub pursuant to
Section 1.15 and Schedule 1.15.
-------------
8.13 Subordinated Lenders' Conversion All of the Subordinated Lenders
--------------------------------
shall have waived their conversion and purchase option rights with respect to
DBC as set forth in Section 5.12.
8.14 Inter-Company Debt All inter-company indebtedness by and among the
------------------
Davis Companies shall have been satisfied and eliminated without any adverse tax
consequences of any kind or nature upon Radio One or the Surviving Company.
8.15 Shareholders' Approval The Shareholders shall have approved this
----------------------
Agreement and the Mergers, and the Minority Shareholders shall have satisfied
the requirements of Section 5.10 to Radio One's reasonable satisfaction.
8.16 Liens Radio One shall have received evidence reasonably
-----
satisfactory to it that, upon consummation of the Closing, the Assets shall be
free and clear of all liens other than Permitted Encumbrances.
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<PAGE>
ARTICLE 9: ITEMS TO BE DELIVERED AT THE CLOSING
------------------------------------
9.1 Deliveries by the Company and the Shareholders At Closing, the
----------------------------------------------
Company and the Shareholders, as appropriate, shall deliver to Radio One duly
executed by Company, the Shareholders or such other signatory as may be required
by the nature of the document:
(a) the certificates representing (i) the Company Stock accompanied by stock
powers duly endorsed in blank, sufficient to cancel all right, title and
interest in and to the Company Stock and (ii) the other Davis Company Shares;
(b) certified copies of resolutions duly adopted by the Shareholders and the
board of directors of the Company, which shall be in full force and effect at
the time of the Closing, authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby;
(c) the certificate referred to in Section 8.1;
(d) the corporate minute book, stock ledger and all other original and
duplicate corporate records of the Davis Companies;
(e) copies of the certificate of incorporation of the Davis Companies,
including all amendments thereto, certified by the Secretary of State or other
appropriate official of the jurisdiction of incorporation of the Davis Companies
dated within 10 business days of the Closing Date;
(f) copies of the bylaws of the Davis Companies, certified by an officer of
the Company as being true and correct and in effect on the Closing Date;
(g) certificates from the Secretaries of State or other appropriate
officials of the jurisdiction of incorporation of the Davis Companies and any
jurisdiction in which the Davis Companies have qualified to do business, dated
within 10 business days of the Closing Date and showing that the Davis Companies
are duly incorporated and in good standing in its jurisdiction of incorporation
and that it is in good standing in each jurisdiction in which it has qualified
to do business;
(h) a certificate as to the tax status of the Davis Companies from the
appropriate official of the jurisdiction of incorporation of the Davis Companies
and each jurisdiction in which the Davis Companies have qualified to do
business;
(i) resignations and releases of all officers and directors of the Davis
Companies and releases of the Shareholders of the Davis Companies;
-24-
<PAGE>
(j) the Required Consents and any other consents obtained by Shareholders
and Company under Section 5.4;
(k) opinions of Company's counsel in the forms of Exhibit B attached hereto;
---------
(l) the Preliminary Adjustment Statement and the Preliminary Adjustment
Certificate;
(m) the Estoppel Certificates obtained by Majority Shareholder and Company
and Lien Search Reports;
(n) the Subscriptions and the Registration Rights Agreements; and
(o) the Post-Closing Escrow Agreement.
9.2 Deliveries by Radio One At the Closing, Radio One shall deliver
-----------------------
to the Shareholders:
(a) certified copies of resolutions authorizing the execution, delivery and
performance by Radio One of this Agreement, which shall be in full force and
effect at the time of the Closing;
(b) the certificate referred to in Section 7.1;
(c) at the Effective Time, the Merger Consideration as provided by Sections
1.7 and 1.8;
(d) the Post-Closing Escrow Agreement; and
(e) the Registration Rights Agreements.
9.3 Satisfaction of Davis Companies Indebtedness for Long Term Debt
---------------------------------------------------------------
Simultaneously with Closing onUhe Closing Date, the Davis Companies long term
indebtedness payable to Amresco, the Subordinated Lenders, First Union National
Bank, and all other Davis Companies' financial institutions and banks, and
Transactions Fees and Costs, shall be paid and satisfied in full out of the
Total Consideration with such amounts so paid to be treated as Indebtedness and
a part of the Consolidated Liabilities. In connection with such satisfactions,
the Davis Companies' lenders shall release and discharge any and all security
interests, stock pledges, mortgage, liens, claims and encumbrances whatsoever
that they may have or possess against and in respect of the Davis Companies'
Assets, including, without limitation, the execution, delivery and filing of
mortgage satisfactions and UCC termination
-25-
<PAGE>
statements in all required jurisdictions.
ARTICLE 10: SURVIVAL; RELEASE; INDEMNIFICATION
----------------------------------
10.1 Survival; Release All representations and warranties contained in
-----------------
this Agreement, or in any certificate, agreement, or other document or
instrument, delivered pursuant hereto, shall survive (and not be affected in any
respect by) the Closing, any investigation conducted by any party hereto and any
information which any party may receive, for a period of one (1) year after the
Closing Date, provided, however, that representations and warranties with
-------- -------
respect to authorization, title, taxes and environmental matters shall survive
without limitation.
10.2 Indemnification
---------------
(a) From and after Closing, subject to the limitation set forth in Section
5.7, if applicable, the Majority Shareholder (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Radio One and Radio One of Charlotte, the
shareholders, directors, officers and employees of Radio One and Radio One of
Charlotte, LLC, and all persons which directly or indirectly, through one or
more intermediaries, control, are controlled by, or are under common control
with Radio One, and their respective successors and assigns (collectively, the
"Radio One Indemnitees") from, against and in respect of, and to reimburse the
Radio One Indemnitees for, the amount of any and all Deficiencies (as defined in
Section 10.3(a)). Effective upon Closing, the Majority Shareholder hereby
assumes and agrees to pay and perform when due any and all such Deficiencies.
Notwithstanding anything to the contrary set forth in this Agreement, the
Majority Shareholder shall have no obligation to indemnify any Radio One
Indemnitees on account of (i) any Taxes required to be paid by, or on behalf of,
any Davis Company as a result of the Mergers not being treated as
reorganizations under Section 368(a) of the Code, or (ii) any breach of Section
2.8 resulting from the Mergers not being treated as reorganizations under
Sections 368(a) of the Code.
(b) From and after Closing, Radio One (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless the Majority Shareholder and its
respective successors and assigns (collectively, the "Majority Shareholder
Indemnitees") from, against and in respect of, and to reimburse the Majority
Shareholder Indemnitees for, the amount of any and all Deficiencies (as defined
in Section 10.3(b)). Radio One shall have no obligation whatsoever to indemnify
any of the Minority Shareholders for any Deficiencies.
10.3 Deficiencies
----------
(a) As used in this Article 10, the term "Deficiencies" when asserted by
Radio One Indemnitees or arising out of a third party claim against Radio One
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Radio One Indemnitees and arising out of, based upon or
resulting from: (i) any misrepresentation, breach of warranty, or any failure to
comply with any covenant, obligation or agreement on the part of the Majority
Shareholder or the Company contained in or made pursuant to this Agreement to
the extent not
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covered by proceeds of insurance; (ii) any obligation or liability arising from
the business or operations of the Davis Companies prior to Closing of a nature
or type required to be reflected on the Closing Date consolidated balance sheet
of the Davis Companies in accordance with GAAP to the extent not covered by
proceeds of insurance, except for Assumed Obligations and except for
Consolidated Liabilities that are taken into account in calculating the Merger
Consideration; (iii) without limiting the foregoing, any litigation, proceeding
or claim by any third party relating to the business or operation of the Davis
Companies prior to Closing to the extent not covered by proceeds of insurance;
or (iv) any obligation or liability arising from the business or operations of,
and any litigation proceeding or claim by any third party relating to the
business or operations of, the Columbus Stations and the Columbus Sub, whether
prior to or after Closing. Such Deficiencies include without limitation any and
all acts, suits, proceedings, demands, assessments and judgments, and all fees,
costs and expenses of any kind, related or incident to any of the foregoing
(including, without limitation, any and all Legal Expenses (as defined in
Section 10.6 below)).
(b) As used in this Article 10, the term "Deficiencies" when asserted by the
Majority Shareholder Indemnitees or arising out of a third party claim against
the Majority Shareholder Indemnitees shall mean any and all losses, damages,
liabilities and claims sustained by the Majority Shareholder Indemnitees and
arising out of, based upon or resulting from: (i) any misrepresentation, breach
of warranty, or any failure to comply with any covenant, obligation or agreement
on the part of Radio One contained in or made pursuant to this Agreement to the
extent not covered by proceeds of insurance; (ii) any failure by the Radio One
Indemnitees to pay or perform any of the Assumed Obligations and Consolidated
Liabilities that are taken into account in calculating the Merger Consideration
to the extent not covered by proceeds of insurance; or (iii) any litigation,
proceeding or claim by any third party relating to the business or operation of
the Davis Companies after Closing to the extent not covered by proceeds of
insurance. Such Deficiencies include without limitation any and all acts, suits,
proceedings, demands, assessments and judgments, and all fees, costs and
expenses of any kind, related or incident to any of the foregoing (including,
without limitation, any and all Legal Expenses (as defined in Section 10.6
below)).
10.4 Exceptions Neither party shall be required to indemnify and hold
----------
harmless the other party or parties with respect to deficiencies described in
Sections 10.3(a)(i) and 10.3(b)(i) until the aggregate amount of such
deficiencies exceed $100,000, provided, however, that if such amount exceeds
$100,000 the indemnifying party shall be liable to the indemnified party or
parties for the entirety of the amount claimed and not just that portion in
excess of $100,000. The aggregate amount that Majority Shareholder and the
Company shall be required to indemnify and hold harmless Radio One Indemnitees
for Deficiencies with respect to Section 10.3(a)(i) above shall not exceed the
amount of the Merger Consideration.
10.5 Procedures
----------
(a) Third Party Claims In the event that any claim shall be asserted by any
------------------
third party against the Radio One Indemnitees or the Majority Shareholder
Indemnitees (Radio One Indemnitees or the Majority Shareholder Indemnitees, as
the case may be, hereinafter, the "Indemnitees"), which, if sustained, would
result in a Deficiency, then the Indemnitees, as promptly as practicable but in
no event later than 10 business days, after learning of such
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claim, shall notify the Indemnifying Party of such claim, and shall extend to
the Indemnifying Party a reasonable opportunity to defend against such claim,
at the Indemnifying Party's sole expense and through legal counsel reasonably
acceptable to the Indemnitees, provided that the Indemnifying Party proceeds
in good faith, expeditiously and diligently. The Indemnitees shall, at their
option and expense, have the right to participate in any defense undertaken by
the Indemnifying Party with legal counsel of their own selection. No
settlement or compromise of any claim which may result in a Deficiency may be
made by the Indemnifying Party without the prior written consent of the
Indemnitees unless: (A) prior to such settlement or compromise the
Indemnifying Party acknowledges in writing its obligation to pay in full the
amount of the settlement or compromise and all associated expenses; (B) the
Indemnitees are furnished with a full release from the party or parties
asserting the claim; and (C) the Indemnifying Party has the ability (financial
or otherwise) to pay or perform such settlement or compromise.
(b) Direct Claims In the event that the Indemnitees assert the existence of
-------------
any Deficiency (other than a Deficiency arising out of any litigation,
proceeding claim, by any third party) against the Indemnifying Party, they shall
give written notice to the Indemnifying Party of the nature and amount of the
Deficiency asserted. If the Indemnifying Party, within a period of thirty (30)
days after the giving of notice by the Indemnitees, shall not give written
notice to the Indemnitees announcing its intent to contest such assertion of the
Indemnitees (such notice by the Indemnifying Party being hereinafter referred to
as the "Contest Notice"), such assertion of the Indemnitees shall be deemed
accepted and the amount of the Deficiency shall be deemed established. In the
event, however, that a Contest Notice is given to the Indemnitees within said
30-day period, then the contested assertion of a Deficiency shall be settled
by arbitration to be held in Washington, D.C. in accordance with the
Commercial Rules of the American Arbitration Association then existing. The
determination of the arbitrator shall be delivered in writing to the
Indemnifying Party and the Indemnitees and shall be final, binding and
conclusive upon all of the parties hereto, and the amount of the Deficiency,
if any, determined to exist, shall be deemed established.
(c) The Indemnitees and the Indemnifying Party may agree in writing, at any
time, as to the existence and amount of a Deficiency, and, upon the execution of
such agreement such Deficiency shall be deemed established.
10.6 Payment The Indemnifying Party hereby agrees to pay the amount of
-------
established Deficiencies within 15 days after the establishment thereof. The
amount of established Deficiencies shall be paid in cash except as provided in
the Post-Closing Escrow Agreement, which shall be used for such purpose on a
priority basis. At the option of the Indemnitees, the Indemnitees may offset any
Deficiency or any portion thereof that has not been paid by the Indemnifying
Party to the Indemnitees against any obligation the Indemnitees, or any of them,
may have to the Indemnifying Party.
10.7 Legal Expenses As used in this Article 10, the term "Legal
--------------
Expenses" shall mean any and all reasonable fees (whether of attorneys,
accountants or other professionals), costs and expenses of any kind reasonably
incurred by any person identified herein and its counsel in investigating,
preparing for, defending against, or providing evidence, producing documents or
taking other action with respect to any threatened or asserted claim.
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10.8 Sole Remedy Except as set forth Sections 11.1 and 11.2 below, from
-----------
and after the Closing Date, the rights pursuant to this Article 10 and Sections
1.8 and 1.10 above shall be the parties' exclusive remedies with respect to all
breaches of representations, warranties and covenants under this Agreement
(specifically excluding breaches of representations, warranties and covenants
set forth in the Employment Agreement), and the parties' waive all other rights
and remedies whatsoever in law or equity with respect to the foregoing, except
for rights and remedies that the Majority Shareholder may have as a shareholder
of Radio One arising out of securities laws.
ARTICLE 11: MISCELLANEOUS
-------------
11.1 Termination This Agreement may be terminated at any time prior to
-----------
Closing: (a) by the mutual consent of the Majority Shareholder and Radio One;
(b) by the Majority Shareholder or Radio One if the FCC has denied the approvals
contemplated by this Agreement in an order which has become Final; (c) by Radio
One as provided in Section 5.6 (Environmental), Section 11.5 (Broadcast
Transmission Interruption) or Section 11.6 (Risk of Loss); (d) except as set
forth in Section 11.6, by Radio One or the Majority Shareholder if the Closing
has not taken place by the Final Closing Date; (e) by Radio One, if on the
Closing Date the Company or the Majority Shareholder has failed to satisfy any
of the conditions set forth in Section 8.1, 8.5, 8.6, 8.7, 8.10, 8.11, 8.12,
8.13, 8.14, 8.15 or 8.16; (f) by Radio One if the Company or the Majority
Shareholder has failed to cure a material breach of any of their
representations, warranties or covenants under this Agreement within fifteen
(15) calendar days after they receive notice from Radio One of such breach; (g)
by the Majority Shareholder, if on the Closing Date Radio One has failed to
satisfy either of the conditions set forth in Section 7.1 or 7.5; or (h) by the
Majority Shareholder if Radio One has failed to cure a material breach of any of
its representations, warranties or covenants under this Agreement within fifteen
(15) calendar days after they receive notice from the Majority Shareholder of
such breach. A termination pursuant to this Section 11.1 shall not relieve any
party of any liability it would otherwise have for a breach of this Agreement.
11.2 Specific Performance In the event of a breach by the Majority
--------------------
Shareholder or the Company of any representation, warranty, covenant or
agreement under this Agreement, at Radio One's election, in addition to any
other remedy available to it, Radio One shall be entitled to an injunction
restraining any such breach or threatened breach and, subject to obtaining any
requisite approval of the FCC, to enforcement of this Agreement by a decree of
specific performance requiring the Company and the Majority Shareholder to
fulfill their obligations under this Agreement, in each case without the
necessity of showing economic loss or other actual damage and without any bond
or other security being required. The remedies provided Radio One in this
Agreement shall be cumulative and shall not preclude the assertion by Radio One
of any other rights or the seeking of any other remedies against the Company or
the Majority Shareholder.
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<PAGE>
11.3 Expenses Each party hereto shall bear all of its expenses
--------
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith; provided that: (i) the Majority Shareholder and Radio One shall each
pay one-half of the filing fees required to be paid in connection with the FCC
Applications and the Merger Reorganizations; (ii) the Majority Shareholder shall
be exclusively responsible for, and Radio One shall not have any liability or
responsibility for, any sales or transfer taxes (including without limitation
any real estate transfer taxes), arising from the consummation of the Mergers;
and (iii) Radio One shall pay the HSR Act filing fee, if any.
11.4 Further Assurances From time to time prior to and after Closing,
------------------
each party hereto will use their respective reasonable best efforts to take all
actions required hereunder to consummate this Agreement and the Mergers and will
execute all such instruments and take all such actions as any other party shall
reasonably request, without payment of further consideration, in connection with
carrying out and effectuating the intent and purpose hereof and all transactions
contemplated by this Agreement, including without limitation the execution and
delivery of any and all confirmatory and other instruments in addition to those
to be delivered at Closing, and any and all actions which may reasonably be
necessary to complete the transactions contemplated hereby, including the Merger
Reorganizations. The parties shall cooperate fully with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement.
11.5 Broadcast Transmission Interruption If before Closing the regular
-----------------------------------
broadcast transmission of the Davis Stations in the normal and usual manner is
interrupted for a period of eight consecutive hours or more, the Company shall
give prompt written notice thereof to Radio One. Radio One shall then have the
right, by giving written notice, to postpone (and if necessary re-postpone) the
Closing to a date that is fifteen (15) days after the end of any such
interruption. If regular broadcast transmission in the normal and usual manner
is interrupted for a continuous period of eighteen (18) hours or more at any
time prior to Closing, then (a) the Company immediately shall give written
notice thereof to Radio One and (b) Radio One shall have the right, by giving
written notice, to (i) terminate this Agreement, or (ii) postpone the Closing as
provided above.
11.6 Risk of Loss The risk of loss, damage or destruction to any of the
------------
Assets shall be borne by the Company and the Shareholders at all times up to
12:01 a.m. local time on the Closing Date. In the event of any such loss,
damage, or destruction, the proceeds of any claim for any loss, payable under
any insurance policy with respect thereto, shall be used to repair, replace, or
restore any such property to its former condition, subject to the conditions
stated below. In the event of any loss or damage to any of the Assets, the
Company and the Majority Shareholder shall notify Radio One thereof in writing
immediately. Such notice shall specify with particularity the loss or damage
incurred, the cause thereof (if known or reasonably ascertainable), and the
insurance coverage. If any part of the Assets are damaged or destroyed by
casualty loss prior to the Closing Date, and the cost of restoring the damaged
or destroyed
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<PAGE>
Assets to a condition reasonably comparable to their prior condition does not
exceed $500,000, at Radio One's option, (a) the Company shall perform such
restoration, and in such event, the Closing shall be postponed until restoration
can be completed or (b) the amount of the Merger Consideration shall be reduced
by the estimated cost of such incomplete restoration (as estimated by a
qualified firm reasonably acceptable to Radio One and the Company) minus the
amount of expected insurance proceeds attributable to such casualty loss (not
including any such proceeds received before the Closing Date). If the cost of
restoration is in excess of $500,000, the Majority Shareholder and Company may
elect to perform such restoration and in such event, at Radio One's option (x)
the Closing shall be postponed until restoration can be completed, (y) the
Merger Consideration shall be reduced by such estimated cost of restoration
minus the amount of expected insurance proceeds attributable to such casualty
- -----
loss (not including any such proceeds received before the Closing Date), or (z)
this Agreement shall be terminated. If the cost of the restoration is in excess
of $500,000 and the Majority Shareholder and Company elect not to perform the
restoration, Radio One may elect to terminate this Agreement. If necessary, the
Company and the Majority Shareholder shall join Radio One in requesting from the
FCC any extensions of time in which to consummate the Closing that may be
required in order to complete such repairs.
11.7 Cooperation From the date of Closing and for a period of three (3)
-----------
years thereafter, the Majority Shareholder shall provide Radio One with such
cooperation and information as Radio One shall reasonably request in Radio
One's: (i) analysis and review of Financial Statements or information provided
or created hereunder, or (ii) preparation of any reports or analyses prepared by
Radio One. The Majority Shareholder shall also make the accountants employed by
the Company prior to Closing available, including any work papers, opinions and
financial statements relating to the Company or the Shareholders, to provide
explanations of any documents or information provided hereunder and to permit
disclosure of such information by Radio One, including disclosure to any
governmental authority, including the Securities and Exchange Commission.
11.8 Tax Matters Prior to Closing, the Majority Shareholder shall cause
-----------
the Company to prepare and timely file, or cause to be prepared and timely
filed, all tax returns of the Davis Companies that are due prior to Closing,
which shall be prepared by treating items on such tax returns in a manner
consistent with the past practices with respect to such items, unless otherwise
required by law. The Majority Shareholder shall cause the Company to provide to
Radio One drafts of all tax returns (and accompanying work papers) of the Davis
Companies at least thirty (30) days prior to filing. Not less than fifteen (15)
days prior to filing, Radio One shall notify the Majority Shareholder of the
existence of any objection (specifying in reasonable detail the nature and basis
for such objection) Radio One may have to any items set forth on such draft tax
returns. Radio One and the Majority Shareholder agree to consult and resolve in
good faith any such objection. After Closing, Radio One shall prepare and timely
file, or cause to be prepared and timely filed, all tax returns of the Davis
Companies; provided, however, that in the case of any return that includes any
-------- -------
period prior to Closing, Radio One shall provide to the Majority Shareholder
drafts of such tax returns (and accompanying work papers) at least thirty (30)
days prior to filing. No less than fifteen (15) days prior to filing, the
Majority Shareholder shall notify Radio One of the existence of any objection
(specify in reasonable detail the nature and basis for such objection) the
Majority Shareholder may have to any items set forth on such draft tax return to
the extent that such return would adversely impact the Majority Shareholder
indemnification obligations hereunder. Radio One and the Majority Shareholder
agree to consult and resolve in good faith any such objection and any such
objection that is not resolved shall be determined by an independent
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certified public accountant who is acceptable to both Radio One and the Majority
Shareholder. The parties shall treat the spin-off of Davis Broadcasting of
Columbus, Inc. as a Code Section 355 transaction, and for purposes of
determining taxable gain under Code Section 355(e), shall value the stock of
such corporation at $2,500,000. The Majority Shareholder shall not file or cause
to be filed any amended tax return without the prior written consent of Radio
One, which consent shall not be unreasonably withheld. The Majority Shareholder
and Radio One shall cooperate with one another in connection with the
preparation, filing and any inquiries relating to any tax returns. Any refund of
taxes relating to the Davis Companies received by the Shareholders after Closing
shall be paid by the Shareholders to Radio One within ten business days after
such refund is received by the Shareholders.
ARTICLE 12: GENERAL PROVISIONS
------------------
12.1 Successors and Assigns This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto, and their respective
representatives, successors and assigns. Neither the Company nor the
Shareholders may assign any rights or delegate any duties hereunder without the
prior written consent of Radio One, and any such attempted assignment or
delegation without such consent shall be void. Radio One may assign its rights
and obligations hereunder in whole or in part without consent of the Company or
the Majority Shareholder to: (a) any person which directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with Radio One; and (b) Radio One's senior lender as collateral.
12.2 Amendments; Waivers The terms, covenants, representations,
-------------------
warranties and conditions of this Agreement may be changed, amended, modified,
waived, or terminated only by a written instrument executed by the party waiving
compliance. The failure of any party at any time or times to require performance
of any provision of this Agreement shall in no manner affect the right of such
party at a later date to enforce the same. No waiver by any party of any
condition or the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
12.3 Notices All notices, requests, demands and other communications
-------
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by Federal
Express or a similar overnight courier service, expenses prepaid, or, if sent by
telex, graphic scanning or other facsimile communications equipment, delivered
by such equipment, addressed as follows:
if to the Company or the Majority Shareholder: c/o Davis Broadcasting, Inc.
2203 Wynnton Road
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<PAGE>
Columbus, GA 31906
Attn: Gregory A. Davis
Facsimile No.: (704) 358-1612
with a copy (which shall not constitute notice) to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, N.C. 28246
Attn: Robin L. Hinson
Facsimile No.: (704) 378-4000
and
Fleishman and Walsh, L.L.P.
1400 Sixteenth Street, N.W.
Washington, D.C. 20036
Attn: Howard A. Topel
Facsimile No.: (202) 745-0916
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<PAGE>
if to Radio One: Radio One, Inc.
5900 Princess Garden Parkway, Suite 800
Lanham, MD 20706
Attn: Alfred C. Liggins, President
Facsimile No.: (301) 306-9638
with a copy (which shall not constitute notice) to:
Radio One, Inc.
5900 Princess Garden Parkway, Suite 800
Lanham, MD 20706
Attn: Linda J. Eckard, General Counsel
Facsimile No.: (301) 306-9638
and Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Attn: Dominic T. Bodensteiner
Facsimile No.: (202) 719-7049
Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section providing for the giving of notice.
12.4 Captions The captions of Articles and Sections of this Agreement
--------
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
12.5 Governing Law This Agreement and all questions relating to
------------
its validity,
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<PAGE>
interpretation, performance and enforcement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
12.6 Entire Agreement This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof, and supersedes all prior agreements, understandings, inducements
or conditions, express or implied, oral or written, relating to the subject
matter hereof. The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
This Agreement has been prepared by all of the parties hereto, and no inference
of ambiguity against the drafter of a document therefore applies against any
party hereto.
12.7 Counterparts This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
SIGNATURE PAGE TO MERGER AGREEMENT
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
RADIO ONE:
RADIO ONE, INC.
By:
-------------------------------
Name:
------------------------------
Title:
-----------------------------
COMPANY: DAVIS BROADCASTING, INC.
By:
--------------------------------
Gregory A. Davis, President
MAJORITY SHAREHOLDER:
-----------------------------------
Gregory A. Davis
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ANNEX A
Certain Defined Terms
For the purposes of this Agreement, the following terms have the meanings set
forth below.
"Adjusted Consideration" means the Total Consideration less the Consolidated
Liabilities and (i) plus one half of the amount by which Consolidated Current
Assets exceed the Consolidated Accounts Payable, or (ii) less the amount by
which Consolidated Accounts Payable exceed Consolidated Current Assets, as the
case may be.
"Affiliate" of any particular person means any other person controlling,
controlled by, or under common control with, such particular person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a person whether through the ownership of voting
securities, contract or otherwise.
"Assets" means all right, title and interest of the Davis Companies in all
properties, assets, privileges, rights, interests and claims, real and personal,
tangible and intangible, of every type and description, wherever located,
including its business and goodwill, including, without limitation, the FCC
Authorizations, Tangible Personal Property, Real Property, the DBC Stock, Time
Sales Agreements, Station Contracts, Intangible Property, Programming and
Copyrights, Files and Records and Websites.
"Assumed Obligations" means the obligations arising on and after the Closing for
Consolidated Accounts Payable and under the Station Contracts other than those
required by this Agreement to be terminated at or prior to Closing.
"Barter Balance" on a given date means the difference between the value of air
time (based upon the Davis Stations' then prevailing rates) to be provided and
the fair market value of goods or services to be received therefor pursuant to
trade, barter or similar agreements for the sale of time for goods or services.
"Cash Amount" means the amount of Two Million Dollars ($2,000,000).
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<PAGE>
"Closing Price" means $61.89 per share of Radio One's common stock.
"Company Accountant" means Sievers & Knopf.
"Consolidated Accounts Payable" means the trade account payable of the Davis
Companies incurred in the usual and ordinary course of business consistent with
past practices with maturities of less than thirty (30) days.
"Consolidated Accounts Receivable" means the trade accounts receivable of the
Davis Companies net after the deduction of reserve for bad debts equal to two
percent (2%) of net sales for the prior 12 month period.
"Consolidated Current Assets" means the sum of the cash and Consolidated
Accounts Receivable of the Davis Companies.
"Consolidated Liabilities" means all Indebtedness of the Davis Companies other
than the Assumed Obligations, including without limitation all indebtedness of
the Davis Companies owing to Radio One, all other indebtedness for borrowed
money, all change of control payments the Davis Companies are obligated to
make as a result of the transaction contemplated by this Agreement, the amount
of any negative Barter Balance and Transaction Fees and Costs.
"Davis Companies" means the Company and the Station Subs collectively.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Escrow Amount" means $850,000, being an amount equal to (i) five percent
(5%) of the Total Consideration less (ii) the $350,000 principal amount of
indebtedness for borrowed money owed by the Company to Radio One.
"Escrowed Shares" means the number of shares of Radio One common stock equal
to $1,200,000 based on the Closing Price, which shares issued in the name of the
Majority Shareholder shall be deposited by Radio One into the post-closing
Escrow Account pursuant to Section 1.8 from the Stock Consideration.
"FCC Authorizations" means all of the FCC authorizations issued with respect
to the Davis Stations, including without limitation all rights in and to the
Davis Stations' call letters and any variations thereof, and all of those FCC
authorizations listed and described on Schedule 2.10 attached hereto, and all
-------------
applications therefor, together with any renewals or extensions thereof and
additions thereto.
"Files and Records" means all FCC logs and all files and other records of
the Davis Companies (other than duplicate copies of such files ("Duplicate
Records")), including
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<PAGE>
without limitation all schematics, blueprints, engineering data, customer lists,
reports, specifications, projections, statistics, promotional graphics, original
art work, mats, plates, negatives and other advertising, marketing or related
materials, and all other technical and financial information.
"Final" means that action shall have been taken by the FCC (including action
duly taken by the FCC's staff, pursuant to delegated authority) which shall not
have been reversed, stayed, enjoined, set aside, annulled or suspended; with
respect to which no timely request for stay, petition for rehearing, appeal or
certiorari or sua sponte action of the FCC with comparable effect shall be
--- ------
pending; and as to which the time for filing any such request, petition, appeal,
certiorari or for the taking of any such sua sponte action by the FCC shall have
--- ------
expired or otherwise terminated.
"GAAP" means generally accepted accounting principles as of the date hereof
consistently applied throughout the specified period and in prior periods.
"Indebtedness" means all indebtedness, liabilities and obligations of every
kind and nature, both current and long term, which are vested, absolute, and
accrued, including but not limited to, all indebtedness for borrowed money (and
interest thereon and prepayment penalties incurred as a result of prepaying such
indebtedness, if any, pursuant to Section 9.3) of the Davis Companies, all
determined in accordance with GAAP on a consolidated basis.
"Independent Accounting Firm" means a "big-five" accounting firm other than
the Company Accountant and Radio One's Accountant.
"Intangible Property" means all interests of the Davis Companies as of the
date of this Agreement in all trademarks, trade names, service marks,
franchises, patents, jingles, slogans, logotypes and other intangible rights,
including without limitation all right, title and interest in and to the marks
consisting of the Davis Stations' call letters and any variations thereof, and
all of those listed and described on Schedule 2.14 attached hereto, and those
-------------
acquired by the Davis Companies between the date hereof and the Closing Date.
"Knowledge", including the phrases "to the knowledge of" or "to the best
knowledge of" any person and any similar phrase means, with respect to the
Company the actual knowledge of Greg Davis, Bill Yeager and Bernie Corcoran.
"Liens" means any mortgages, liens, deeds of trust, security interests,
pledges, restrictions, prior assignments, charges, claims, defects in title and
encumbrances of any kind or type whatsoever.
"Minority Cash Amount" means the portion of the Cash Amount equal to the
excess of (i) the Adjusted Consideration multiplied by the Minority Percentage
-------------
over (ii) $500,000.
"Minority Percentage" means the percentage of Company Stock (both Class A
Common Stock and Class B Common Stock) held by the Minority Shareholders as set
forth in Schedule 2.2, determined prior to the redemption of the shares of Class
------------
B Common Stock pursuant to Schedule 1.15.
-------------
"Permitted Encumbrances" means: (i) liens for real estate taxes not yet due
and payable (all such taxes for the periods prior to Closing being a part of the
Consolidated Liabilities); (ii) the Assumed Obligations (iii) statutory or
common law liens to secure landlords, lessors or renters under leases or rental
agreements confined to the premises rented to the extent that no payment or
performance under any such lease or rental agreement is in
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<PAGE>
arrears or is otherwise past due, (iv) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance or
old age pension programs mandated under applicable laws or other social security
regulations, (v) statutory or common law liens to secure claims for labor,
materials or supplies and other liens, which secure obligations to the extent
the payment thereof is not in arrears or otherwise past due, (vi) non-monetary
easements, rights of way or other reservations or imperfections of title and
encumbrances of record that do not, individually or in the aggregate, materially
impair the continued use and operation of the Assets.
"Post-Closing Escrow Agreement" means a Post-Closing Escrow Agreement in the
form of C Attached hereto.
"Programming and Copyrights" means all interests of the Davis Companies as
of the date of this Agreement in all programs and programming materials and
elements of whatever form or nature, whether recorded on tape or any other
substance or intended for live performance, and whether completed or in
production, and all related common-law and statutory copyrights, together with
all such programs, materials, elements and copyrights acquired by the Davis
Companies between the date hereof and the Closing Date.
"Radio One's Accountant" means Arthur Andersen LLP.
"Real Property" means all interests of the Davis Companies as of the date of
this Agreement in all land, leaseholds, licenses, rights-of-way and other
interests of every kind and description in and to all of the real property and
buildings and other improvements thereon, including without limitation those
listed and described on Schedule 2.12 attached hereto, and any additions and
-------------
improvements thereto between the date of this Agreement and the Closing Date.
"Registration Rights Agreements" means registration rights agreements in the
form of Exhibit E attached hereto.
"Station Contracts" means (i) those contracts and agreements used in
connection with the business or operation of the Davis Stations that are listed
and described on Schedule 2.13 attached hereto (ii) the Time Sales Agreements,
-------------
and (iii) and those contracts that Radio One shall elect in writing to assume at
Closing.
"Stock Consideration" means a number of shares of Radio One's common stock
equal to the Adjusted Consideration less the Cash Amount divided by the Closing
Price.
"Subscriptions" means written subscriptions delivered by the Shareholders to
Radio One in form and substance as set forth on Exhibit D attached hereto.
---------
"Subsidiary" means any other corporation, partnership, limited liability
company or other business entity in which a person owns, directly or indirectly,
any equity security or other equity interest and which is controlled, directly
or indirectly, by such person.
"Tangible Personal Property" means all interests of the Davis Companies as
of the date of this Agreement in all equipment, electrical devices, antennas,
cables, vehicles, furniture, fixtures, towers, office materials and supplies,
hardware, tools, spare parts, and other tangible personal property of every kind
and description, including without limitation those listed and described on
Schedule 2.11 attached hereto, and any additions and improvements thereto
- -------------
between the date of this Agreement and the Closing Date.
"Tax" (including with correlative meaning the terms "Taxes" and "Taxable")
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<PAGE>
shall mean (a) all foreign, federal, state, local and other income, gross
receipts, sales, use, entertainment, ticket, ad valorem, value-added,
intangible, unitary, withholding, transfer, franchise, license, payroll,
employment, estimated, excise, environmental, stamp, occupation, premium,
property, prohibited transactions, windfall or excess profits, customs, duties
or other taxes, levies, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, (b) any liability for payment of amounts described
in clause (a) as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of law, and (c) any liability for payment of amounts described
in clause (a) or (b) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other Person or Taxes.
"Tax Proceeding" shall mean any audit, examination, claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Return" shall mean any return (including any information return),
report, statement, schedule, notice, form, estimate or declaration of
estimated tax relating to or required to be filed with any governmental
authority in connection with the determination, assessment, collective or
payment of any Tax.
"Tax Authority" shall mean any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having jurisdiction with respect to
any Tax.
"Taxable Period" shall mean any taxable year or any other period that is
treated as a taxable year with respect to which any Tax may be imposed under any
applicable statute, rule or regulation.
"Time Sales Agreements" means those obligations of the Davis Companies that
exist on the Closing Date for the sale of air time on the Davis Stations for
cash entered in the ordinary course of business, at customary rates for the
periods in question and cancelable on 30 days notice or less without penalty.
"Total Consideration" means the sum of Twenty Four Million Dollars
($24,000,000).
"Transaction Fees and Costs" means fees and costs incurred by the Davis
Companies in connection with the transactions contemplated by this Agreement for
outside legal and accounting services and disbursements, recording and filing
fees and expenses.
"Websites" means all interests of the Davis Companies in any Internet domain
leases and domain names relating to the Davis Stations, the unrestricted right
to the use of HTML content located and publicly accessible from those domain
names, and the "visitor" email data base for those sites.
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<PAGE>
Schedules
- ---------
1.15 Merger Reorganizations
2.2 Capitalization
2.6 Consents
2.8 Taxes
2.9 Liens
2.10 FCC Authorizations
2.11 Tangible Personal Property
2.12 Real Property
2.13 Station Contracts
2.14 Intangible Property
2.15 Employment Matters
2.17 Litigation
2.18 Insurance Policies
5.12 Subordinated Lenders' Waivers
Exhibit
- -------
A Employment Agreement
B Company's Counsel Opinions
C Post-Closing Escrow Agreement
D Subscriptions
E Registration Rights Agreements
<PAGE>
Exhibit 10.60
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the 11th day
of March, 2000 among Shirk, Inc., an Indiana corporation ("Shirk"), IBL, L.L.C.,
an Indiana limited liability company ("IBL") (Shirk and IBL, collectively,
"Seller"), and (only as to Section 11.9) William Shirk Poorman and William G.
Mays, each an individual residing in the State of Indiana, and Radio One, Inc.,
a Delaware corporation ("Buyer").
Recitals
--------
Seller owns and operates the following broadcast stations (collectively,
the "Stations") pursuant to certain licenses, permits and authorizations (the
"FCC Authorizations") issued by the Federal Communications Commission (the
"FCC"):
Radio Stations:
WHHH(FM), Indianapolis, Indiana
WBKS(FM), Greenwood, Indiana
WYJZ(FM), Lebanon, Indiana
Television Station:
W53AV, Indianapolis, Indiana (Channel 53)
Construction Permit for W65DW, Indianapolis, Indiana (Channel 65)
(W53AV and the Construction Permit for W65DW may sometimes be referred to
collectively herein as "Station W53AV/W65DW")
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
the Station Assets (defined below), subject to the terms and conditions of this
Agreement.
Agreement
---------
NOW, THEREFORE, taking the foregoing into account, and in consideration of
the mutual covenants and agreements set forth herein, the parties, intending to
be legally bound, hereby agree as follows:
ARTICLE 1: SALE AND PURCHASE
-----------------
1.1 Station Assets. Except for Excluded Assets as defined in Section 1.2,
--------------
and subject to and in reliance upon the representations, warranties and
agreements herein set forth, and to the terms and conditions herein contained,
Seller shall grant, convey, sell, assign, transfer and deliver to Buyer on the
Closing Date (as hereinafter defined) all right, title and interest of Seller in
all properties, assets, privileges, rights, interests and claims, real and
personal, tangible and intangible, of every type and description, wherever
located, including its business and goodwill used or held for use in the
business or operation of the Stations (collectively, the "Station Assets").
Without limiting the foregoing, the Station Assets shall include the following:
<PAGE>
(a) FCC Authorizations. All of the FCC Authorizations issued with
------------------
respect to the Stations, including without limitation all rights in and to the
Stations' call letters and any variations thereof, and all of those FCC
Authorizations listed and described on Schedule 1.1(a) attached hereto, and all
---------------
applications therefor, together with any renewals or extensions thereof and
additions thereto.
(b) Tangible Personal Property. All interests of Seller as of the
--------------------------
date of this Agreement in all equipment, electrical devices, antennas, cables,
vehicles, furniture, fixtures, towers, office materials and supplies, hardware,
tools, spare parts, and other tangible personal property of every kind and
description, used or held for use in connection with the business or operation
of the Stations, including without limitation those listed and described on
Schedule 1.1(b) attached hereto, and any additions and improvements thereto
- ---------------
between the date of this Agreement and the Closing Date (collectively, the
"Tangible Personal Property").
(c) Real Property. All interests of Seller as of the date of this
-------------
Agreement in all land, leaseholds, licenses, rights-of-way and other interests
of every kind and description in and to all of the real property and buildings
and other improvements thereon, used or held for use in the business or
operation of the Stations, including without limitation those listed and
described on Schedule 1.1(c) attached hereto, and any additions and improvements
---------------
thereto between the date of this Agreement and the Closing Date (collectively,
the "Real Property").
(d) Time Sales Agreements. Those obligations of Seller that exist on
---------------------
the Closing Date for the sale of air time on the Stations for cash that are:
(i) listed on Schedule 1.1(d) attached hereto; or (ii) cancelable without
---------------
penalty on no more than 15 days notice.
(e) Station Contracts. Those contracts and agreements used in
-----------------
connection with the business or operation of the Stations that are: (i) listed
on Schedule 1.1(e) attached hereto or (ii) entered into after the date hereof in
---------------
compliance with Section 4.1(b) (the "Station Contracts").
(f) Intangible Property. All interests of Seller as of the date of
-------------------
this Agreement in all trademarks, trade names, service marks, copyrights,
franchises, patents, jingles, slogans, logotypes and other intangible rights,
used or held for use in connection with the business or operation of the
Stations, including without limitation all right, title and interest in and to
the marks consisting of the Stations' call letters and any variations thereof,
and all of those listed and described on Schedule 1.1(f) attached hereto, and
---------------
those acquired by Seller between the date hereof and the Closing Date
(collectively and together with the Websites (defined below), the "Intangible
Property").
(g) Programming and Copyrights. All interests of Seller as of the
--------------------------
date of this Agreement in all programs and programming materials and elements of
whatever form or nature used or held for use in the business or operation of the
Stations, whether recorded on tape or any other substance or intended for live
performance, and whether completed or in production, and all related common-law
and statutory copyrights used or held for use in the
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<PAGE>
business or operation of the Stations, together with all such programs,
materials, elements and copyrights acquired by Seller in the business or
operation of the Stations between the date hereof and the Closing Date.
(h) Files and Records. All FCC logs and other records that relate to
-----------------
the operation of the Stations, and all files and other records of Seller
relating to the business or operation of the Stations and that do not relate
solely to Seller's internal corporate or limited liability affairs (other than
duplicate copies of such files ("Duplicate Records")), including without
limitation all schematics, blueprints, engineering data, customer lists,
reports, specifications, projections, statistics, promotional graphics, original
art work, mats, plates, negatives and other advertising, marketing or related
materials, and all other technical and financial information concerning the
Stations or the Station Assets.
(i) Claims. Any and all claims and rights against third parties if
------
and to the extent that they relate to the Station Assets, including, without
limitation, all rights under manufacturers' and vendors' warranties.
(j) Prepaid Items. All deposits, reserves and prepaid expenses
-------------
relating to the Stations and prepaid taxes relating to the Stations or the
Station Assets listed on Schedule 1.1(j).
(k) Goodwill. All of Seller's goodwill in, and going concern value
--------
of, the Stations.
(l) Accounts Receivable. All accounts receivable (including any notes
-------------------
receivable and other receivables) of Seller with respect to the Stations as of
the Closing Date.
(m) Internet Websites. Without limiting the foregoing, all interests
-----------------
of Seller in any internet domain leases and domain names relating to the
Stations, the unrestricted right to the use of HTML content located and publicly
accessible from those domain names, and the "visitor" email data base for those
sites (collectively, the "Websites").
1.1A Permitted Encumbrances. The Station Assets shall be sold and
----------------------
conveyed to Buyer free and clear of all mortgages, liens, deeds of trust,
security interests, pledges, restrictions, prior assignments, charges, claims,
defects in title and encumbrances of any kind or type whatsoever (collectively,
"Liens") except: (i) liens for real estate taxes not yet due and payable for
which Buyer receives a Purchase Price adjustment under Section 1.7; (ii) the
post-Closing obligations of Seller which Buyer will assume pursuant to Section
1.3 under the Station Contracts and (iii) solely with respect to Real Property,
the Ordinary Exceptions (defined below) (collectively in the case of (i), (ii)
and (iii) above the "Permitted Encumbrances"). "Ordinary Exceptions" means the
following, but only if and to the extent not at any time adversely affecting the
current and intended use of the properties or requiring the removal or
alteration of the presently existing structures, or appurtenant structures
thereon: (a) building and use restrictions of record; (b) vehicular or
pedestrian easements of record affecting the properties and being contiguous to
the front, rear or side lot lines; (c) water,
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<PAGE>
sewer, gas, electric, cable television, and telephone lines or easements of
record or as presently installed; (d) other imperfections of title which do not
materially detract from the value or impair the use of the property subject
thereto (collectively, the "Ordinary Exceptions").
1.2 Excluded Assets. There shall be excluded from the Station Assets and
---------------
retained by Seller to the extent in existence on the Closing Date, all (a) cash
and cash equivalents, (b) publicly traded securities, (c) insurance policies
(including all insurance proceeds of settlements and insurance claims made by
Seller on or before the Closing Date, except as provided in Section 10.7 (Risk
of Loss)), (d) any other contracts and agreements not included in the Station
Contracts, (e) all pension, profit sharing and all other employee benefit plans,
(f) all claims, rights, and interest in and to any refunds for federal, state or
local taxes to which Seller is entitled, (g) any Duplicate Records and (h) the
assets listed on Schedule 1.2 hereto (the "Excluded Assets").
------------
1.3 Liabilities. Buyer shall assume as of the Closing all liabilities
-----------
relating to the business and operations of the Stations after the Closing under
the Station Contracts (the "Assumed Obligations"). Except for the Assumed
Obligations, Buyer shall not assume or be liable for any obligation or liability
arising from the pre-Closing operation of the Stations (the "Retained
Liabilities"). The Retained Liabilities include, without limitation: (i) any
liability or obligation of Seller arising out of or relating to any contract,
lease agreement, or instrument (other than the Assumed Obligations); (ii) any
liability or obligation of Seller arising out of or relating to any employee
benefit plan or otherwise relating to employment (including, but not limited to,
any severance obligations due to employees who are terminated by Seller on or
before the Closing Date and all employment obligations shall be brought current
by Seller as of the Closing Date, including the payment of all accrued benefits
and severance pay and all bonuses, whether or not such benefits or bonuses are
due as of the Closing Date); (iii) any liability or obligation of Seller arising
out of or relating to any litigation, proceeding or claim (whether or not such
litigation, proceeding or claim is pending, threatened or asserted before, on or
after the Closing Date); (iv) any other liabilities, obligations, debts or
commitments of Seller whatsoever whether accrued now or hereafter, whether fixed
or contingent, whether known or unknown (except to the extent Seller is entitled
to indemnification therefor from Buyer pursuant to Section 9.2(b) hereof); or
(v) any claims asserted against the Stations or any of the Station Assets
relating to any event (whether act or omission) prior to the Closing Date,
including without limitation, the payment of all taxes. Seller retains and
shall hereafter pay, satisfy, discharge, perform and fulfill all Retained
Liabilities as they become due, without any charge or cost to Buyer.
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<PAGE>
1.4 Purchase Price.
--------------
(a) Amount. The purchase price to be paid for the Station Assets
------
shall be $40 million, as adjusted pursuant to Section 1.7 hereof (the "Purchase
Price").
(b) Allocation. The Purchase Price shall be allocated as follows:
----------
(i) $10 million, as adjusted pursuant to Section 1.7 (the
"Shirk Amount") to Shirk for the WHHH(FM) Station Assets; and
(ii) $30 million, as adjusted pursuant to Section 1.7 (the
"IBL Amount") to IBL for the other Station Assets, of which amount $27
million (as adjusted pursuant to Section 1.7) shall be allocated to
the WBKS(FM) and WYJZ(FM) Station Assets and $3 million (as adjusted)
shall be allocated to the Station W53AV/W65DW Station Assets.
(c) Payment. Upon Closing, the Purchase Price shall be paid as
-------
follows: (i) issuance of the Stock Consideration (defined below) to Shirk; and
(ii) payment of the IBL Amount in cash to IBL. Payment of cash shall be in
immediately available funds pursuant to written instructions of the Seller to be
delivered by Seller to Buyer at least three (3) business days prior to Closing.
(d) Definitions. As used herein, the following terms have the
-----------
following meanings:
"Cash Flow Amount" means the amount of reported earnings before
interest, taxes, depreciation and amortization of radio stations WHHH(FM),
WBKS(FM) and WYJZ(FM) plus the addbacks described on Exhibit A hereto, all for
---------
calendar year 1999.
"Closing Price" means $68 per share of Buyer's Class A common stock
(as appropriately adjusted to reflect any stock splits, stock dividends, or
reclassifications of Buyer's Class A common stock, including a merger,
consolidation or recapitalization).
"Stock Consideration" means a number of shares of Buyer's Class A
common stock equal to the Shirk Amount divided by the Closing Price.
"Subscription" means a written subscription delivered by Shirk to
Buyer in form and substance as set forth on Exhibit B attached hereto.
---------
(e) Audit.
-----
(i) Seller shall, at its option and expense, have an audit conducted
by an accounting firm of its choice of the Cash Flow Amount (the "Audit"),
provided that the Audit shall be completed by March 17, 2000. A copy of the
Audit, together with copies of all working papers and other materials used in
and generated by the Audit, and such other items
-5-
<PAGE>
relating to the Audit as Buyer shall reasonably request, shall be provided
promptly to Buyer. If the Audit results in a Cash Flow Amount that is at least
$1,700,000 and Buyer disagrees with such result, then Buyer may have an audit of
the Cash Flow Amount conducted by an accounting firm of its choice (the "Buyer
Audit") promptly after the results of the Audit are provided to Buyer, provided
that the Buyer Audit shall be ordered no later than ten business days after the
results of the Audit are provided to Buyer. In the event that the Buyer Audit
results in a Cash Flow Amount that is less than $1,700,000, Seller and Buyer
shall negotiate in good faith to attempt to agree on the Cash Flow Amount. If
such an agreement is not reached within five (5) days of the date of completion
of the Buyer Audit, then Buyer may terminate this Agreement upon written notice
to Seller without further liability hereunder and the Deposit together with
interest thereon shall be returned to Buyer.
(ii) Without limiting Buyer's other rights under this Agreement,
Seller shall timely make available to Buyer for review and/or audit all books
and records necessary to calculate the Cash Flow Amount.
1.5 Deposit. Within one business day of the date of this Agreement, Buyer
-------
shall deposit Two Million Dollars ($2,000,000) (the "Deposit") into escrow with
Wilmington Trust Company (the "Escrow Agent"), pursuant to the Escrow Agreement
of even date herewith among Buyer, Seller and the Escrow Agent. At Closing, the
Deposit together with all interest thereon shall be paid to Seller as a partial
payment of the Purchase Price. If this Agreement is terminated by Seller
pursuant to Section 10.1(h) or 10.1(i), then the Deposit, together with any
interest thereon, shall be disbursed to Seller as liquidated damages and such
disbursement shall be the sole and exclusive remedy of Seller. Seller hereby
waives all other legal and equitable rights and remedies it may otherwise have
as a result of any breach or default by Buyer under this Agreement. If this
Agreement is terminated without a Closing for any other reason, then the Deposit
and all interest thereon shall be returned to Buyer. Seller and Buyer shall
each instruct the Escrow Agent to disburse the Deposit and all interest thereon
to the party entitled thereto and shall not, by any act or omission, delay or
prevent any such disbursement.
1.6 Allocation and Appraisal. Concurrent with Closing, or, if later,
------------------------
within 90 days thereafter, Buyer and Seller will further allocate the Purchase
Price in accordance with the respective fair market values of the Station Assets
and the goodwill being purchased and sold in a manner consistent with Section
1.4(b) hereof and in accordance with the requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). Buyer may, at its
election and expense prior to Closing, engage a broadcast property appraisal
company to appraise the Station Assets. In the event Buyer does so, a copy
thereof shall be provided to Seller.
1.7 Adjustments.
-----------
(a) The operation of the Stations and the income and normal operating
expenses attributable thereto through the date preceding the Closing Date (the
"Adjustment Date") shall be for the account of Seller and thereafter for the
account of Buyer, and, if any income or expense is properly allocable or
credited, then it shall be allocated, charged or
-6-
<PAGE>
prorated accordingly. Expenses for goods or services received both before and
after the Adjustment Date, power and utilities charges, frequency discounts, and
rents and similar prepaid and deferred items shall be prorated between Seller
and Buyer as of the Adjustment Date in accordance with generally accepted
accounting principles. All special assessments and similar charges or liens
imposed against the Owned Real Property and Tangible Personal Property in
respect of any period of time through the Adjustment Date, whether payable in
installments or otherwise, shall be the responsibility of Seller, and amounts
payable with respect to such special assessments, charges or liens in respect of
any period of time after the Adjustment Date shall be the responsibility of
Buyer, and such charges shall be adjusted accordingly. One-half of the total
amount owing as of the Adjustment Date pursuant to all leases of equipment or
other personal property included in the Station Contracts (including without
limitation for remaining rental payments due, early termination fees, amounts
owing upon termination for purchase of equipment or other personal property
leased or other costs incurred in connection with purchasing such leased
equipment or other personal property free and clear of Liens) shall be the
responsibility of Seller. To the extent that any of the foregoing prorations and
adjustments cannot be determined as of the Closing Date, Buyer and Seller shall
conduct a final accounting and make any further payments, as required on a date
mutually agreed upon, within ninety (90) days after the Closing.
(b) With respect to trade, barter or similar agreements for the sale
of time for goods or services ("Barter Agreements") assumed by Buyer pursuant to
Section 1.1(e), if any, if there exists on the date of assumption an aggregate
negative barter balance (i.e., the amount by which the value of air time (based
upon the Stations' then prevailing rates) to be provided exceeds the fair market
value of goods or services to be received therefor), then, to the extent such
excess is greater than $50,000 in the aggregate for all Stations, it will be
treated as prepaid time sales and adjusted for as a proration in Buyer's favor.
If, however, there exists on such date an aggregate positive barter balance
(i.e., the amount by which the value of air time (based upon the Stations' then
prevailing rates) to be provided is less than the fair market value of goods or
services to be received therefor) with respect to Barter Agreements assumed by
Buyer, there shall be no proration in Seller's favor.
(c) Anything herein to the contrary notwithstanding, all sales
commissions with respect to amounts collected by Seller with respect to the
stations on or prior to the Adjustment Date shall be the responsibility of
Seller and all sales commissions with respect to amounts collected by Buyer
after the Adjustment Date shall be the responsibility of Buyer.
1.8 Closing. The consummation of the sale and purchase of the Station
-------
Assets provided for in this Agreement (the "Closing") shall take place at a date
and time mutually agreed upon by Buyer and Seller after the date of the FCC
Consent pursuant to the FCC's initial order, but in no event later than the
earlier of (a) nine months after the date the FCC gives public notice of the
filing of the FCC Application (defined below) (the "Final Closing Date"), (b)
ten business days after the date the FCC Consent becomes Final, or (c) at
Buyer's election, upon ten days notice after the date the FCC Consent is granted
by initial order, in any case subject to the satisfaction or waiver of the last
of the conditions required to be satisfied or waived pursuant to Articles 6 or 7
below (other than those requiring a delivery of a certificate
-7-
<PAGE>
or other document, or the taking of other action, at the Closing).
Alternatively, the Closing may take place at such other place, time or date as
the parties may mutually agree upon in writing. The date on which the Closing is
to occur is referred to herein as the "Closing Date."
1.9 FCC Application.
---------------
(a) As soon as possible (but in no event later than ten business days
after the date of this Agreement) Seller and Buyer shall file an application
with the FCC (the "FCC Application") requesting the FCC's written consent to the
assignment of the FCC Authorizations from Seller to Buyer or, at Buyer's option,
to Buyer's wholly-owned subsidiary Radio One Licenses, Inc., pursuant to this
Agreement. Seller and Buyer shall diligently take all steps that are necessary,
proper or desirable to expedite the prosecution of the FCC Application to a
favorable conclusion. Each party shall promptly provide the other with a copy
of any pleading, order or other document served on it relating to the FCC
Application, shall furnish all information required by the FCC, and shall be
represented at all meetings or hearings scheduled to consider the FCC
Application.
(b) The FCC's written consent to the FCC Application is referred to
herein as the "FCC Consent." For purposes of this Agreement, the term "Final"
shall mean that action shall have been taken by the FCC (including action duly
taken by the FCC's staff, pursuant to delegated authority) which shall not have
been reversed, stayed, enjoined, set aside, annulled or suspended; with respect
to which no timely request for stay, petition for rehearing, appeal or
certiorari or sua sponte action of the FCC with comparable effect shall be
--- ------
pending; and as to which the time for filing any such request, petition, appeal,
certiorari or for the taking of any such sua sponte action by the FCC shall have
--- ------
expired or otherwise terminated.
1.10 Hart-Scott-Rodino. As soon as possible (but in no event later than
-----------------
ten business days after the date of this Agreement), Buyer and Seller shall
prepare and file with the Federal Trade Commission and the United States
Department of Justice any documents that may be necessary to comply with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") (including
a request for early termination of the waiting period thereunder) and shall
thereafter promptly furnish all materials thereafter requested by such agencies.
1.11 Characterization of Transactions for Tax Purposes. The transactions
-------------------------------------------------
contemplated hereby will be reported for tax purposes as (i) a sale of assets,
in the case of the acquisition of assets from IBL, and as (ii) a reorganization
described in Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as
amended, in the case of the acquisition of assets from Shirk.
-8-
<PAGE>
ARTICLE 2: REPRESENTATIONS AND WARRANTIES OF SELLER
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To induce Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to Buyer as
follows:
2.1 Organization. Seller is duly organized and validly existing under the
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laws of the jurisdiction of its organization (as first set forth above). Seller
has the requisite power and authority to own and operate the Stations, to carry
on the Stations' business as now conducted by it, and to execute and deliver
this Agreement and all of the other agreements and instruments to be executed
and delivered Seller pursuant hereto (collectively, the "Seller Ancillary
Agreements"), to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.
2.2 Authority. The execution, delivery and performance of this Agreement
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and the Seller Ancillary Agreements by Seller have been duly authorized and
approved by all necessary action of Seller and do not require any further
authorization or consent of Seller. This Agreement is, and each Seller
Ancillary Agreement when executed and delivered by Seller and the other parties
thereto will be, a legal, valid and binding agreement of Seller enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
2.3 No Conflicts. Except as set forth in Schedule 2.3, neither the
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execution and delivery by Seller of this Agreement and the Seller Ancillary
Agreements or the consummation by Seller of any of the transactions contemplated
hereby or thereby nor compliance by Seller with or fulfillment by Seller of the
terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Lien upon any of the Station
Assets under, the charter or other organizational documents of Seller, or, to
the knowledge of Seller, any contract, lease, agreement or instrument, or any
governmental license, permit or authorization, or any judgment, order, award or
decree to which Seller is a party or any of the Station Assets is subject or by
which Seller is bound, or any statute, other law or regulatory provision
affecting Seller or the Station Assets; or
(ii) require the approval, consent, authorization or act of, or the
making by Seller of any declaration, filing or registration with, any third
party or any foreign, federal, state or local court, governmental or regulatory
authority or body, except for such of the foregoing as are necessary pursuant to
the HSR Act and the Communications Act (defined below).
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2.4 Financial Statements.
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(a) Seller has furnished Buyer with audited financial statements used
by Seller in the preparation of its federal and state tax returns and copies of
its filed federal and state tax returns for fiscal years 1996, 1997 and 1998 as
well as unaudited monthly financial statements for the period from January 1,
1999 through December 31, 1999. Pursuant to Section 4.2, Seller will, each
month, furnish to Buyer unaudited monthly financial statements for the preceding
calendar month as well as financial statements for the year to date period. In
addition, Seller will deliver financial statements for the comparable month and
year to date period for the previous calendar year. So, for example, on January
30, Seller would deliver financial statements for the following periods: (i)
December, 1999; (ii) January 1, 1999 through December 31, 1999; (iii) December,
1998; and (iv) January 1, 1998 through December 31, 1998. The financial
statements described in the preceding sentences and in Section 4.2 shall be
collectively referred to as "Financial Statements". Except in the case of
interim and monthly financial statements for normal year end adjustments, the
Financial Statements: (x) 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; (y) fairly present Seller's
financial position, income, expenses, assets, liabilities, and the results of
operations of the Stations as of the dates and for the periods indicated; and
(z) properly and fairly disclose and allocate all transactions by or between
Seller and any affiliate. There has been no material adverse change in the
business, assets, properties or condition (financial or otherwise) of the
Stations since the preparation of the most recent annual or monthly Financial
Statement. To the knowledge of Seller, no event has occurred that would make
any Financial Statement misleading in any material respect.
(b) To the knowledge of Seller, except as reflected in the balance
sheets included in the Financial Statements dated December 31, 1999, 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 this most recent
balance sheet, there exist no liabilities or obligations of Seller, contingent
or absolute, matured or unmatured, known or unknown. Since the December 31,
1999 balance sheet: (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; (v) except as set forth in Schedule 2.4(b), Seller has not
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increased the salaries or any other compensation of any of its employees or
agreed to the payment of any substantial bonuses except in the ordinary course
of business consistent with past practices; and (vi) Seller has not entered into
any contract, agreement or transaction with any affiliate. The monthly balance
sheets: (x) have been prepared on a consistent basis throughout the periods
involved and as compared with prior periods; and (y) fairly present Seller's
financial position, income,
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expenses, assets, liabilities, 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.
2.5 Taxes. Seller has, in respect of the Stations' business, filed all
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foreign, federal, state, county and local income, excise, property, sales, use,
franchise and other tax returns and reports which are required to have been
filed by it under applicable law and has paid all taxes which have become due
pursuant to such returns or pursuant to any assessments which have become
payable. To the knowledge of Seller, all monies required to be withheld by
Seller from employees of the Stations for income taxes, social security and
other payroll taxes have been collected or withheld, and paid to the appropriate
governmental authorities.
2.6 Station Assets. The Station Assets constitute all the assets used or
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held for use in the business or operation of the Stations. Except as set forth
in Schedule 2.6, Seller has good and marketable title to the Station Assets,
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free and clear of Liens, except for Permitted Encumbrances. Upon delivery to
Buyer at Closing of the documents contemplated by Section 8.1(a), Seller will
thereby transfer to Buyer good and marketable title to the Station Assets, free
and clear of Liens, except for Permitted Encumbrances.
2.7 FCC Authorizations.
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(a) Seller is the holder of the FCC Authorizations listed and
described on Schedule 1.1(a). Such FCC Authorizations constitute all of the
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licenses and authorizations required under the Communications Act of 1934, as
amended (the "Communications Act"), or the rules, regulations and policies of
the FCC for, and used in the operation of, the Stations. The FCC Authorizations
are in full force and effect and have not been revoked, suspended, canceled,
rescinded or terminated and have not expired. Except as set forth in Schedule
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2.7(a), there is not pending or, to the knowledge of Seller, threatened any
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action by or before the FCC to revoke, suspend, cancel, rescind or modify any of
the FCC Authorizations (other than proceedings to amend FCC rules of general
applicability), and there is not now issued or outstanding or pending or, to the
knowledge of Seller, threatened, by or before the FCC, any order to show cause,
notice of violation, notice of apparent liability, or notice of forfeiture or
complaint against Seller or the Stations. The Stations are operating in
material compliance with the FCC Authorizations, the Communications Act, and the
rules, regulations and policies of the FCC.
(b) All reports and filings required to be filed with, and all
regulatory fees required to be paid to, the FCC by Seller with respect to the
Stations have been timely filed and paid. All such reports and filings are
accurate and complete in all material respects. Seller maintains public files
for the Stations as required by FCC rules. With respect to FCC licenses,
permits and authorizations, Seller is operating only those facilities for which
an appropriate FCC Authorization has been obtained and is in effect, and Seller
is meeting the conditions of each such FCC Authorization in all material
respects.
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(c) Seller is aware of no facts indicating that Seller is not in
material compliance with all requirements of the FCC, the Communications Act, or
any other applicable federal, state and local statutes, regulations and
ordinances. To Seller's knowledge, there are no facts, and Seller has received
no notice or communication, formal or informal, indicating that the FCC is
considering revoking, suspending, canceling, rescinding or terminating any FCC
Authorization.
(d) Except as set forth in Schedule 2.7(d), the operation of the
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Stations does not cause or result in exposure of workers or the general public
to levels of radio frequency radiation in excess of the "Radio Frequency
Protection Guides" recommended in "American National Standard Safety Levels with
Respect to Human Exposure to Radio Frequency Electromagnetic Fields 3 kHz to 300
GHz" (ANSI/IEEE C95.1-1992) issued by the American National Standards Institute,
adopted by the FCC effective October 15, 1997, and described in OET Bulletin No.
65. Renewal of the FCC Authorizations would not constitute a "major action"
within the meaning of Section 1.1301, et seq., of the FCC's rules.
-- ---
(e) Seller has no cable carriage agreements for Station W53AV/W65DW
with cable systems. To the extent must carry rights are available to Station
W53AV/W65DW, Seller has made valid must carry elections or has valid
retransmission consent agreements with each cable system located in the market
in which such Station operates (and all such elections, agreements and systems
are listed on Schedule 2.7(e)), and complete and correct copies of such
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elections and agreements have been provided to Buyer.
(f) Seller has timely made all filings necessary to obtain, protect
and preserve the rights of Station W53AV/W65DW arising out of the FCC's
transition to digital television ("DTV"), including without limitation any
filings necessary for Station W53AV/W65DW to obtain a Class A television
license. Except as listed on Schedule 2.7(f), Station W53AV/W65DW is not
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adversely affected by other DTV facilities, and Seller has not filed at the FCC
a displacement application.
(g) Each communications tower structure used in the operation of the
Stations (whether owned or leased) has been registered under the rules and
regulations of the FCC, and the Federal Aviation Administration has issued a
determination of no hazard to air navigation with respect to each such tower for
which such a determination is required.
2.8 Real Property. Schedule 1.1(c) contains a description of all real
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property used, held for use, or anticipated to be used or held for use, in the
business or operation of the Stations. Seller has, or has the right to acquire,
good and marketable fee simple title to all owned Real Property ("Owned Real
Property"), including all real property described on Schedule 1.1(c) as owned,
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and including all buildings and other improvements thereon. Schedule 1.1(c)
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lists each lease or similar agreement under which Seller is lessee or licensee
of, or holds, uses or operates, or anticipates that it will hold, use or
operate, any real property in the business or operation of the Stations (the
"Real Property Leases"). The Owned Real Property includes, and the Real
Property Leases provide, sufficient access to the Stations' facilities without
the need to obtain any other access rights. Neither the whole nor any part of
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any Real Property is subject to any pending or, to the knowledge of Seller,
threatened suit for condemnation or other taking by any public authority. All
buildings and other improvements included in the Real Property are in good
operating condition and repair (ordinary wear and tear excepted), and free from
material defect or damage, and, to Seller's knowledge, comply with applicable
zoning, health and safety laws and codes. Seller has delivered to Buyer copies
of all title insurance policies, if any, in its possession that are applicable
to the Real Property. Schedule 1.1(c) contains a description of all Real
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Property anticipated to be used in connection with the Improvement Application
and the WYJZ CP (each defined below), together with a summary of Seller's rights
in and to such Real Property.
2.9 Personal Property. Schedule 1.1(b) contains a list of all machinery,
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equipment, vehicles, furniture and other tangible personal property owned by
Seller and used or held for use in the business or operation of the Stations.
Each material item of Tangible Personal Property is in good operating condition
and repair (ordinary wear and tear excepted), is free from material defect or
damage, is functioning in the manner and purposes for which it was intended, and
has been maintained in accordance with industry standards.
2.10 Contracts. Each of the Station Contracts (including without
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limitation each of the Real Property Leases) constitutes a valid and binding
obligation of Seller and, to the knowledge of Seller, the other parties thereto
(subject to bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally) and is
in full force and effect and (except as set forth in Schedule 2.3 and except for
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those Station Contracts which by their terms will expire prior to the Closing
Date or will be otherwise terminated prior to the Closing Date in accordance
with the provisions hereof) may be transferred to the Buyer pursuant to this
Agreement, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. Seller
has performed its obligations under each of the Station Contracts, and Seller is
not in, or alleged to be in, breach or default under any of the Station
Contracts, and, to the knowledge of Seller, no other party to any of the Station
Contracts has breached or defaulted thereunder, and to the knowledge of Seller,
no event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by Seller or, to the knowledge of Seller, by any such other party.
Complete and correct copies of each of the Station Contracts, together with all
amendments thereto, have been delivered to Buyer by Seller. Except as set forth
in Schedule 2.10, none of the Station Contracts (including without limitation
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the Real Property Leases and Time Sales Agreements) is between Seller and an
affiliate. Any Real Property Leases for which renewal rights, options or
elections exist have been duly and validly renewed as set forth in such leases
and are currently in effect for the renewal terms set forth therein, and no
notice of termination or non-renewal has been received with respect to such
leases.
2.11 Intangible Property. To the knowledge of Seller, Seller has all
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right, title and interest in and to all Intangible Property necessary to the
conduct of the business and operations of the Stations as presently operated.
Schedule 1.1(f) contains a description of all material Intangible Property.
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Seller has received no notice of any claim that any Intangible
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Property or the use thereof conflicts with, or infringes upon, any rights of any
third party (and there is no basis for any such claim of conflict). The Stations
have the sole and exclusive right, or a license, to use the Intangible Property.
To the knowledge of the Seller, no service provided by the Stations or any
programming or other material used, broadcast or disseminated by the Stations
infringes upon any copyright, patent or trademark of any other party.
2.12 Employees. Schedule 2.12 contains a list of all Stations' employees
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and their position and rate of compensation, and a list of all Seller's employee
benefit plans. Seller has delivered to Buyer copies of all Seller's handbooks,
policies and procedures relating to Stations' employees, if any. Seller has
received no notice that it is not in compliance with, and Seller has to its
knowledge complied with, all labor and employment laws, rules and regulations
applicable to the Stations' business, including without limitation those which
relate to prices, wages, hours, discrimination in employment and collective
bargaining. Seller is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. There is no (i)
unfair labor practice charge or complaint against Seller in respect of the
Stations' business pending or to the knowledge of Seller, threatened before the
National Labor Relations Board, any state labor relations board or any court or
tribunal, or (ii) strike, dispute, request for representation, slowdown or
stoppage pending, or to the knowledge of Seller, threatened in respect of the
Stations' business. Buyer shall have the right, but not the obligation, to
offer employment to any of the Stations' employees concurrent with Closing.
2.13 Compliance with Law. To the knowledge of Seller, Seller has complied
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with all laws, regulations, rules, writs, injunctions, ordinances, franchises,
decrees or orders of any court or of any foreign, federal, state, municipal or
other governmental authority which are applicable to the Station Assets, the
Stations or the Stations' business. There is no action, suit or proceeding
pending or, to the knowledge of Seller, threatened against Seller in respect of
the Station Assets, the Stations or the Stations' business. To the knowledge of
Seller, there are no claims or investigations pending or threatened against
Seller in respect of the Station Assets, the Stations or the Stations' business.
There is no action, suit or proceeding pending or, to the knowledge of Seller,
threatened against Seller which questions the legality or propriety of the
transactions contemplated by this Agreement.
2.14 Insurance. Seller maintains insurance policies relating to the
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Stations bearing the policy numbers, for the terms, with the companies, in the
amounts, providing the general coverage set forth on Schedule 2.14 hereto. All
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of such policies are in full force and effect and Seller is not in default
thereunder. Seller has not received notice from any issuer of any such policies
of its intention to cancel, terminate or refuse to renew any policy issued by
it.
2.15 Environmental. Seller has not and, to the knowledge of Seller, no
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other party has, generated, stored, transported or released (each a "Release")
on, in, from or to the assets or properties of the Stations any hazardous or
toxic substance or waste (including without limitation petroleum products) or
other material regulated under any applicable environmental, health or safety
law (each a "Contaminant"). Neither the Stations nor any of the Station Assets
is subject to any order from or agreement with any governmental authority or
private party respecting (i) any environmental, health or safety law, (ii) any
environmental clean-up,
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removal, prevention or other remedial action or (iii) any obligation or
liability arising from the Release of a Contaminant. Neither the Stations nor
any of the assets or properties of the Stations includes any underground storage
tanks or surface impoundments or any polychlorinated biphenyls. To the knowledge
of Seller, neither the Stations nor any of the assets or properties of the
Stations includes any asbestos containing material. Seller has not received in
respect of the Stations or any assets or properties of the Stations any notice
or claim to the effect that it is or may be liable as a result of the Release of
a Contaminant. To the knowledge of Seller, neither the Stations nor any of their
assets or properties are the subject of any investigation by any governmental
authority with respect to a Release of a Contaminant. Seller has delivered to
Buyer copies of all environmental surveys, analyses and assessments in its
possession relating to any of the Real Property, if any.
2.16 No Finder. No broker, finder or other person is entitled to a
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commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Seller or any party acting on Seller's behalf.
2.17 Year 2000 Compliance. To the knowledge of Seller, all of the Station
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Assets (including all systems, machinery, information technology, computer
software and hardware, and other data sensitive technology) are operating
without error or interruption related to date data (meaning data or input that
includes an indication of or reference to a date) and without other problems
commonly referred to as "year 2000 problems."
2.18 Disclosure. With respect to Seller, the Stations and the Station
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Assets, to the knowledge of Seller, this Agreement and the Seller Ancillary
Agreements do not and will not contain any untrue statement of material fact or
omit to state a material fact required to made in order to make the statements
herein and therein not misleading in light of the circumstances in which they
are made.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF BUYER
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To induce Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:
3.1 Organization. Buyer is duly organized, validly existing and in good
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standing under the laws of the jurisdiction of its organization (first set forth
above). Buyer has the requisite power and authority to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by Buyer (collectively, the "Buyer Ancillary Agreements"), to
consummate the transactions contemplated hereby and thereby and to comply with
the terms, conditions and provisions hereof and thereof.
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3.2 Authority.
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(a) The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
all necessary action of Buyer and do not require any further authorization or
consent of Buyer. This Agreement is, and each Buyer Ancillary Agreement when
executed and delivered by Buyer and the other parties thereto will be, a legal,
valid and binding agreement of Buyer enforceable in accordance with its
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) Upon issuance of the Stock Consideration at Closing, the shares
comprising the Stock Consideration will be duly authorized, validly issued and
fully paid and non-assessable.
3.3 No Conflicts. Neither the execution and delivery by Buyer of this
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Agreement and the Buyer Ancillary Agreements or the consummation by Buyer of any
of the transactions contemplated hereby or thereby nor compliance by Buyer with
or fulfillment by Buyer of the terms, conditions and provisions hereof or
thereof will: (i) conflict with the charter or other organizational documents
of Buyer or any law, regulation, judgment, order or decree to which Buyer is
subject; (ii) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any third party
or any foreign, federal, state or local court, governmental or regulatory
authority or body, except for such of the foregoing as are necessary pursuant to
the HSR Act and the Communications Act; or (iii) cause a breach or default under
any agreement of Buyer that would have a material adverse affect on Buyer's
ability to consummate this Agreement.
3.4 No Finder. No broker, finder or other person is entitled to a
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commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Buyer or any party acting on Buyer's behalf, except Media Services
Group, whose fee shall be paid by Buyer.
3.5 Qualification. Buyer is qualified under the Communications Act and
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the rules, regulations and policies of the FCC, including those with respect to
multiple ownership/duopoly, to hold the FCC Authorizations and to own and
operate the Stations. To the knowledge of Buyer, there are no facts which would
disqualify Buyer as an assignee of the FCC Authorizations or as the owner and
operator of the Station Assets. No waiver of any FCC rule or policy in effect
as of the date hereof is required for the grant of the application for the
assignment of the FCC authorizations to Buyer.
3.6 Availability of Funds. Buyer has available as of the date hereof
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sufficient funds to enable it to pay the Deposit as called for herein and it
will have available on the Closing Date sufficient funds to enable it to
consummate the transactions contemplated herein.
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3.7 Litigation. There is no claim, litigation, proceeding or
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investigation pending or, to the knowledge of Buyer, threatened, that could
reasonably be expected to materially adversely affect Buyer's ability to perform
its obligations pursuant to this Agreement.
ARTICLE 4: COVENANTS OF SELLER
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Seller covenants and agrees that from the date hereof until the completion
of the Closing:
4.1 Operation of the Business.
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(a) Seller shall: (i) continue to carry on the business of the
Stations and keep their books and accounts, records and files in the usual and
ordinary manner in which the business has been conducted in the past; (ii)
operate the Stations in accordance with the terms of the FCC Authorizations and
in material compliance with the Communications Act, FCC rules, regulations and
policies, and all other applicable laws, rules and regulations, and maintain the
FCC Authorizations in full force and effect and timely file and prosecute any
necessary applications for renewal of the FCC Authorizations; (iii) use
commercially reasonable efforts to (1) preserve the business organization of the
Stations intact, (2) retain substantially as at present the Stations' employees,
consultants and agents, and (3) preserve the goodwill of the Stations'
suppliers, advertisers, customers and others having business relations with it;
(iv) keep all Tangible Personal Property and Real Property in good operating
condition (ordinary wear and tear excepted) and repair and maintain adequate and
usual supplies of inventory, office supplies, spare parts and other materials as
have been customarily maintained in the past; (v) preserve intact the Station
Assets and maintain in effect its current insurance policies with respect to the
Stations and the Station Assets; and (vi) collect the Stations' accounts
receivable only in the ordinary course of business consistent with past
practice. Nothing contained in this Agreement shall give Buyer any right to
control the programming, operations or any other matter relating to the Stations
prior to the Closing, and Seller shall have complete control of the programming,
operations and all other matters relating to the Station up to the Closing.
(b) Notwithstanding Section 4.1(a), Seller shall not, without the
prior written consent of Buyer: (i) sell, lease, transfer, or agree to sell,
lease or transfer, any Station Assets, except for non-material sales or leases
in the ordinary course of business of items which are being replaced by assets
of comparable or superior kind, condition and value; (ii) grant any raises to
employees of the Stations or pay any substantial bonuses, except in the ordinary
course of business and consistent with past practices, or enter into any
contract of employment with any employee or employees of the Stations; (iii)
amend or terminate any existing time sales contracts with respect to the
Stations except in the ordinary course of business; (iv) amend, terminate or, by
any act or omission, breach or default on any of the Station Contracts, or enter
into any contract, lease or agreement with respect to the Stations except those
entered into in the ordinary course of business and with parties other than
affiliates of Seller which have an obligation of no more than $5,000
individually and $50,000 in the aggregate; (v) by any act or omission cause any
representation or warranty set forth in
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Article 2 to become untrue or inaccurate; or (vi) settle, discount or otherwise
reduce the amount receivable in respect of any of the Stations' accounts
receivable, except in the ordinary course of business and consistent with past
practice.
(c) Without limiting the foregoing:
(i) Seller shall continue to diligently prosecute, and at the Closing
shall assign to the Buyer its rights to prosecute, its pending FCC application
to improve the facilities of radio station WBKS(FM) (FCC File No. BPH-980904IE)
(the "Improvement Application"), and shall take no action to dismiss, and shall
vigorously oppose the dismissal of, such application.
(ii) for all FCC applications with respect to the Stations, including
the Improvement Application, Seller shall timely respond to all FCC inquiries,
timely provide Buyer copies of all documents prepared or received by it that
relate thereto, otherwise keep Buyer informed of the status thereof, and consult
with Buyer in advance regarding Seller's actions in connection therewith.
(iii) Seller shall timely make all filings necessary to preserve the
rights of Station W53AV/W65DW arising out of the FCC's transition to DTV,
including without limitation any filings necessary for Station W53AV/W65DW to
obtain a Class A television license. If Station W53AV/W65DW will be adversely
affected by other DTV facilities, prior to Closing Seller shall file and
prosecute at the FCC a displacement application requesting a new channel at
maximum allowable power.
(iv) Seller shall cooperate with Buyer with respect to each of the
foregoing matters in this Section 4.1(c), provide Buyer with copies of all
material items of correspondence relating thereto, and provide Buyer with copies
of all documents, reports, analyses or other items relating thereto requested by
Buyer.
4.2 Reports. Seller shall furnish to Buyer by the 30th day after the end
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of each calendar month for such calendar month: (a) monthly Financial Statements
for Seller, and (b) such other reports as Buyer may reasonably request relating
to Seller (except that the Financial Statements for January, 2000 shall be
furnished to Buyer by March 17, 2000). Except for normal year end adjustments,
each of the Financial Statements delivered pursuant to this Section shall have
been prepared in accordance with generally accepted accounting principles
consistently applied during the periods covered (except as disclosed therein).
4.3 Access. Between the date hereof and the Closing Date, Seller shall
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give Buyer and the officers, employees, accountants, counsel, agents,
consultants and representatives of Buyer reasonable access to all Station
Assets, employees of Seller and the Stations, accounts, books, records, deeds,
title papers, insurance policies, licenses, agreements, contracts, commitments,
records and files of every character, equipment, machinery, fixtures, furniture,
vehicles, notes and accounts payable and receivable of Seller relating to the
Stations, and any other information concerning the affairs of the Stations as
Buyer may reasonably request. It is
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expressly understood that, pursuant to this Section, Buyer, at its expense,
shall be entitled to conduct such inspections and reviews of the Stations, the
Station Assets, and financial records relating to the Stations 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 hereunder or be deemed
to constitute a waiver of any of those representations, warranties and
covenants. Immediately after the date hereof, Seller shall also cooperate, and
shall cause its accountants to cooperate, with Buyer to conduct an audit by
Buyer's independent accountants at Buyer's expense of the Financial Statements
for the Stations for the years 1996, 1997, 1998 and 1999, and Buyer may disclose
such financial statements provided or created hereunder in reports filed by
Buyer with any governmental or regulatory authority, including the Securities
and Exchange Commission. Buyer shall provide copies of any such financial
statements in advance of disclosure and, in the event Seller shall reasonably
object to the contents of such disclosure of its financial statements, Seller
and Buyer shall negotiate in good faith to attempt to agree on the form of such
disclosure, provided that Buyer shall in all events have the right to proceed
with such disclosure in the event an agreement is not reached. Seller
acknowledges that in responding and negotiating as set forth in the previous
sentence, time is of the essence.
4.4 Consents. Seller shall use commercially reasonable efforts to obtain
--------
all of the consents noted on Schedule 2.3 hereto. If Seller does not obtain a
------------
consent required to assign a Station Contract hereunder, Buyer shall not be
required to assume such Station Contract. Marked with an asterisk on Schedule
--------
2.3 are those consents the receipt of which is a condition precedent to Buyer's
- ---
obligation to close under this Agreement (the "Required Consents"). Seller
shall obtain the Required Consents prior to Closing.
4.5 Estoppel Certificates; Title Insurance; Liens. Seller, at Seller's
---------------------------------------------
expense, will obtain and deliver to Buyer: (i) written estoppel certificates
(the "Estoppel Certificates") duly executed by the lessors under the Real
Property Leases, in form and substance satisfactory to Buyer; (ii) commitments
from a title company acceptable to Buyer to issue to Buyer at standard rates
ALTA extended coverage owner's and leasehold title insurance policies with
respect to the owned Real Property and with respect to those parcels of leased
Real Property marked with a dagger (+) on Schedule 1.1(c) with no exceptions
---------------
other than the Liens listed on Schedule 2.6 (all of which shall be discharged
and released by Seller at or before Closing) and Permitted Encumbrances (the
"Title Commitments"); and (iii) an ALTA survey of each parcel of Owned Real
Property satisfactory to cause the removal of any standard exceptions or
conditions to the Title Commitments (the "Surveys"). The Estoppel Certificates
and Surveys shall be dated within fifteen days prior to Closing. The Title
Commitments shall be delivered within thirty days of the date of this Agreement
and shall be updated within fifteen days prior to Closing.
4.6 Environmental. Following the execution of this Agreement, at Buyer's
-------------
expense, Buyer may engage engineering or environmental assessment firms to
perform one or more Phase I, Phase II or other environmental assessments for any
or all of the Real Property (collectively, the "Environmental Assessments").
Seller shall cooperate, and shall use reasonable efforts to ensure that any
lessor or other person in control of any of the Real
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<PAGE>
Property shall also cooperate, with Buyer and such firms in performing the
Environmental Assessments. The Environmental Assessments shall initially be
ordered promptly, but not later than thirty (30) days after the date hereof, it
being understood that, so long as the initial Environmental Assessment for a
piece of property has been ordered within such time, any follow-up Environmental
Assessments need not be ordered within such time. Receipt of the Environmental
Assessments shall not relieve Seller of any obligation with respect to any
representation, warranty or covenant of Seller herein or waive any condition to
Buyer's obligations herein. If any Environmental Assessment, including any
follow-up Environmental Assessment, reveals the existence of Environmental
Noncompliance (defined as any condition that renders Section 2.15 hereof untrue,
misleading or inaccurate in any material respect) that can be remedied by the
expenditure of One Million Dollars or less, Seller shall remedy the
Environmental Noncompliance at its expense prior to the Closing and the Closing
will otherwise take place in the manner and at the time provided for herein. In
the event that the cost of remedying the Environmental Noncompliance will exceed
One Million Dollars, Buyer may elect to: (a) proceed with the Closing with a
Purchase Price reduction in the amount of One Million Dollars, any additional
cost of remedying the Environmental Noncompliance to be contributed by Buyer,
and Seller shall have no further liability or obligation to Buyer with respect
thereto, or (b) terminate this Agreement. Nothing in this Section or otherwise
in this Agreement shall be construed as creating any third-party beneficiaries
or any other rights in parties other than the parties hereto.
ARTICLE 5: COVENANTS OF BUYER AND SELLER
-----------------------------
Buyer and Seller covenant and agree that from the date hereof until the
completion of the Closing:
5.1 Representations and Warranties. Each party shall give the other
------------------------------
detailed written notice promptly upon learning of the occurrence of any event
that would cause or constitute a breach (or would have caused a breach had such
event occurred or been known to it prior to the date hereof) of any of its
representations and warranties contained in this Agreement.
5.2 Notice of Proceedings. Each party shall promptly notify the other in
---------------------
writing upon: (a) becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder; or (b) receiving any
notice from any governmental department, court, agency or commission of its
intention (i) to institute an investigation into, or institute a suit or
proceeding to restrain or enjoin, the consummation of this Agreement or such
transactions, or (ii) to nullify or render ineffective this Agreement or such
transactions if consummated.
5.3 WYJZ Tower Construction. Seller shall proceed diligently with
-----------------------
construction of the tower site identified in the Construction Permit issued with
respect to WYJZ-FM (FCC File No. BPH-981113IH) (the "WYJZ CP") consistent with
the budget provided by Seller to Buyer. The cost of such construction shall be
shared equally by Buyer and Seller, provided that Buyer's obligation shall not
exceed $75,000 without its prior written consent.
ARTICLE 6: CONDITIONS TO THE OBLIGATIONS OF SELLER
---------------------------------------
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<PAGE>
The obligations of Seller under this Agreement are, at its option, subject
to the fulfillment of the following conditions prior to or on the Closing Date:
6.1 Representations, Warranties and Covenants. Each of the
-----------------------------------------
representations and warranties of Buyer contained in this Agreement shall be
deemed to be made again on and as of the Closing Date and shall then be true and
correct in all material respects, except to the extent changes are permitted or
contemplated pursuant to this Agreement. Buyer shall have performed and
complied in all material respects with each and every covenant and agreement
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date. Buyer shall have furnished Seller with a certificate, dated
the Closing Date and duly executed by an officer of Buyer authorized on behalf
of Buyer to give such a certificate, to the effect that the conditions set forth
in this Section 6.1 have been satisfied.
6.2 Proceedings. Neither Seller nor Buyer shall be subject to any
-----------
restraining order or injunction restraining or prohibiting the consummation of
the transactions contemplated hereby. In the event such a restraining order or
injunction is in effect, this Agreement may not be abandoned by Seller pursuant
to this Section 6.2 prior to the Final Closing Date, but the Closing shall be
delayed during such period. This Agreement may be abandoned after the Final
Closing Date if such restraining order or injunction remains in effect.
6.3 FCC Consent. The FCC Consent shall have been granted by the FCC by
-----------
initial order.
6.4 Hart-Scott-Rodino. If applicable, the waiting period under the HSR
-----------------
Act shall have expired or been terminated.
6.5 Deliveries. Buyer shall have complied with its obligations set forth
----------
in Section 8.2.
ARTICLE 7: CONDITIONS TO THE OBLIGATIONS OF BUYER
--------------------------------------
The obligations of Buyer under this Agreement are, at its option, subject
to the fulfillment of the following conditions prior to or on the Closing Date:
7.1 Representations, Warranties and Covenants. Each of the
-----------------------------------------
representations and warranties of Seller contained in this Agreement shall be
deemed to be made again on and as of the Closing Date and shall then be true and
correct in all material respects except to the extent changes are permitted or
contemplated pursuant to this Agreement. Seller shall have performed and
complied in all material respects with each and every covenant and agreement
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date. Seller shall have furnished Buyer with a certificate, dated
the Closing Date and duly executed by an officer of Seller authorized on behalf
of Seller to give such a certificate, to the effect that the conditions set
forth in this Section 7.1 have been satisfied.
7.2 Proceedings. Neither Seller nor Buyer shall be subject to any
-----------
restraining order
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or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby. In the event such a restraining order or injunction is in
effect, this Agreement may not be abandoned by Buyer pursuant to this Section
7.2 prior to the Final Closing Date, but the Closing shall be delayed during
such period. This Agreement may be abandoned after such date if such restraining
order or injunction remains in effect.
7.3 FCC Consent. The FCC Consent shall have been granted by the FCC by
-----------
Final order, without any conditions materially adverse to Buyer.
7.4 Hart-Scott-Rodino. If applicable, the waiting period under the HSR
-----------------
Act shall have expired or been terminated.
7.5 Deliveries. Seller shall have complied with its obligations set forth
----------
in Section 8.1.
7.6 Required Consents. Seller shall have obtained all of the Required
-----------------
Consents.
7.7 Material Adverse Change. No Station nor any material portion of the
-----------------------
Station Assets shall have suffered a material adverse change since the date
hereof, and there shall have been no changes since the date hereof in the
business, operations, condition (financial or otherwise), properties, assets or
liabilities of Seller, the Stations or any of the Station Assets, except changes
contemplated by this Agreement and changes which are not (either individually or
in the aggregate) materially adverse to the Stations.
7.8 Cash Flow Amount. The Cash Flow Amount determined pursuant to Section
----------------
1.4(e) shall be at least $1,700,000 and the Buyer Audit, if any, shall have been
completed.
ARTICLE 8: ITEMS TO BE DELIVERED AT THE CLOSING
------------------------------------
8.1 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer
--------------------
duly executed by Seller or such other signatory as may be required by the nature
of the document:
(a) bills of sale, certificates of title, endorsements, assignments,
general warranty deeds and other good and reasonably sufficient instruments of
sale, conveyance, transfer and assignment, in form and substance reasonably
satisfactory to Buyer, sufficient to sell, convey, transfer and assign the
Station Assets to Buyer free and clear of Liens (other than Permitted
Encumbrances) and to quiet Buyer's title thereto;
(b) the Required Consents and any other consents obtained by Seller
under Section 4.4;
(c) certified copies of Seller's articles of incorporation, bylaws and
resolutions authorizing the execution, delivery and performance by Seller of
this Agreement, which shall be in full force and effect;
(d) the certificate referred to in Section 7.1;
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<PAGE>
(e) the Estoppel Certificates, Title Commitments and Surveys;
(f) the Subscription in the form of Exhibit B hereto; and
---------
(g) a tower site lease in form and substance reasonably satisfactory
to Buyer for the antenna, STL and related transmission equipment at the tower
site identified in the Construction Permit issued with respect to Station
W53AV/W65DW (FCC File No. BPTTL-19981014JB).
8.2 Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller:
-------------------
(a) the Purchase Price, which shall be paid in the manner specified in
Section 1.4;
(b) an instrument or instruments of assumption of the Assumed
Obligations in form and substance reasonably satisfactory to Buyer;
(c) certified copies of Buyer's articles of incorporation, bylaws and
resolutions authorizing the execution, delivery and performance by Buyer of this
Agreement, including without limitation, the due authorization and issuance of
the Stock Consideration, which shall be in full force and effect at the time of
the Closing;
(d) the certificate referred to in Section 6.1; and
(e) the Registration Rights Agreement in the form of Exhibit C hereto.
---------
ARTICLE 9: SURVIVAL; INDEMNIFICATION
-------------------------
9.1 Survival. All representations, warranties, covenants and agreements
--------
contained in this Agreement, or in any certificate, agreement, or other document
or instrument, delivered pursuant hereto, shall survive (and not be affected in
any respect by) the Closing, any investigation conducted by any party hereto and
any information which any party may receive, for a period of twelve (12) months
from the Closing Date and neither party shall have the right to assert a claim
against the other with respect thereto after the expiration of such twelve month
period, provided that: (a) any claim for which written notice has been given
during such twelve month period shall survive until resolved, (b) the following
provisions, and any indemnification obligations relating thereto, shall survive
until the expiration of the applicable statute of limitations: Sections 1.3
(Assumed Obligations and Retained Liabilities), 1.6 (Allocation), 1.7
(Adjustments), 2.1 (Organization), 2.2 (Authority), 2.4 (Financial Statements),
2.8 (Real Property, but only with respect to Seller's title to owned Real
Property and rights in leased Real Property), 3.1 (Organization), 3.2
(Authority), 10.3 (Expenses), and any obligation or liability arising from the
post-Closing operation of the Stations by Buyer (collectively, the "Fundamental
Provisions"), and (c) the Guaranty shall survive as provided in Section 11.9
hereof.
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<PAGE>
9.2 Indemnification.
---------------
(a) From and after Closing, Seller (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Buyer, the shareholders, directors,
officers and employees of Buyer and all persons which directly or indirectly,
through one or more intermediaries, control, are controlled by, or are under
common control with Buyer, and their respective successors and assigns
(collectively, the "Buyer Indemnitees") from, against and in respect of, and to
reimburse the Buyer Indemnitees for, the amount of any and all Deficiencies (as
defined in Section 9.3(a)); provided that, (i) except for the Fundamental
Provisions (which shall not be subject to such limitation), Seller shall have no
liability to Buyer hereunder until Buyer's aggregate Deficiencies exceed
$250,000, provided that, once such amount is exceeded, all such Deficiencies
shall be paid, (ii) the maximum liability of Seller to Buyer for breaches of the
representations and warranties set forth in Section 2.15 shall be $1,000,000,
and (iii) the maximum aggregate liability of Seller hereunder for Deficiencies
shall be $3,000,000.
(b) From and after Closing, Buyer (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Seller, the shareholders, directors,
officers and employees of Seller and all persons which directly or indirectly,
through one or more intermediaries, control, are controlled by, or are under
common control with Seller, and their respective successors and assigns
(collectively, the "Seller Indemnitees") from, against and in respect of, and to
reimburse the Seller Indemnitees for, the amount of any and all Deficiencies (as
defined in Section 9.3(b)); provided that, (i) except for the Fundamental
Provisions (which shall not be subject to such limitation), Buyer shall have no
liability to Seller hereunder until Seller's aggregate Deficiencies exceed
$250,000, provided that, once such amount is exceeded, all such Deficiencies
shall be paid, and (ii) the maximum aggregate liability of Buyer hereunder for
Deficiencies shall be $3,000,000 (provided that such aggregate liability
limitation shall be increased to $10,000,000 for Deficiencies arising solely
from a breach of Section 3.2(b) hereof).
9.3 Deficiencies.
------------
(a) As used in this Article 9, the term "Deficiencies" when asserted
by Buyer Indemnitees or arising out of a third party claim against Buyer
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Buyer Indemnitees and arising out of, based upon or resulting
from: (i) any misrepresentation, breach of warranty, or any failure to comply
with any covenant, obligation or agreement on the part of Seller contained in or
made pursuant to this Agreement, including without limitation the Seller
Ancillary Agreements; (ii) any failure by Seller to pay or perform any of the
Retained Liabilities or any other liability or obligation relating to the
operation of the Stations by Seller prior to Closing; or (iii) any litigation,
proceeding or claim by any third party relating to the business or operation of
the Stations prior to Closing. Such Deficiencies include without limitation any
and all acts, suits, proceedings, demands, assessments and judgments, and all
fees, costs and expenses of any kind, related or incident to any of the
foregoing (including, without limitation, any and all Legal Expenses (as defined
in Section 9.6 below)).
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<PAGE>
(b) As used in this Article 9, the term "Deficiencies" when asserted
by Seller Indemnitees or arising out of a third party claim against Seller
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Seller Indemnitees and arising out of, based upon or resulting
from: (i) any misrepresentation, breach of warranty, or any failure to comply
with any covenant, obligation or agreement on the part of Buyer contained in or
made pursuant to this Agreement, including without limitation the Buyer
Ancillary Agreements; (ii) any failure by Buyer to pay or perform any of the
Assumed Obligations or any other liability or obligation relating to the
operation of the Stations by Buyer after Closing; or (iii) any litigation,
proceeding, or claim by any third party relating to the business or operation of
the Stations after Closing. Such Deficiencies include without limitation any
and all acts, suits, proceedings, demands, assessments and judgments, and all
fees, costs and expenses of any kind, related or incident to any of the
foregoing (including, without limitation, any and all Legal Expenses (as defined
in Section 9.6 below)).
9.4 Procedures.
----------
(a) In the event that any claim shall be asserted by any third party
against the Buyer Indemnitees or Seller Indemnitees (Buyer Indemnitees or Seller
Indemnitees, as the case may be, hereinafter, the "Indemnitees"), which, if
sustained, would result in a Deficiency, then the Indemnitees, as promptly as
practicable after learning of such claim, shall notify the Indemnifying Party of
such claim, and shall extend to the Indemnifying Party a reasonable opportunity
to defend against such claim, at the Indemnifying Party's sole expense and
through legal counsel reasonably acceptable to the Indemnitees, provided that
the Indemnifying Party proceeds in good faith, expeditiously and diligently.
The Indemnitees shall, at their option and expense, have the right to
participate in any defense undertaken by the Indemnifying Party with legal
counsel of their own selection at the expense of the Indemnitees. No settlement
or compromise of any claim which may result in a Deficiency may be made by the
Indemnifying Party, without the prior written consent of the Indemnitees,
unless: (A) prior to such settlement or compromise the Indemnifying Party
acknowledges in writing its obligation to pay in full the amount of the
settlement or compromise and all associated expenses; (B) the Indemnitees are
furnished with a full release from the party or parties asserting the claim; and
(C) the Indemnifying Party has the ability (financial or otherwise) to pay or
perform such settlement or compromise. Unless the Indemnifying Party has
elected not to defend against a claim, no settlement or compromise of any claim
which may result in a Deficiency may be made by the Indemnitees without the
prior written consent of the Indemnifying Party, which shall not be unreasonably
withheld, conditioned or delayed. If the Indemnifying Party has elected to
defend against a claim, but the Indemnitee determines in good faith that there
is a reasonable probability that such claim may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnitee may, by notice
to the Indemnifying Party, assume the exclusive right to defend, compromise, or
settle such claim, but the Indemnifying Party will not be bound by any
determination of a claim so defended or any compromise or settlement effected
without its consent, which shall not be unreasonably withheld, conditioned or
delayed.
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<PAGE>
(b) In the event that the Indemnitees assert the existence of any
claim for Deficiency against the Indemnifying Party, they shall give written
notice to the Indemnifying Party of the nature and amount of the Deficiency
asserted. The parties agree that all such claims not disputed by the
Indemnifying Party shall be paid in cash by the Indemnifying Party within thirty
(30) days after receiving notice of the claim. "Disputed Claims" shall mean
claims by an Indemnitee which the Indemnifying Party objects to in good faith in
writing within twenty (20) days after receiving notice of the claim. At the
option of the Indemnitees, the Indemnitees may offset any established Deficiency
or any portion thereof that has not been paid by the Indemnifying Party to the
Indemnitees against any obligation the Indemnitees, or any of them, may have to
the Indemnifying Party.
(c) In the event there is a Disputed Claim, the parties shall attempt
for a period of at least 20 days to negotiate in good faith a resolution of such
Disputed Claim, including at least one meeting in person among an executive
officer of Buyer and each Seller. In connection with resolution of such
Disputed Claim, each party shall provide to the other such information,
documents, records, engineering, schematics, compilations, analyses and reports
relating to the Disputed Claim as shall be reasonably requested.
9.5 Legal Expenses. As used in this Article 9, the term "Legal Expenses"
--------------
shall mean any and all fees (whether of attorneys, accountants or other
professionals), costs and expenses of any kind reasonably incurred by any person
identified herein and its counsel in investigating, preparing for, defending
against, or providing evidence, producing documents or taking other action with
respect to any threatened or asserted claim.
ARTICLE 10: MISCELLANEOUS
10.1 Termination. This Agreement may be terminated at any time prior to
-----------
Closing: (a) by the mutual consent of Seller and Buyer; (b) by any party hereto
if the FCC has denied the approvals contemplated by this Agreement in an order
which has become Final; (c) by Buyer as provided in Section 1.4(e) (Audit) or
Section 4.6 (Environmental) or Section 10.6 (Broadcast Transmission
Interruption); (d) by Buyer as provided in Section 10.7 (Risk of Loss); (e) by
Buyer or Seller if the Closing has not taken place by the Final Closing Date;
(f) by Buyer, if on the Closing Date Seller has failed to satisfy any of the
conditions set forth in Section 7.1, 7.5, 7.6, 7.7 or 7.8; (g) by Buyer if
Seller has failed to cure a material breach of any of its representations,
warranties or covenants under this Agreement within thirty (30) calendar days
after it receives notice from Buyer of such breach; (h) by Seller, if on the
Closing Date Buyer has failed to satisfy either of the conditions set forth in
Section 6.1 or 6.5; or (i) by Seller if Buyer has failed to cure a material
breach of any of its representations, warranties or covenants under this
Agreement within thirty (30) calendar days after it receives notice from Seller
of such breach. A termination pursuant to this Section 10.1 shall not relieve
any party of any liability it would otherwise have for a breach of this
Agreement.
10.2 Specific Performance. In the event of a breach or threatened breach
--------------------
by Seller of
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<PAGE>
any representation, warranty, covenant or agreement under this Agreement, at
Buyer's election, in addition to any other remedy available to it, Buyer shall
be entitled to an injunction restraining any such breach or threatened breach
and, subject to obtaining any requisite approval of the FCC, to enforcement of
this Agreement by a decree of specific performance requiring Seller to fulfill
its obligations under this Agreement, in each case without the necessity of
showing economic loss or other actual damage and without any bond or other
security being required. The remedies provided Buyer in this Agreement shall be
cumulative and shall not preclude the assertion by Buyer of any other rights or
the seeking of any other remedies against Seller.
10.3 Expenses. Each party hereto shall bear all of its expenses incurred
--------
in connection with the transactions contemplated by this Agreement, including
without limitation, accounting and legal fees incurred in connection herewith;
provided, however, that: (i) Seller and Buyer shall each pay one-half of the
FCC filing fees required to be paid in connection with the FCC Application; (ii)
Seller shall be exclusively responsible for, and Buyer shall not have any
liability or responsibility for, any sales or transfer taxes (including without
limitation any real estate transfer taxes), arising from the transfer of the
Station Assets to Buyer; and (iii) the HSR Act filing fee will be paid for by
Buyer.
10.4 Further Assurances. From time to time prior to and after Closing,
------------------
each party hereto will execute all such instruments and take all such actions as
any other party shall reasonably request, without payment of further
consideration, in connection with carrying out and effectuating the intent and
purpose hereof and all transactions contemplated by this Agreement, including
without limitation the execution and delivery of any and all confirmatory and
other instruments in addition to those to be delivered at Closing, and any and
all actions which may reasonably be necessary to complete the transactions
contemplated hereby. The parties shall cooperate fully with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement.
10.5 Public Announcements. Prior to Closing, neither party shall, without
--------------------
the approval of the other party hereto, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as is customary for a public company or as and to the extent that such party
shall be so obligated by law, in which case such party shall give advance notice
to the other party. Notwithstanding the foregoing, the parties acknowledge that
the rules and regulations of the FCC require that public notice of the
transactions contemplated by this Agreement be made after the FCC Application
has been filed with the FCC, and that such notice may be broadcast on the
Stations without the advance consent of Buyer.
10.6 Broadcast Transmission Interruption. If before Closing the regular
-----------------------------------
broadcast transmission of any of the Stations in the normal and usual manner is
interrupted for a period of eight consecutive hours or more, Seller shall give
the prompt written notice thereof to Buyer. Buyer shall then have the right, by
giving written notice to Seller, to postpone (and if necessary re-postpone) the
Closing to a date that is fifteen (15) days after the end of any such
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<PAGE>
interruption. If regular broadcast transmission in the normal and usual manner
is interrupted for a continuous period of eighteen (18) hours or more at any
time prior to Closing (other than interruptions resulting from the loss of
electrical power due to an act of God including, but not limited to, storms and
lightning which do not exceed an aggregate of 48 hours), then (a) Seller
immediately shall give written notice thereof to Buyer and (b) Buyer shall have
the right, by giving written notice to Seller, to (i) terminate this Agreement,
or (ii) postpone the Closing as provided above.
10.7 Risk of Loss. The risk of loss, damage or destruction to any of the
------------
Station Assets shall be borne by Seller at all times up to 12:01 a.m. local time
on the Closing Date, and it shall be the responsibility of Seller to repair or
cause to be repaired and to restore the property to substantially the
operational and functional condition of such property prior to any such loss,
damage, or destruction. In the event of any such loss, damage, or destruction,
the proceeds of any claim for any loss, payable under any insurance policy with
respect thereto, shall be used to repair, replace, or restore any such property
to its former condition, subject to the conditions stated below. In the event
of any loss or damage to any of the Station Assets, Seller shall notify Buyer
thereof in writing immediately. Such notice shall specify with particularity
the loss or damage incurred, the cause thereof (if known or reasonably
ascertainable), and the insurance coverage. In the event that the property is
not completely repaired, replaced or restored on or before the thirtieth day
after the occurrence of the loss or damage, Buyer at its option: (a) may elect
to postpone Closing (including as needed beyond the Final Closing Date and this
Agreement may not be terminated by Seller pursuant to Section 10.1(e) prior to
the Final Closing Date, but the Closing shall be delayed during such period)
until such time as the property has been completely repaired, replaced or
restored (and, if necessary, Seller shall join Buyer in requesting from the FCC
any extensions of time in which to consummate the Closing that may be required
in order to complete such repairs); or (b) may elect to consummate the Closing
and accept the property in its then condition, in which event Seller shall pay
to Buyer all proceeds of insurance and assign to Buyer the right to any unpaid
proceeds; or (c) terminate this Agreement.
10.8 Cooperation. From the date of Closing and for a period of three (3)
-----------
years thereafter, Seller shall preserve its books and records not included in
the Station Assets and provide Buyer with such cooperation and access thereto as
Buyer shall reasonably request in connection with Buyer's: (i) analysis and
review of Financial Statements or information provided or created hereunder, or
(ii) preparation of any reports or analyses prepared by Buyer. Seller shall
also make its accountants available (at Buyer's expense), including any opinions
and financial statements relating to the Seller, to provide explanations of any
documents or information provided hereunder and to permit disclosure of such
information by Buyer, including disclosure to any governmental authority,
including the Securities and Exchange Commission. In the event the Improvement
Application has not been granted as of the Closing Date, Seller agrees to
cooperate with and assist Buyer at Buyer's expense as reasonably requested in
the prosecution thereof.
ARTICLE 11: GENERAL PROVISIONS
------------------
-28-
<PAGE>
11.1 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto, and their respective
representatives, successors and assigns. Seller may not assign any of its
rights or delegate any of its duties hereunder without the prior written consent
of Buyer, and any such attempted assignment or delegation without such consent
shall be void. Buyer may not assign any of its rights or delegate any of its
duties hereunder in whole or in part without Seller's prior written consent and
any such attempted assignment or delegation without Seller's consent will be
null and void; provided, however, that Buyer may assign its rights or delegate
its duties hereunder in whole or in part to any wholly owned subsidiary of
Buyer, including by filing the FCC Application in the name of Radio One
Licenses, Inc. as assignee of the FCC Authorizations, provided, however, that
any such assignment or delegation shall not relieve Buyer of any of its
liabilities or obligations hereunder.
11.2 Amendments; Waivers. The terms, covenants, representations,
-------------------
warranties and conditions of this Agreement may be changed, amended, modified,
waived, or terminated only by a written instrument executed by the party waiving
compliance. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right of such party at a later date to enforce the same. No waiver by any party
of any condition or the breach of any provision, term, covenant, representation
or warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
11.3 Notices. All notices, requests, demands and other communications
-------
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by Federal
Express or a similar overnight courier service, expenses prepaid, or, if sent by
telex, graphic scanning or other facsimile communications equipment, delivered
by such equipment, addressed as follows:
if to Seller: Shirk, Inc.
IBL, L.L.C.
6264 Lapas Trail
Indianapolis, IN 46268
Attn: Bill Shirk Poorman
Facsimile No.: 317-328-3870
and Mays Chemical Company, Inc.
P.O. Box 50915
Indianapolis, IN 46250-0915
Attn: William G. Mays
Facsimile No.: 317-845-8410
with a copy (which shall not constitute notice) to:
-29-
<PAGE>
Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, IN 46204
Attn: Catherine L. Bridge
Facsimile No.: (317) 231-7344
Richard Hayes, Esq.
8404 Lee's Ridge Road
Warrenton, VA 20186
Facsimile: 202-478-0048
Richard Carr, Esq.
5528 Trent Street
Chevy Chase, MD 20815
Facsimile: 301-718-8407
if to Buyer: Radio One, Inc.
5900 Princess Garden Parkway, Suite 800
Lanham, MD 20706
Attn: Alfred C. Liggins, President
Facsimile No.: (301) 306-9638
with a copy (which shall not constitute notice) to:
Radio One, Inc.
5900 Princess Garden Parkway, Suite 800
Lanham, MD 20706
Attn: Linda J. Eckard, General Counsel
Facsimile No.: (301) 306-9638
and Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Attn: Dominic T. Bodensteiner
Facsimile No.: (202) 719-7049
Any party may alter the address to which communications are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section providing for the giving of notice.
11.4 Captions. The captions of Articles and Sections of this Agreement
--------
are for convenience only and shall not control or affect the meaning or
construction of any of the
-30-
<PAGE>
provisions of this Agreement.
11.5 Governing Law. This Agreement and all questions relating to its
-------------
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of Indiana, without giving
effect to principles of conflicts of laws.
11.6 Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof, and supersedes all prior agreements, understandings, inducements
or conditions, express or implied, oral or written, relating to the subject
matter hereof. The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
This Agreement has been prepared by all of the parties hereto, and no inference
of ambiguity against the drafter of a document therefore applies against any
party hereto.
11.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
11.8 Interpretation. References herein to Seller shall be construed case
--------------
by case to mean Shirk or IBL or either or both as the context requires to enable
Buyer to obtain the fullest benefit of this Agreement, and Shirk and IBL shall
be jointly and severally liable for all representations, warranties, agreements,
covenants and other obligations arising hereunder.
11.9 Guaranty. William G. Mays and William Shirk Poorman, both
--------
individuals residing in the State of Indiana (collectively the "Guarantors")
hereby jointly and severally guarantee to Buyer the timely payment and
performance in full of Seller's post-Closing indemnification obligations under
this Agreement (the "Guaranteed Obligations"); provided, however that the
aggregate liability of Guarantors under this Section shall not exceed
$3,000,000, the Guaranteed Obligations shall not be subject to an additional
$250,000 minimum as in Section 9.2(a)(i), and the Guarantors' liability under
this Section shall expire on the first anniversary of the Closing Date, provided
that Guarantors' liability with respect to any Guaranteed Obligations for which
notice has been given during such one-year period shall survive until resolved.
Guarantors' obligations hereunder are primary and direct and not conditioned or
contingent upon pursuit of any remedies against Seller, and shall not be limited
or affected by any circumstance that might otherwise limit or affect the
obligations of a surety or guarantor, all of which are waived to the fullest
extent permitted by law. The Guarantors each represent and warrant that they
have and will maintain sufficient personal net worth to pay and perform the
Guaranteed Obligations hereunder.
[SIGNATURE PAGE FOLLOWS]
857808
-31-
<PAGE>
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
------------------------------------------
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
BUYER: RADIO ONE, INC.
By: ________________________________
Name:
Title:
SELLER: SHIRK, INC.
By: ________________________________
Name:
Title:
IBL, L.L.C.
By: ________________________________
Name:
Title:
GUARANTORS (as to Section 11.9 only):
______________________________________
William G. Mays, an individual
______________________________________
William Shirk Poorman, an individual
<PAGE>
Schedules:
- ---------
1.1(a) FCC Authorizations
1.1(b) Tangible Personal Property
1.1(c) Real Property
1.1(d) Time Sale Contracts
1.1(e) Station Contracts
1.1(f) Intangible Property
1.1(j) Prepaid Items
1.2 Excluded Assets
2.3 Consents
2.4 Financial Statements
2.6 Exceptions to Title
2.7(a),(d),(e) & (f) FCC Matters
2.10 Station Contracts with Affiliates
2.12 Employees
2.14 Insurance Policies
Exhibits:
- --------
Exhibit A Cash Flow Addbacks
Exhibit B Subscription
Exhibit C Registration Rights Agreement
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 MAR-31-1999 MAR-31-2000
<PERIOD-START> JAN-01-1999 JAN-01-1999 JAN-01-2000
<PERIOD-END> DEC-31-1999 MAR-31-1999 MAR-31-2000
<CASH> 6,221,000 0 125,588,000
<SECURITIES> 256,390,000 0 274,154,000
<RECEIVABLES> 22,262,000 0 18,512,000
<ALLOWANCES> (2,429,000) 0 (2,877,000)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 284,463,000 0 417,425,000
<PP&E> 22,497,000 0 24,583,000
<DEPRECIATION> 6,985,000 0 7,786,000
<TOTAL-ASSETS> 527,536,000 0 868,304,000
<CURRENT-LIABILITIES> 10,136,000 0 12,373,000
<BONDS> 82,626,000 0 83,697,000
0 0 0
0 0 0
<COMMON> 23,000 0 28,000
<OTHER-SE> 420,233,000 0 757,998,000
<TOTAL-LIABILITY-AND-EQUITY> 527,536,000 0 868,304,000
<SALES> 0 13,390,000 25,124,000
<TOTAL-REVENUES> 0 13,390,000 25,124,000
<CGS> 0 (1,573,000) (2,972,000)
<TOTAL-COSTS> 0 (1,573,000) (2,972,000)
<OTHER-EXPENSES> 0 11,817,000 19,146,000
<LOSS-PROVISION> 0 141,000 57,000
<INTEREST-EXPENSE> 0 3,737,000 3,582,000
<INCOME-PRETAX> 0 (3,684,000) 3,661,000
<INCOME-TAX> 0 251,000 1,600,000
<INCOME-CONTINUING> 0 (3,935,000) 2,061,000
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 0 (3,935,000) 2,061,000
<EPS-BASIC> 0.00 (0.52) 0.08
<EPS-DILUTED> 0.00 (0.52) 0.08
</TABLE>
