SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934, as amended
(Amendment No. _____)
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14c-5(d)(2))
[ X ] Definitive Information Statement
USARadio.com, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14c-5(g) and 0-11.
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transaction applies:
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transaction applies:
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transaction computed pursuant to Exchange Act Rule 0-11
(set forth amount on which the filing is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
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Identify the previous filing by registration statement
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(1) Amount Previously Paid:
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<PAGE>
USARadio.com, Inc.
Notice of 2000 Annual Meeting of Stockholders
and
Information Statement
[LOGO]
<PAGE>
[LOGO] USARadio.com, Inc.
2290 Springlake Road, Suite 107
Dallas, Texas 75234
972.484.3900
May 4, 2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 26, 2000
USARadio.com (f/k/a Ansel Project, Inc.) will hold its Annual Meeting
of Stockholders at the company's principal executive offices located
at 2290 Springlake Road, Suite 107, in Dallas, Texas on Friday,
May 26, 2000 at 10:00 a.m.
We are holding this meeting:
* To elect two directors to serve until the 2001 Annual
Meeting of Stockholders and until their respective
successors shall be elected and qualified.
* To approve the merger of the company into a wholly-
owned subsidiary to be organized under the laws of the
State of Delaware in order to effect the change of the
company's state of incorporation from Colorado to
Delaware. Upon the consummation of the merger, we will
continue our operations as a Delaware corporation.
* To transact any other business that properly comes
before the meeting.
We have selected March 31, 2000 as the record date for
determining stockholders entitled to vote at the meeting. A list
of stockholders on that date has been available for inspection at
USARadio.com, Inc., 2290 Springlake Road, Suite 107, Dallas,
Texas 75234 since at least April 25, 2000.
All stockholders are cordially invited to attend the meeting and
vote in person.
This Notice of Annual Meeting, Information Statement and our 1999
Annual Report are being distributed to our stockholders on or
about May 4, 2000.
For the Board of Directors,
Marlin Maddoux
Chairman of the Board,
Chief Executive Officer
and President
IMPORTANT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
<PAGE>
TABLE OF CONTENTS
Tab
---
QUESTIONS AND ANSWERS............................... 1
INFORMATION STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS................................ 3
RECENT CHANGE OF CONTROL TRANSACTION................ 3
Sale of Stock and Merger....................... 3
Change of Management........................... 3
Source of Consideration........................ 3
Accounting Implications........................ 4
ITEM 1. ELECTION OF DIRECTORS...................... 5
Your Board of Directors........................ 5
Compensation of Directors...................... 5
Committees of the Board of Directors; Meetings. 5
STOCK OWNERSHIP..................................... 6
Beneficial Ownership of Certain Stockholders
and Management.............................. 6
Section 16(a) Beneficial Ownership Reporting
Compliance.................................. 6
MANAGEMENT.......................................... 7
Executive Officers............................. 7
Key Management Employees....................... 8
Executive Compensation......................... 9
Stock Option Plan.............................. 9
Certain Transactions........................... 9
ITEM 2. REINCORPORATION OF USARADIO.COM FROM
COLORADO TO DELAWARE...................... 11
General........................................ 11
Principal Features of the Reincorporation
and the Merger.............................. 11
Principal Reasons for the Reincorporation...... 12
Possible Disadvantages of Reincorporation...... 13
Amendment, Deferral or Termination of the
Reincorporation Merger Agreement.......... 13
Federal Income Tax Consequences of the
Reincorporation............................. 13
Exchange of Stock Certificates................. 14
Dissenters' Rights............................. 14
EXHIBITS
Certificate of Incorporation of
USARadio.com, Inc., a
Delaware corporation....................... Exhibit A
Bylaws of USARadio.com, Inc.,
a Delaware corporation..................... Exhibit B
Agreement and Plan of Merger................... Exhibit C
Comparison of Colorado and Delaware
Corporation Law............................ Exhibit D
Colorado Business Corporation Act
Dissenters' Rights Statute................. Exhibit E
-i-
<PAGE>
QUESTIONS AND ANSWERS
Q1: Who is USARadio.com?
A: USARadio.com is the corporation that resulted from the
merger of Ansel Project, Inc., a Colorado corporation
and USARadio.com, Inc., a Texas corporation. Specifically,
USARadio.com merged into Ansel Project with Ansel Project
surviving in the merger and changing its name to
USARadio.com. USARadio.com (also known as USA Radio
Network) is a satellite-delivered radio broadcast network
that offers a broad line of programming content to
independent radio stations. USARadio.com's programming
includes news, sports, music and general interest talk
programs. As of March 15, 2000, the USA Radio Network was
comprised of approximately 1,200 affiliated radio
stations across the nation, including stations in 49 of
the top 50 Dominant Market Areas.
See "Recent Change of Control Transaction" for more
information concerning USARadio.com and its merger with the
company.
Q2: Why is USARadio.com holding a meeting?
A: We are holding an Annual Meeting of Stockholders to request
that our stockholders consider and act upon two proposals:
* a proposal to re-elect Marlin Maddoux and Mark
Maddoux to our board of directors; and
* a proposal to redomesticate the company in
Delaware.
Q3: Why is USARadio.com not soliciting a proxy from me?
A: Our principal stockholder, the U.S.A. Radio Network Trust,
Marlin Maddoux, Trustee, has indicated its intention to vote
in favor of both of the proposals expected to be brought at
the Annual Meeting. Because the Trust holds 13,136,720
shares, or approximately 97.2% of the issued and outstanding
shares of common stock of the company, the proposals will
pass if the Trust votes as expected. Consequently, we do
not believe that the solicitation of proxies is necessary.
Q4: May I still attend and vote at the Annual Meeting?
A: Absolutely. As a stockholder of USARadio.com you are
entitled and encouraged to attend the Annual Meeting and
vote upon the proposals.
Q5: Who can vote?
A: Only those who owned common stock at the close of business
on March 31, 2000, the record date for the Annual Meeting,
can vote. If you owned common stock on the record date, you
have one vote per share for each matter presented at the
Annual Meeting.
Q6: Will I have the right to dissent from the proposal to
reincorporate the company from Colorado to Delaware?
A: Yes. Holders of shares of our common stock will have the
right to dissent and seek the payment of "fair value" of
their shares with regard to this proposal. For a complete
discussion of your rights in this regard, see the section of
this Information Statement entitled, "Reincorporation of
USARadio.com from Colorado to Delaware--Dissenters' Rights"
beginning on page 14.
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<PAGE>
Q7: What constitutes a quorum?
A: Voting can take place at the Annual Meeting only if
stockholders owning one-third of the outstanding shares as
of the record date are present in person or represented by
effective proxies. On the record date, we had 13,516,720
shares of common stock outstanding.
Q8: What vote of the stockholders will result in the matters
being passed?
A: Election of Directors. Directors need the affirmative vote
of holders of a plurality of the voting power present to be
elected. At this year's meeting, the two nominees receiving
the greatest number of votes in favor of their election will
be deemed to have received a plurality of the voting power
present.
Reincorporation. Approval of the company's reincorporation
into Delaware requires an affirmative vote by a majority of
all the votes entitled to be cast, whether or not those
votes are present at the meeting.
Q9: How does the board recommend that I vote on the matters
proposed?
A: The board of directors of USARadio.com unanimously
recommends that stockholders attending the Annual Meeting
vote FOR both of the proposals submitted.
Q10: Will there be other matters proposed at the 2000 Annual
Meeting?
We do not expect any other matter to come before the Annual
Meeting.
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<PAGE>
INFORMATION STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Information Statement is being distributed for use at
the Annual Meeting of Stockholders to be held Friday, May 26,
2000, at 10:00 a.m., local time, or at any and all
continuation(s) or adjournment(s) thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at our principal executive
offices located at 2290 Springlake Road, Suite 107, Dallas, Texas
75234. The telephone number at that location is 972.484.3900.
Proxies are not being solicited because a stockholder
holding enough shares to effect the proposed actions has
previously indicated its intention to vote in favor of such
proposals. Stockholders of USARadio.com do not have cumulative
voting rights.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY. However, if you wish to vote your shares of
common stock, you may do so by attending the meeting in person
and casting your vote by a ballot which will be provided for that
purpose.
RECENT CHANGE OF CONTROL TRANSACTION
Sale of Stock and Merger
- ------------------------
During the year ended December 31, 1999, the company was
involved in a series of related transactions that resulted in the
change of control of the company. Specifically, on November 5,
1999, Corporate Management Services, Inc., the company's pre-
merger controlling stockholder, sold a majority of the
outstanding shares of our common stock to U.S.A. Radio Network
Trust, the sole stockholder of USARadio.com, Inc., a Texas
corporation ("Old USA"), for $185,000 cash. Marlin Maddoux is the
sole trustee of the U.S.A. Radio Network Trust and he, his wife
and their lineal descendants are the beneficiaries thereof. As a
result of this transaction, Marlin Maddoux, through his control
of the U.S.A. Radio Network Trust, acquired control of
approximately 69.1% of the company.
Immediately following the stock sale, the boards of
directors and stockholders of Old USA and the company approved an
Agreement and Plan of Merger, whereby the two companies would
merge, and the company would continue as the surviving
corporation operating the business previously conducted by Old
USA. Pursuant to the terms of the merger, each outstanding share
of Old USA was converted into 4.2368 shares of the company. As a
result of the merger and the shares previously acquired from
Corporate Management Services, the U.S.A. Radio Network Trust
directly (and Marlin Maddoux indirectly) became the holder of
approximately 97.2% of our common stock. We changed our name to
USARadio.com as part of the merger.
Change of Management
- --------------------
On December 5, 1999, the previous officer and director of
the company (namely, George Andrews) resigned and the
stockholders elected R. Marlin Maddoux and Mark R. Maddoux as the
new members to the board of directors of the company. On that
same date, Marlin Maddoux was elected as our Chief Executive
Officer and President and Mark Maddoux, Marlin Maddoux's son, was
elected our Vice President and Chief Financial Officer.
Source of Consideration
- -----------------------
In order to effectuate the purchase of the 850,000 shares of
our common stock from Corporate Management Services, Inc., the
U.S.A. Radio Network Trust borrowed the funds necessary therefor
from Marlin Maddoux personally. This debt is reflected by a note
due upon demand which bears interest at the rate of 9.0% per
annum. The debt is unsecured.
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<PAGE>
Accounting Implications
- -----------------------
The merger was accounted for as a recapitalization of Old
USA. Accordingly, the historical operations of Old USA are, for
accounting purposes, treated as the historical operations of the
company.
The funds borrowed by the U.S.A. Radio Network Trust to
acquire the shares from Corporate Management Services have been
reflected in our financial statements as contributed capital and
have been expensed as a cost of the recapitalization.
As part of the merger, we elected to adopt the fiscal year
end of Old USA.
-4-
<PAGE>
ITEM 1.
ELECTION OF DIRECTORS
Your Board of Directors
- -----------------------
The board of directors of USARadio.com has currently set the
number of directors constituting the whole board at two. At the
upcoming Annual Meeting, you and the other stockholders will
elect two individuals to serve as directors whose terms expire at
the 2001 Annual Meeting. Each of the nominees to the board,
namely Marlin Maddoux and Mark Maddoux, are acting members of the
board and have consented to serve if elected.
Below are the names and ages of the nominees for director,
the years they became directors, their principal occupations or
employment for at least the past five years and certain of their
other directorships, if any.
* Robert Marlin Maddoux Age 67, a director since December 1999.
Mr. Maddoux has been the Chief
Executive Officer and President of
USARadio.com, or a predecessor
entity, since 1985 and, during such
time, has been responsible for
substantially all of our day-to-day
affairs. Mr. Maddoux has hosted our
most popular radio program, Point of
View, since 1972. He also has served
as President and member of the board
of trustees of International
Christian Media, Inc., a non-profit
organization, since 1974. Mr. Maddoux
attended Southwestern Bible College
from 1951 to 1955 and Dallas Baptist
University from 1967 to 1968.
* Mark R. Maddoux Age 43, a director since December 1999.
Mark Maddoux has been employed by
USARadio.com, or a predecessor entity
since December, 1985 and has served
as our Vice President, Corporate
Secretary and Chief Financial Officer
since December 1999. Mr Maddoux is
also the Chief Financial Officer of
International Christian Media.
Mr. Maddoux received a Bachelors of
Science from Texas A&M University in
1979. Mr. Maddoux also serves as a
director of the Alliance Defense
Fund. Mr. Maddoux is the son of
Marlin Maddoux.
We intend to add additional qualified members to our board
of directors in the future.
Compensation of Directors
- -------------------------
We do not provide cash compensation to our directors but do
reimburse our directors for reasonable out-of-pocket expenses
incurred in connection therewith. We intend to issue stock
options to our directors in the future.
Committees of the Board of Directors; Meetings
- ----------------------------------------------
USARadio.com has no standing committees.
During the year ended December 31, 1999, the entire board of
directors of USARadio.com met three times and acted by unanimous
written consent on two other occasions. During fiscal 1999, each
director attended at least 75% of the total of all meetings of
the board of directors.
-5-
<PAGE>
STOCK OWNERSHIP
Beneficial Ownership of Certain Stockholders and Management
- -----------------------------------------------------------
The following table sets forth information with respect to
the beneficial ownership of our common stock at March 31, 2000,
by:
* each of our directors;
* each of our named executive officers;
* all of our executive officers and directors as a
group; and
* each person, or group of affiliated persons, known
to us to own beneficially more than 5% of our common
stock.
Unless otherwise noted in the footnotes to the table and
subject to community property laws where applicable, the
following individuals have sole voting and investment control
with respect to the shares beneficially owned by them. The
address of each person and entity below is c/o USARadio.com,
Inc., 2290 Springdale Road, Suite 107, Dallas, Texas 75234. We
have calculated the percentages of shares beneficially owned
based on 13,516,720 shares of common stock outstanding at
March 31, 2000.
Shares beneficially owned
---------------------------
Person or group Number Percent
- ---------------------------------------- -------------- ------------
Directors and Named Executive Officers:
Robert Marlin Maddoux(1)(2) 13,136,720 97.2%
Mark R. Maddoux 0 0.0
Thomas R. Tradup 0 0.0
All executive officers and 13,136,720 97.2
directors as a group (3 persons)
Beneficial Owners of 5% or More of
Our Outstanding Common Stock:
U.S.A. Radio Network Trust (2) 13,136,720 97.2
- ------------------
(1) Represents shares of common stock held by the U.S.A. Radio
Network Trust.
(2) Mr. Maddoux is the sole trustee of the U.S.A. Radio Network
Trust and he, his wife and their lineal descendants
(specifically, Mark R. Maddoux, J. David Maddoux, Timothy F.
Maddoux and Marla Renee' Maddoux Kelley) are the
beneficiaries thereof.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Under U.S. securities laws, directors, certain executive
officers and persons holding more than 10% of our common stock
must report their initial ownership of the common stock, and any
changes in that ownership, to the SEC. The SEC has designated
specific due dates for these reports. Based solely on our review
of copies of the reports filed with the SEC and written
representations of our directors and executive offers, we believe
that all persons subject to reporting filed the required reports
on time in 1999, other than Thomas R. Tradup, our Vice President
and General Manager, and Mark R. Maddox, our Vice President, Cheif
Financial Officer and Corporate Secretary, each of whom filed his
Form 3 late. Consistent with the table above, neither Mr. Tradup,
nor Mr. Mark Maddoux, reported any shares of our common
stock as beneficially owned on their respective Form 3.
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<PAGE>
MANAGEMENT
Executive Officers
- ------------------
Below are the names and ages of the executive officers of
USARadio.com as of March 31, 2000 and a brief description of
their prior experience and qualifications.
* Robert Marlin Maddoux Age 67, a director since December 1999.
Mr. Maddoux is also our Chief
Executive Officer and President. See
the biography of Mr. Maddoux on page
5.
* Mark R. Maddoux Age 43, a director since December 1999.
Mr. Maddoux is also our Vice
President, Corporate Secretary and
Chief Financial Officer. See the
biography of Mr. Maddoux on page 5.
Thomas R. Tradup Age 48, Vice President and General
Manager, since June 1998.
As General Manager for USARadio.com,
Mr. Tradup has oversight
responsibility for programming,
operations, sales and long-range
planning. From June, 1996 to June,
1998, Mr. Tradup served as our
Director of Talk Programming where he
was responsible for successfully
launching the company's second
satellite channel used for offering
mainstream radio programming for the
general radio market. Mr. Tradup has
been in the radio industry since 1973
and, prior to joining us, held
programming and management positions
with numerous radio stations
including KCMO-AM (Kansas City), WMCA-
AM (New York), WASH-FM (Washington
D.C.), KRLD-AM (Dallas) and WLS-AM
(Chicago).
-7-
<PAGE>
Key Management Employees
- ------------------------
Below are the names and ages of certain key management
employees of USARadio.com as of March 31, 2000 and a brief
description of their prior experience and qualifications.
* Jeffery C. Dorf Age 51, National Marketing and Sales Director
since, March 1998.
As National Marketing and Sales
Director for USARadio.com, Mr. Dorf
manages a team of three national Sales
Executives who are responsible for
soliciting and managing national
advertising accounts. Mr. Dorf is also
responsible for the management of
USARadio.com's Trafficking Department,
which in turn is responsible for the
scheduling of all commercial
inventories. Prior to joining us,
Mr. Dorf served as General Manager of
Prime Sports Radio Network and has held
sales and management positions with
companies such as radio station WBPS
(Boston) and Bruce Marr & Associates.
Mr. Dorf holds a Bachelors degree in
Business Administration from the
University of Miami.
* Robert E. Morris II Age 53, News Director since January 2000.
As News Director, Mr. Morrison is
responsible for all news gathering
and news delivery operations.
Mr. Morrison manages a news staff of
approximately 15 news anchors and
producers. Mr. Morrison has been a
broadcast journalist for almost 33
years and has served in management at
numerous radio stations such as WFAA-
AM (Dallas), KRLD-AM (Dallas) and ABC
Radio Network (New York), RKO Radio
Network (Los Angeles). Mr. Morrison
also holds many coveted awards from
broadcast organizations such as Texas
Associated Press Broadcasters, United
Press International (UPI) and Radio-
Television News Directors Association.
-8-
<PAGE>
Executive Compensation
- ----------------------
SUMMARY COMPENSATION. The following table provides summary
information concerning compensation paid by us to our named
executive officers, which are our Chief Executive Officer and our
two other executive officer who earned more than $100,000 in
salary and bonus for all services rendered in all capacities
during the fiscal year ended December 31, 1999. We may refer to
these officers as our named executive officers in other parts of
this Information Statement. For a list of our current executive
officers, see "--Executive Officers."
<TABLE>
<CAPTION>
Annual Compensation
--------------------------------------------
Other Annual
Name and Position Salary Bonus Compensation
- -------------------------------------------- ----------- ------------ -----------------
<S> <C> <C> <C>
Robert Marlin Maddoux,
Chief Executive Officer and President.... $ 33,000 --- $8,302
Thomas R. Tradup,
Vice President and General Manager....... $180,000 --- --
</TABLE>
The "Other Annual Compensation" for Mr. Robert Marlin Maddoux
represents a car allowance provided to him by the company. Mr. Dorf,
one of our key management employees received a salary of
approximately $160,000 (including commissions) during 1999.
STOCK OPTIONS GRANTED IN THE YEAR ENDED DECEMBER 31, 1999.
No stock options were granted to the named executive officers
during the year ended December 31, 1999.
YEAR-END OPTION VALUES. Neither of the named executive
officers exercised any stock options during the year ended
December 31, 1999 and neither of these individuals held any
options as of that date.
Stock Option Plan
- -----------------
We have not yet established a stock option plan. However, we
anticipate creating a stock option plan in the near future for
the purpose of promoting our objectives by using interests in our
common stock to attract, retain and motivate employees,
directors, officers and consultants, and to encourage such
persons' contributions to the performance of USARadio.com. We
expect that our plan will authorize the granting of stock options
exercisable for up to 20% of our issued and outstanding shares of
common stock.
Certain Transactions
- --------------------
LOANS FROM MARLIN MADDOUX. We have had a history of losses
and negative cash flow. Therefore, although we have financed our
operations principally from operations, we have had the need to
supplement these funds with bank debt and stockholder loans.
Marlin Maddoux, our Chief Executive Officer and President, has
guaranteed a portion of our bank debt, although he has not
received a guarantee fee to do so. Further, Mr. Maddoux has been
the primary source for stockholder loans to the company. As of
December 31, 1999, we owed Mr. Maddoux a total of $152,934 of
which $76,877 is due September, 2004 and bears interest at 10%
per annum and the remaining $76,057 is due June 2001 and bears
interest at 12% per annum. No assurances can be made that
Mr. Maddoux will continue to provide credit enhancements and/or
stockholder loans to us in the future.
In addition to the loans referenced above, Marlin Maddoux
loaned the U.S.A. Radio Network Trust the funds necessary to
acquire the shares of our stock on November 5, 1999. See "Recent
Change of Control Transaction."
-9-
<PAGE>
FAMILIAL RELATIONSHIPS. We employ other persons related to
Marlin Maddoux, our Chief Executive Officer and President, and
Mark Maddoux, our Vice President, Corporate Secretary and Chief
Financial Officer. Specifically, Tim Maddoux, a Vice President
and our Assistant General Manager and J. David Maddoux, our
Director of Information Systems, are the sons of Marlin Maddoux
and the brothers of Mark Maddoux. These individuals received
annual compensation of approximately $92,000 and $80,000,
respectively, during 1999.
INTERNATIONAL CHRISTIAN MEDIA. We sell satellite time and
syndication services to International Christian Media ("ICM"),
a not-for-profit organization that produces our program "Point
of View." Mr. Marlin Maddoux, our Chief Executive Officer and
President, is the President of ICM and also serves on its board
of trustees. Mr. Mark Maddoux, our Vice President, Corporate
Secretary and Chief Financial Officer, is the Chief Financial
Officer of ICM. Neither Mr. Marlin Maddoux, nor Mr. Mark Maddoux,
believe that their responsibilities with ICM interfere in any way
with their responsibilities to the company. From time to time,
we and ICM incur expenses on behalf of the other which are
subsequently reimbursed by the appropriate party. Further, we
sublease approximately 12,200 square feet of our executive
offices to ICM for their operations at a rate equal to or in
excess of the rate paid by us for such space. During the year
ended December 31, 1999, ICM incurred approximately $234,000 in
fees with us, representing approximately 6.0% of our total
revenues for the year. Of this amount, approximately $150,000
was more than 90 days past due at December 31, 1999. We have
agreed with ICM that we will begin to charge a "carrying fee" of
1% per month commencing March 1, 2000 on all amounts more than 90
days past due.
We expect to continue to provide services to ICM in the
future.
-10-
<PAGE>
ITEM 2.
REINCORPORATION OF USARADIO.COM FROM COLORADO TO DELAWARE
General
- -------
Your board of directors has approved and recommends that the
stockholders approve the proposed merger of the company into a
wholly-owned subsidiary to be incorporated under the laws of the
State of Delaware for the purpose of changing our state of
incorporation from the State of Colorado to the State of
Delaware. We believe that this redomestication will result in
significant advantages as more fully described below. In this
discussion, the terms "company" or "USARadio-Colorado" refer to
the existing Colorado corporation and the term "USARadio-
Delaware" refers to the new Delaware corporation which is the
proposed successor to USARadio-Colorado.
The following discussion summarizes certain aspects of our
proposed redomestication into the State of Delaware. This summary
is not intended to be complete and is subject to, and qualified
in its entirety by, reference to the following:
* the Certificate of Incorporation of USARadio-Delaware,
a copy of which is attached as Exhibit A to this
Information Statement;
* the Bylaws of USARadio - Delaware, a copy of which is
attached as Exhibit B to this Information Statement;
* the Agreement and Plan of Merger, a copy of which is
attached as Exhibit C to this Information Statement;
* the "Comparison of Colorado and Delaware Corporation
Law" attached as Exhibit D to this Information
Statement; and
* the Colorado Business Corporation Act Dissenters'
Rights Statute, a copy of which is attached as
Exhibit E to this Information Statement.
Copies of our current Articles of Incorporation and Bylaws
are available for inspection at our principal executive offices
and copies will be sent to stockholders, without charge, upon
oral or written request directed to USARadio.com, Inc., 2290
Springlake Road, Suite 107, Dallas, Texas 75234, Attention:
Corporate Secretary, (972) 484-3900.
Principal Features of the Reincorporation and the Merger
- --------------------------------------------------------
The reincorporation will be effected by the merger of
USARadio-Colorado with and into USARadio-Delaware, which will be
incorporated under the Delaware General Corporation Law ("DGCL")
for purposes of the merger. USARadio-Delaware will be the
surviving corporation in the merger. The separate existence of
USARadio-Colorado will cease to exist as a result of the merger.
Upon completion of the merger, each outstanding share of
common stock, no par value per share, of USARadio-Colorado will
be converted into one share of common stock, $.001 par value, of
USARadio-Delaware. As a result, the existing stockholders of
USARadio-Colorado will automatically become stockholders of
USARadio-Delaware. USARadio-Colorado stock certificates will be
deemed to represent the same number of USARadio-Delaware shares
as were represented by such USARadio-Colorado stock certificates
prior to the merger.
Our redomestication in Delaware will not result in any
change to the daily business operations of the company or the
present location of the principal executive offices or broadcast
center in Dallas, Texas. The financial condition and results of
operations of USARadio-Delaware immediately after the
consummation of this transaction will be identical to that of
USARadio-Colorado immediately prior to the consummation of the
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<PAGE>
reincorporation. In addition, at the effective time of the
merger, the board of directors of USARadio-Delaware will consist
of those persons who were directors of USARadio-Colorado
immediately prior to the merger; namely, Marlin Maddoux and Mark
Maddoux. In addition, the individuals serving as executive
officers of USARadio-Colorado immediately prior to the merger
will serve as executive officers of USARadio-Delaware upon the
effectiveness of the merger.
Principal Reasons for the Reincorporation
- -----------------------------------------
As the company plans for the future, the board of directors
and management believe that it is essential to be able to draw
upon well established principles of corporate governance in
making legal and business decisions. The prominence and
predictability of Delaware corporate law provide a reliable
foundation on which our governance decisions can be based. We
believe that the stockholders will benefit from the
responsiveness of Delaware corporate law to their needs and to
those of the Corporation they own.
For many years, the State of Delaware has followed a policy
of encouraging incorporation in that state and, in furtherance of
that policy, has adopted comprehensive, modern and flexible
corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many corporations have been
initially incorporated in Delaware or have subsequently
reincorporated in Delaware in a manner similar to that proposed
by us. Because of Delaware's prominence as a state of
incorporation for many corporations, the Delaware courts have
developed considerable expertise in dealing with corporate issues
and a substantial body of case law has developed construing the
DGCL and establishing public policies with respect to
corporations incorporated in Delaware. Consequently, the DGCL is
comparatively well known and understood. It is anticipated that,
as in the past, the DGCL will continue to be interpreted and
explained in a number of significant court decisions. We believe
that reincorporation in Delaware should provide greater
predictability with respect to our corporate affairs.
In addition, the Delaware Secretary of State is particularly
flexible, expert and responsive in its administration of the
filings required for mergers, acquisitions and other corporate
transactions. Delaware has become a preferred domicile for most
major corporations in the United States and Delaware law and
administrative practices have become comparatively well-known and
widely understood. As a result of these factors, it is
anticipated that Delaware law will provide greater efficiency,
predictability and flexibility in our legal affairs than
presently available under Colorado law.
We believe that the proposed reincorporation under Delaware
law will enhance our ability to attract and retain qualified
directors and officers as well as encourage directors and
officers to continue to make independent decisions in good faith
on behalf of the company. The law of Delaware offers greater
certainty and stability from the perspective of those who serve
as corporate officers and directors. To date, we have not
experienced difficulty in retaining directors or officers.
However, as a result of the significant potential liability and
lack of compensation associated with service as a director, we
believe that the better understood, and comparatively stable,
corporate environment afforded by Delaware will enable us to
compete more effectively with other public companies, most of
which are incorporated in Delaware, in the recruitment of
talented and experienced directors and officers. The parameters
of director and officer liability are more extensively addressed
in Delaware court decisions and therefore are better defined and
better understood than under Colorado law.
We believe that Delaware law strikes an appropriate balance
with respect to personal liability of directors and officers, and
that the proposed reincorporation under Delaware law will enhance
our ability to recruit and retain directors and officers in the
future, while providing appropriate protection for stockholders
from possible abuses by directors and officers. Delaware law
permits a corporation to eliminate or limit the personal
liability of its directors to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as
a director of the corporation; however, directors' personal
liability is not, and can not be, eliminated under Delaware law
for intentional misconduct, bad faith conduct or any transaction
from which the director derives an improper personal benefit, or
for violations of federal laws such as federal securities laws.
We have not viewed the increased protections permitted under
the DGCL as a reason for recommending the reincorporation.
Stockholders should note, however, that since members of the
board of directors will receive
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the benefit of expanded indemnification provisions and
limitations on liability, the board of directors may be viewed as
having a personal interest in the approval of the reincorporation
at the potential expense of stockholders.
Possible Disadvantages of Reincorporation
- -----------------------------------------
The DGCL has been publicly criticized on the grounds that it
does not afford minority stockholders all the same substantive
rights and protections that are available under the laws of a
number of other states (including Colorado). For example, if the
reincorporation is consummated, we will not be required in the
future under the DGCL to obtain stockholder approval, or to grant
class voting and appraisal rights, in connection with certain
kinds of mergers and corporate reorganizations which under
Colorado law would be subject to those requirements. For
information regarding those and other material differences
between the CBCA and the DGCL, see Exhibit D attached to this
Information Statement. We believe that the advantages of the
reincorporation to the company and its stockholders outweigh its
possible disadvantages.
STOCKHOLDERS ARE STRONGLY URGED TO READ THE SUMMARY OF CERTAIN
SIGNIFICANT DIFFERENCES IN THE PROVISIONS OF THE CBCA AND THE
DGCL AFFECTING THE RIGHTS AND INTERESTS OF STOCKHOLDERS SET FORTH
IN EXHIBIT D ATTACHED TO THIS INFORMATION STATEMENT.
Amendment, Deferral or Termination of the Reincorporation Merger
Agreement
- ----------------------------------------------------------------
If approved by the stockholders at the Annual Meeting, it is
anticipated that the reincorporation will become effective at the
earliest practicable date. However, the applicable Merger
Agreement provides that it may be amended, modified or
supplemented before or after approval by the stockholders of the
company; but no such amendment, modification or supplement may be
made if it would have a material adverse effect upon the rights
of the company's stockholders unless it has been approved by the
stockholders. The Merger Agreement also provides that the company
may terminate and abandon the merger or defer its consummation
for a reasonable period, notwithstanding stockholder approval, if
in the opinion of the board of directors or, in the case of
deferral, of an authorized officer, such action would be in the
best interests of the company and its stockholders.
Federal Income Tax Consequences of the Reincorporation
- ------------------------------------------------------
We believe that, for federal income tax purposes, no gain or
loss will be recognized by the holders of common stock of
USARadio-Colorado as a result of the consummation of the
reincorporation and no gain or loss will be recognized by
USARadio-Colorado or USARadio-Delaware. Each holder of common
stock of USARadio-Colorado will have the same tax basis in the
USARadio-Delaware common stock received pursuant to the
reincorporation (other than those who exercise dissenters'
rights) as such stockholder had in the common stock of USARadio-
Colorado held immediately prior to the reincorporation, and the
stockholder's holding period with respect to the USARadio-
Delaware common stock will include the period during which such
stockholder held the corresponding common stock, so long as the
common stock was held as a capital asset at the time of
consummation of the reincorporation.
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME
TAX CONSEQUENCES TO STOCKHOLDERS WILL VARY FROM THE FEDERAL
INCOME TAX CONSEQUENCES DESCRIBED ABOVE, STOCKHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE EFFECT OF THE
REINCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
We also believe that USARadio-Delaware will succeed without
adjustment to the tax attributes of USARadio-Colorado.
Stockholders should be aware that franchise taxes in the State of
Delaware are likely to be higher than those in the State of
Colorado.
A dissenting stockholder who receives payment for his shares
upon exercise of his rights of dissent may recognize gain or loss
for federal income tax purposes, measured by the difference
between the tax basis for his
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shares and the amount of the payment received. Stockholders who
dissent and seek cash payment for their shares should consult
with their tax advisors.
Exchange of Stock Certificates
- ------------------------------
The conversion of shares of USARadio-Colorado common stock
into USARadio-Delaware common stock will occur automatically upon
the completion of the merger without any action on the part of
stockholders and without regard to the date certificates
representing shares of common stock prior to the merger are
physically surrendered.
As soon as practicable after the consummation of the merger,
transmittal forms will be mailed to each holder of record of
USARadio-Colorado to be used in forwarding stock certificates for
surrender and exchange for certificates representing the number
of shares of USARadio-Delaware common stock such stockholder is
entitled to receive as a consequence of the merger. The
transmittal forms will be accompanied by instructions specifying
other details of the exchange. Upon receipt of such transmittal
form, each stockholder should surrender the certificates
representing shares of common stock, in accordance with the
applicable instructions. Each holder who surrenders certificates
will receive new certificates representing the number of shares
of USARadio-Delaware common stock that he or she holds as a
result of the merger. STOCKHOLDERS SHOULD NOT SEND THEIR STOCK
CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.
After the consummation of the merger, each certificate
representing shares of common stock outstanding prior to the
consummation of the merger will, until surrendered and exchanged
as described above, be deemed, for all corporate purposes, to
evidence ownership of that number of shares of USARadio-Delaware
common stock into which the shares of common stock evidenced by
such certificate have been converted as a result of the
consummation of the merger.
Dissenters' Rights
- ------------------
Holders of shares of common stock of USARadio-Colorado will
have the right to dissent and seek the payment of "fair value" of
their shares with regard to the reincorporation proposal.
Pursuant to Article 113 of the CBCA, such holders of record of
USARadio-Colorado common stock who object and who follow the
procedures prescribed by Article 113 of the CBCA will be entitled
to receive a cash payment equal to the "fair value" of the shares
of USARadio-Colorado common stock held by them. Set forth below
is a summary of the procedures such holders of USARadio-Colorado
common stock must follow in order to exercise their dissenters'
rights under the CBCA. This summary does not purport to be
complete and is qualified in its entirety by reference to
Article 113 of the CBCA (a copy of which is attached to this
Information Statement as Exhibit E) and to any amendments to, or
modifications of, such provisions as may be adopted after the
date hereof.
In addition, stockholders are hereby advised that they may
have had the right to dissent and seek the payment of "fair
value" of their shares in connection with the merger of
USARadio.com, Inc., a Texas corporation, with and into USARadio-
Colorado. That merger was effective December 21, 1999.
Any such holder of shares of common stock of USARadio-
Colorado contemplating a possibility of objecting to the
reincorporation proposal (or the prior merger into USARadio-
Colorado) should carefully review the text of Exhibit E
(particularly the specified procedural steps required to perfect
their dissenters' rights) and should consult as appropriate with
such holder's legal counsel. YOUR DISSENTERS' RIGHTS WILL BE LOST
IF THE PROCEDURAL REQUIREMENTS OF ARTICLE 113 OF THE CBCA ARE NOT
FULLY AND PRECISELY SATISFIED.
A record stockholder may assert dissenters' rights to fewer
than all shares registered in his name only if he dissents with
respect to all shares beneficially owned by a beneficial holder
for whom he acts as nominee and notifies the company in writing
of the name, address and federal taxpayer identification number
of each person on whose behalf he has asserted dissenters'
rights. A beneficial holder may assert dissenters' right as to
shares held on his behalf only if he submits to the company the
record holder's written consent to the dissent not later than the
time
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the beneficial stockholder asserts dissenters' rights and does so
with respect to all shares to which he is beneficial owner.
Under Article 113 of the CBCA, any stockholder who desires
to assert dissenters' rights shall deliver to the company before
the vote is taken written notice of his intent to demand payment
for his shares if the proposed action is effected and shall not
vote his shares in favor of the proposed action. If the proposed
corporate action is effected, the company shall deliver a written
dissenters' notice to all stockholders who properly exercised
their dissenters' rights within ten (10) days after the effective
date of the corporate action. Such notice from company shall
include, among other items, a form for demanding payment, an
address where certificates representing shares of USARadio-
Colorado must be deposited along with the demand for payment, and
a date not less than thirty (30) days after the date of the
company's delivery of the initial dissenters' notice by which the
company must receive the payment demand. A stockholder who
demands payment and deposits his share certificates in accordance
with the terms of the company's dissenters' notice shall be
entitled to receive from the company the amount that the company
estimates to be the "fair value" of the shares plus accrued
interest. Such payment is to be accompanied by specified
financial information regarding the company, a statement of the
company's estimate of the fair value of the shares and an
explanation of how any accrued interest was calculated. If a
dissenting stockholder disagrees with the company's calculation
of the "fair value" for the shares tendered, he may notify the
corporation in writing of his own estimate of fair value or
reject the company's offer and demand payment of fair value of
his shares. A dissenting stockholder waives his rights to contest
the company's determination of "fair value" unless he notifies
the company of his demand of payment of a different value in
writing within thirty (30) days after the company made or offered
payment for his shares.
If a demand for payment remains unresolved, the company may
commence a proceeding within sixty (60) days after receiving the
payment demand and petition the court to determine the fair value
of the shares and accrued interest. If the company does not
commence a proceeding within the sixty day period, it must pay to
each dissenting stockholder the amount demanded by such
stockholder.
For the Board of Directors,
Marlin Maddoux,
Chairman of the Board,
Chief Executive Officer
and President
May 4, 2000
Dallas, Texas
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<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
USARadio.com, Inc.
FIRST: The name of the corporation is USARadio.com,
Inc. (the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust Center,
1209 Orange Street, in the City of Wilmington, County of New
Castle 19801. The name of its registered agent at such address
is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware ("DGCL").
FOURTH: The aggregate number of shares of all classes of
stock which the Corporation shall have authority to issue is
Thirty Five Million (35,000,000) shares, consisting of (A) Thirty
Million (30,000,000) shares of common stock, par value $0.001 per
share (the "Common Stock"), and (B) Five Million (5,000,000)
shares of preferred stock, par value $0.001 per share (the
"Preferred Stock").
The designations, powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof with respect
to the Common Stock and the Preferred Stock are as follows:
(A) Common Stock. Each holder of the Common Stock of
the Corporation shall be entitled to one vote for every
share of Common Stock outstanding in his name on the books
of the Corporation. Except for and subject to those rights
expressly granted to the holders of the Preferred Stock or
except as may be provided by the laws of the State of
Delaware, the holders of Common Stock shall have exclusively
all other rights of stockholders including, without
limitation, (i) the right to receive dividends, when and as
declared by the Board of Directors out of assets legally
available therefor, and (ii) in the event of any
distribution of assets upon liquidation, dissolution or
winding up of the Corporation or otherwise, the right to
receive ratably and equally with all holders of all Common
Stock all the assets and funds of the Corporation remaining
after the payment to the holders of the Preferred Stock of
the specific amounts that they are entitled to receive upon
such liquidation, dissolution or winding up of the
Corporation, if any.
(B) Preferred Stock. Preferred Stock may be issued
from time to time in one or more series, each of such series
to have such terms as stated in the resolution or
resolutions providing for the establishment of such series
adopted by the Board of Directors of the Corporation as
hereinafter provided. Except as otherwise expressly stated
in the resolution or resolutions providing for the
establishment of a series of Preferred Stock, any shares of
Preferred Stock that may be redeemed, purchased or acquired
by the Corporation may be reissued except as otherwise
expressly provided by law. Different series of Preferred
Stock shall not be construed to constitute different classes
of stock for the purpose of voting by classes unless
expressly provided in the resolution or resolutions
providing for the establishment thereof. The Board of
Directors of the Corporation is hereby expressly authorized
to issue, from time to time, shares of Preferred Stock in
one or more series, and, in connection with the
establishment of any such series by resolution or
resolutions, to determine and fix the number of shares
constituting that series and the distinctive designation of
that series and to determine and fix such voting powers,
full or limited, or no voting powers, and such other powers,
designations, preferences and relative, participating,
optional and other rights, and the qualifications,
limitations and restrictions thereof, including, without
limitation, dividend rights, conversion rights, redemption
privileges and liquidation preferences, as shall be stated
in such resolution or resolutions, all to the fullest extent
permitted by the DGCL. Without limiting the generality of
the foregoing, the resolution or resolutions providing for
the establishment of any series of Preferred Stock may, to
the extent permitted by
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law, provide that such series shall be superior to, rank
equally with or be junior to the Preferred Stock of any
other series. Except as otherwise expressly provided in the
resolution or resolutions providing for the establishment of
any series of Preferred Stock, no vote of the holders of
shares of Preferred Stock or Common Stock shall be a
prerequisite to the issuance of any shares of any series of
the Preferred Stock authorized by and complying with the
conditions of this Certificate of Incorporation.
FIFTH: For the management of the business and for the
conduct of the affairs of the Corporation, and in further
definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders, it is further
provided:
(A) Powers and Authorities of Board of Directors. In
furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered:
(i) to make, alter, amend or repeal the Bylaws in
any manner not inconsistent with the laws of the State
of Delaware or this Certificate of Incorporation;
(ii) without the assent or vote of the
stockholders, to authorize and issue securities and
obligations of the Corporation, secured or unsecured,
and to include therein such provisions as to
redemption, conversion or other terms thereof as the
Board of Directors in its sole discretion may
determine, and to authorize the mortgaging or pledging,
as security therefor, of any property of the
Corporation, real, personal or mixed, including after-
acquired property;
(iii) to determine whether any, and if any,
what part, of the net profits of the Corporation or of
its surplus shall be declared in dividends and paid to
the stockholders, and to direct and determine the use
and disposition of any such net profits or such
surplus; and
(iv) to fix from time to time the amount of net
profits of the Corporation or of its surplus to be
reserved as working capital or for any other lawful
purpose.
In addition to the powers and authorities herein or by
statute expressly conferred upon it, the Board of Directors
may exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the laws of the State of
Delaware, this Certificate of Incorporation and the Bylaws
of the Corporation.
(B) Director or Officer Removal. Any director or any
officer elected or appointed by the stockholders or by the
Board of Directors may be removed at any time in such manner
as shall be provided in the Bylaws of the Corporation.
(C) Amendment to Certificate of Incorporation. From
time to time any of the provisions of this Certificate of
Incorporation may be altered, amended or repealed, and other
provisions authorized by the laws of the State of Delaware
at the time in force may be added or inserted, in the manner
and at the time prescribed by said laws, and all rights at
any time conferred upon the stockholders of the Corporation
by this Certificate of Incorporation are granted subject to
the provisions of this paragraph (C).
SIXTH: No director of the Corporation shall be personally
liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director of the
Corporation; PROVIDED, HOWEVER, that the foregoing is not
intended to eliminate or limit the liability of a director of the
Corporation for (i) any breach of a director's duty of loyalty to
the Corporation or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) a violation of Section 174 of the
DGCL, or (iv) any transaction from which the director derived an
improper personal benefit. If the DGCL is hereafter amended to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended. No amendment to or
repeal of this Article SIXTH shall apply to or have any effect on
the liability or alleged liability of
A-2
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any director of the Corporation for or with respect to any acts
or omissions of such director occurring prior to such amendment
or repeal.
SEVENTH: The Corporation shall, to the fullest extent
permitted by Section 145 of the DGCL, as that Section may be
amended and supplemented from time to time, indemnify any
director or officer of the Corporation (and any director, trustee
or officer of any corporation, business trust or other entity to
whose business the Corporation shall have succeeded) which it
shall have power to indemnify under that Section against any
expenses, liabilities or other matter referred to in or covered
by that Section. The indemnification provided for in this
Article SEVENTH (a) shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any
Bylaw, agreement or vote of stockholders or disinterested
directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding
such office, (b) shall continue as to a person who has ceased to
be a director or officer and (c) shall inure to the benefit of
the heirs, executors and administrators of such a person. To
assure indemnification under this Article of all such persons who
are determined by the Corporation or otherwise to be or to have
been "Fiduciaries" of any employee benefit plan of the
Corporation that may exist from time to time and that is governed
by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time, such Section
145 shall, for the purposes of this Article, be interpreted as
follows: an "other enterprise" shall be deemed to include such
an employee benefit plan; the Corporation shall be deemed to have
requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Corporation also
imposes duties on, or otherwise involves services by, such person
to the plan or participants or beneficiaries of the plan; excise
taxes assessed on a person with respect to an employee benefit
plan pursuant to such Act of Congress shall be deemed "fines;"
and action taken or omitted by a person with respect to an
employee benefit plan in the performance of such person's duties
for a purpose reasonably believed by such person to be in the
interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose that is not opposed to the best
interests of the Corporation.
EIGHTH: Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative
vote of at least 66 2/3% of the outstanding shares of the Common
Stock of the Corporation shall be required to amend or repeal
Article SIXTH, SEVENTH or EIGHTH of this Certificate of
Incorporation or to adopt any provision inconsistent therewith.
Further, the affirmative vote of at least 66 2/3% of the
outstanding shares of the Common Stock of the Corporation shall
be required to amend or repeal the Bylaws of the Corporation, if
the stockholders of the Corporation are required by the DGCL, the
Certificate of Incorporation or the Bylaws to vote thereon.
NINTH: Except as provided herein, the Corporation reserves
the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by the laws of the State of Delaware, and
all rights herein conferred are granted subject to this reserve
power. Notwithstanding the foregoing, the provisions set forth in
Articles SIXTH, SEVENTH and EIGHTH of this Certificate of
Incorporation may not be repealed or amended in any respect
unless such repeal or amendment is approved as specified in
Article EIGHTH herein.
TENTH: Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them
and/or between the Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the
Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as
the case may be, to be summoned in such manner as said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of the Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of the Corporation as the case may be,
and also on the Corporation.
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ELEVENTH: Meetings of stockholders may be held within or
without the State of Delaware as the Bylaws may provide. The
books of the Corporation may be kept (subject to any provision
contained in the DGCL) outside the State of Delaware at such
place or places as may be designated form time to time by the
Board of Directors or in the Bylaws of the Corporation.
TWELFTH: The Corporation elects not to be governed by
Section 203 of the DGCL.
THIRTEENTH: The name and mailing address of the
Incorporator of the Corporation is J. David Washburn, c/o Arter &
Hadden LLP, 1717 Main Street, Suite 4100, Dallas, Texas 75201.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th
day of April, 2000, and affirm the statements contained therein
as true under penalties of perjury.
/s/ J. DAVID WASHBURN
-----------------------------
J. David Washburn
Incorporator
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<PAGE>
BYLAWS
of
USARadio.com, Inc.
(a Delaware corporation)
ARTICLE I
Offices
SECTION 1.1. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State
of Delaware.
SECTION 1.2. The Corporation may also have offices at such
other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.1. Annual Meetings. The annual meeting of the
stockholders for the election of directors and for the
transaction of such other business as may properly come before
the meeting shall be held at such place within or without the
State of Delaware, and on such date and at such hour of the day
as the Board of Directors shall determine.
SECTION 2.2. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise
prescribed by statute or by the Certificate of Incorporation, may
be called by order of the President, and shall be called by the
President or Secretary at the request in writing of a majority of
the Board of Directors or the whole Executive Committee, if any.
Special meetings of the stockholders of the Corporation may not
be called by any other person or persons. Special meetings of the
stockholders shall be held at such place within or without the
State of Delaware, on such date, and at such time as may be
designated by the person or persons calling the meeting.
SECTION 2.3. Notice of Meetings. Written notice of every
meeting of stockholders, stating the time, place and purposes
thereof, shall be given personally or by mail at least ten (10),
but not more than sixty (60), days (except as otherwise provided
by law) before the date of such meeting to each person who
appears on the stock transfer books of the Corporation as a
stockholder and who is entitled to vote at such meeting. If such
notice is mailed, it shall be directed to such stockholder at his
address as it appears on the stock transfer books of the
Corporation.
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SECTION 2.4. Quorum. At any meeting of the stockholders
the holders of a majority of the shares of the Corporation
entitled to vote at such meeting, present in person or
represented by proxy, shall constitute a quorum for all purposes,
except where otherwise provided by law or in the Certificate of
Incorporation. A quorum, once established, shall not be broken
by the withdrawal of enough votes to leave less than a quorum and
the votes present may continue to transact business until
adjournment, provided that any action (other than adjournment) is
approved by at least a majority of the shares required to
constitute a quorum.
SECTION 2.5. Adjournments. If at any meeting of
stockholders a quorum shall fail to attend in person or by proxy,
the holders of a majority of the shares present in person or by
proxy and entitled to vote at such meeting may adjourn the
meeting from time to time until a quorum shall attend, and
thereupon any business may be transacted which might have been
transacted at the meeting as originally called. Notice need not
be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken;
provided, however, that if the adjournment is for more than
thirty (30) days or if after the adjournment a new record date is
fixed, notice of the adjourned date shall be given.
SECTION 2.6. Organization; Meeting Rules. The Chairman of
the Board, if one is elected, and in his absence the President,
and in their absence the Vice President, shall call meetings of
the stockholders to order and shall act as chairman thereof. The
Secretary or an Assistant Secretary of the Corporation shall act
as secretary at all meetings of the stockholders when present,
and, in the absence of both, the presiding officer may appoint
any person to act as secretary. The chairman of any meeting of
stockholders shall determine the order of business and the rules
and procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as he may deem
appropriate in his discretion.
SECTION 2.7. Voting. At each meeting of the stockholders,
each holder of the shares of Common Stock shall be entitled to
one vote on such matter for each such share and may exercise such
voting right either in person or by proxy appointed by an
instrument in writing subscribed by such stockholder or his duly
authorized attorney. No such proxy shall be voted or acted upon
after eleven (11) months from its date unless the proxy provides
for a longer period. Voting need not be by ballot. All
elections of directors shall be decided by a plurality vote and
all questions decided and actions authorized by a majority vote,
except as otherwise required by law.
SECTION 2.8. Inspectors. At any meeting of stockholders,
inspectors of election may be appointed by the presiding officer
of the meeting for the purpose of opening and closing the polls,
receiving and taking charge of the proxies, and receiving and
counting the ballots or the vote of stockholders otherwise given.
The inspectors shall be appointed by the presiding officer of the
meeting, shall be sworn to faithfully perform their duties, and
shall in writing certify to the returns. No candidate for
election as director shall be appointed or act as inspector.
SECTION 2.9. Stockholder List. At least ten (10) days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of such
stockholder, shall be prepared and held open to the examination
of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for said ten (10) days either at a
place within the city where the meeting is to be held, which
place
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shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the meeting during the
whole time thereof, and may be inspected by any stockholder who
is present.
SECTION 2.10. Business to be Transacted at Meetings. At a
meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting.
To be properly brought before a special meeting, business must be
specified in the notice of the meeting (or any supplement
thereto). To be properly brought before an annual meeting,
business must be (a) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting
by or at the direction of the Board of Directors or (c) otherwise
properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a
stockholder, the stockholder must, in addition to any
requirements imposed by federal securities law or other laws,
have given timely notice thereof in writing to the secretary of
the Corporation. To be timely for an annual meeting, a
stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the Corporation, no later
than ninety (90) days prior to the scheduled meeting, regardless
of any postponements, deferrals or adjournments of that meeting
to a later date; provided, however, if less than one hundred
(100) days notice or prior public disclosure of the date of the
scheduled meeting is given, notice by the stockholders must be so
delivered or received not later than the close of business on the
tenth (10th) day following the earlier of the day on which such
notice of the date of the scheduled annual meeting was mailed or
the day on which public disclosure was made. A stockholder's
notice to the secretary with regard to an annual meeting shall
set forth as to each matter that the stockholder proposes to
bring before the meeting, (a) a brief description of the business
desired to be brought before the meeting and the reasons for
conducting such business at the annual meeting, (b) the name and
address, as they appear on the Corporation's books, of the
stockholders supporting such proposal, (c) the class and number
of shares of the Corporation that are beneficially owned by the
supporting stockholders on the date of the presenting
stockholders' notice and (d) any material interest of the
presenting or supporting stockholders in such business. The
Chairman of the meeting may refuse to bring before a meeting any
business not properly brought before the meeting in compliance
with this section.
SECTION 2.10 Informal Action. Any action that may be taken
at any annual or special meeting of the stockholders of the
Corporation, may be takem without a meeting, without prior notice,
and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and
voted, provided that a consent must bear the date of each
stockholder's signature and no consent will be effective unless
written consents received by a sufficient number of stockholders
to take the contemplated action are delivered to the Corporation
within sixty (60) days of the date that the earliest consent is
delivered to the Corporation. Prompt notice of the taking of
corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not
consented in writing. In the event that the action which is
consented to is such as would have required the filing of a
certificate under any section of Delaware law, if such action had
been voted on by stockholders at a meeting thereof, the
certificate filed under any other section shall state, in lieu of
any statement required by such section concerning any vote of
stockholders, that written consent and that written notice have
been given in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
ARTICLE III
Directors
SECTION 3.1. Functions and Number. The property, business
and affairs of the Corporation shall be managed and controlled by
a Board of Directors, who need not be stockholders, citizens of
the United States or residents of the State of Delaware. The
number of members which shall constitute the Board of Directors
shall be determined from time to time by resolution of the Board
of Directors or by the stockholders at an annual or special
meeting held for that purpose, but no decrease in the Board of
Directors shall have the effect of shortening the term of an
incumbent director. Upon approval of these Bylaws, the Board of
Directors shall consist of two (2) members, such number to
constitute the whole Board. The use of the phrase "whole Board"
herein refers to the total number of directors which the
Corporation would have if there were no vacancies. Except as
otherwise provided by law or in these Bylaws or in the
Certificate of Incorporation, the directors shall be elected by
the stockholders entitled to vote at the annual meeting of
stockholders of the Corporation. Subject to law, to the
Certificate of
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Incorporation and to the other provisions of these Bylaws, each
director shall hold office until his or her term of office
expires and until his or her successor shall have been elected
and qualified.
SECTION 3.2. Removal. Any director may be removed by the
affirmative vote of the holders of a majority of the then
outstanding shares of Common Stock only for cause.
SECTION 3.3. Vacancies. Unless otherwise provided in the
Certificate of Incorporation or in these Bylaws, vacancies among
the directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number
of directors or otherwise, may be filled by a majority of the
directors then in office, although less than a quorum, or by a
sole remaining director. Vacancies that occur on the Board of
Directors during the year may be filled by the Board of Directors
as hereinabove provided for the unexpired term of the vacating
directors predecessor in office.
SECTION 3.4. Place of Meeting. The directors may hold
their meetings and may have one or more offices and keep the
books of the Corporation (except as otherwise may at any time be
provided by law) at such place or places within or without the
State of Delaware as the Board may from time to time determine.
SECTION 3.5. Annual Meeting. The newly elected Board may
meet for the purpose of organization, the election of officers
and the transaction of other business, at such time and place
within or without the State of Delaware as shall be fixed as
provided in Section 3.7 of this Article for special meetings of
the Board of Directors.
SECTION 3.6. Regular Meetings. Regular meetings of the
Board of Directors shall be held at such time and place within or
without the State of Delaware as the Board of Directors shall
from time to time by resolution determine and no notice of such
regular meetings shall be required.
SECTION 3.7. Special Meetings. Special meetings of the
Board of Directors shall be held whenever called by the direction
of the President or of one-third of the directors then in office.
The Secretary or some other officer or director of the
Corporation shall give notice to each director of the time and
place of each special meeting by mailing the same at least three
(3) days before the meeting or by telexing, telegraphing or
telephoning the same not later than the day before the meeting,
at the residence address of each director or at his usual place
of business. Special meetings of the Board shall be held at such
place within or without the State of Delaware as shall be
specified in the call for the meeting. Unless expressly required
by statute, by the Certificate of Incorporation or by the Bylaws,
neither the business to be transacted at, nor
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the purpose of, any special meeting of the Board of Directors
need be specified in the notice of a meeting.
SECTION 3.8. Quorum. Except as otherwise provided by law
or in the Certificate of Incorporation, a majority of the
directors in office shall constitute a quorum for the transaction
of business. A majority of those present at the time and place
of any regular or special meeting, if less than a quorum be
present, may adjourn from time to time without notice, until a
quorum be had. The act of a majority of directors present at any
meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise provided by law or in
the Certificate of Incorporation.
SECTION 3.9. Compensation. The Board of Directors shall
have the authority to fix by resolution the compensation of
directors.
SECTION 3.10. Organization. At all meetings of the Board
of Directors, the President, or in his absence the Vice President
if he is a member of the Board, or in their absence, a chairman
chosen by the directors shall preside. The Secretary or an
Assistant Secretary of the Corporation shall act as secretary at
all meetings of the Board of Directors when present, and, in the
absence of both, the presiding officer may appoint any person to
act as secretary.
SECTION 3.11. Telephone Meetings. Any member of the Board
of Directors may participate in any meeting of such Board by
means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can
hear each other, and participation in any meeting pursuant to
this provision shall constitute presence in person at such
meeting.
SECTION 3.12. Informal Action. Any action required or
permitted to be taken at any meeting of the Board of Directors,
or any committee thereof, may be taken without a meeting if all
the members of the Board consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of
the Board.
SECTION 3.13. Nomination of Director Candidates. Subject
to the rights of the holders of Preferred Stock or any other
class of capital stock of the Corporation (other than Common
Stock) or any series of any of the foregoing that has been
outstanding, nominations for the election of directors may be
made by the Board of Directors, by any duly appointed committee
thereof or by any stockholder entitled to vote for the election
of directors. Any stockholder entitled to vote for the election
of directors at any meeting may nominate persons for election as
directors only if written notice of such stockholder's intent to
make such nomination is given, either by personal delivery or by
United States Mail, postage prepaid, to the Secretary of the
Corporation not later than ninety (90) days prior to the
scheduled meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however,
if less than one hundred (100) days notice or prior public
disclosure of the date of the scheduled meeting is given, notice
by the stockholders must be so delivered or received not later
than the close of business on the tenth (10th) day following the
earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which public
disclosure was made. Each such notice shall set forth: (a) the
name, age, business address and residence address of the person
or persons intended to be nominated; (b) a representation that
the stockholder is a
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holder of record of stock of the Corporation entitled to vote at
such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d)
such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had such requirements been applicable and
each nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve
as a director of the Corporation if so elected. The Chairman of
the meeting may refuse to acknowledge the nomination of any
person not made in compliance with this section.
ARTICLE IV
Committees
SECTION 4.1. Executive Committee. The Board of Directors,
by a resolution passed by a vote of a majority of the whole
Board, may appoint an Executive Committee of one or more
directors, which to the extent permitted by law and in said
resolution shall, during the intervals between the meetings of
the Board of Directors, in all cases where special directions
shall not have been given by the Board, have and exercise the
powers of the Board of Directors, including those powers
enumerated in these Bylaws which are not specifically reserved to
the Board of Directors, in the management of the property,
business and affairs of the Corporation; provided, however, that
the Executive Committee shall not have any power or authority to
amend the Certificate of Incorporation, to adopt any agreement of
merger or consolidation, to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the
Corporation's property and assets, to recommend to the
stockholders a dissolution of the Corporation or a revocation of
dissolution, to amend the Bylaws of the Corporation, to declare a
dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger. The Executive Committee
shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. The Board of
Directors shall appoint the Chairman of the Executive Committee.
The members of the Executive Committee shall receive such
compensation and fees as from time to time may be fixed by the
Board of Directors.
SECTION 4.2. Alternates and Vacancies. The Board of
Directors may designate one or more directors as alternate
members of the Executive Committee who may replace any absent or
disqualified member at any meeting of the Executive Committee.
In the absence or disqualification of a member of the Executive
Committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any
such absent or disqualified member. All other vacancies in the
Executive Committee shall be filled by the Board of Directors in
the same manner as original appointments to such Committee.
SECTION 4.3. Committees to Report to Board. The Executive
Committee shall keep regular minutes of its proceedings and all
action by the Executive Committee shall be reported to the Board
of Directors at its meeting next succeeding such action.
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SECTION 4.4. Procedure. The Executive Committee shall fix
its own rules of procedure, and shall meet where and as provided
by such rules or by resolution of the Board of Directors. The
presence of a majority of the then appointed number of each
committee created pursuant to this Article IV shall constitute a
quorum and in every case an affirmative vote by a majority of the
members of the committee present and not disqualified from voting
shall be the act of the committee.
SECTION 4.5. Other Committees. From time to time the
Board of Directors by a resolution adopted by a majority of the
whole Board may appoint any other committee or committees for any
purpose or purposes, to the extent lawful, which shall have such
powers as shall be determined and specified by the Board of
Directors in the resolution of appointment.
SECTION 4.6. Termination of Committee Membership. In the
event any person shall cease to be a director of the Corporation,
such person shall simultaneously therewith cease to be a member
of any committee appointed by the Board of Directors, or any
subcommittee thereof.
ARTICLE V
Officers
SECTION 5.1. Executive Officers. The executive officers
of the Corporation may consist of a Chairman of the Board, a
President and Chief Executive Officer, one or more Vice
Presidents, a Treasurer and a Secretary, all of whom shall be
elected annually by the Board of Directors. Unless otherwise
provided in the resolution of election, each officer shall hold
office until the next annual election of directors and until his
successor shall have been qualified. Any two of such offices may
be held by the same person.
SECTION 5.2. Subordinate Officers. The Board of Directors
may appoint one or more Assistant Secretaries, one or more
Assistant Treasurers and such other subordinate officers and
agents as it may deem necessary or advisable, for such term as
the Board of Directors shall fix in such appointment, who shall
have such authority and perform such duties as may from time to
time be prescribed by the Board.
SECTION 5.3. Compensation. The Board of Directors shall
have the power to fix the compensation of all officers, agents
and employees of the Corporation, which power, as to other than
elected officers, may be delegated as the Board of Directors
shall determine.
SECTION 5.4. Removal. All officers, agents and employees
of the Corporation shall be subject to removal, with or without
cause, at any time by affirmative vote of the majority of the
whole Board of Directors whenever, in the judgment of the Board
of Directors, the best interests of the Corporation will be
served thereby. The power to remove agents and employees, other
than officers or agents elected or appointed by the Board of
Directors, may be delegated as the Board of Directors shall
determine.
SECTION 5.5. Chairman of the Board. If a Chairman of the
Board is elected, he shall be chosen from among the members of
the Board of Directors and shall preside at all meetings of the
directors and the stockholders of the Corporation. The Chairman
of the Board
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shall, in general, have supervisory power over the Chief
Executive Officer and all other officers of the Corporation.
SECTION 5.6. The Chief Executive Officer. The Chief
Executive Officer shall be the chief operating officer of the
Corporation and shall be responsible for insuring that the
President of the Corporation is capable of fulfilling his duties
to the Corporation and shall perform such other duties as the
Board of Directors shall prescribe.
SECTION 5.7. The President. The President shall have the
general powers and duties of supervision and management of the
Corporation, shall report directly to the Chief Executive
Officer, and shall see that all orders and resolutions of the
Board of Directors are carried into effect. The President shall
preside at all meetings of the stockholders and directors at
which he is present. The President shall also perform such other
duties as may from time to time be assigned to him by the Board
of Directors.
SECTION 5.8. Vice Presidents. Each Vice President shall
perform such duties and shall have such authority as from time to
time may be assigned to him by the Board of Directors or the
President.
SECTION 5.9. The Treasurer. The Treasurer shall have the
general care and custody of all the funds and securities of the
Corporation which may come into his hands and shall deposit the
same to the credit of the Corporation in such bank or banks or
depositaries as from time to time may be designated by the Board
of Directors or by an officer or officers authorized by the Board
of Directors to make such designation, and the Treasurer shall
pay out and dispose of the same under the direction of the Board
of Directors. He shall have general charge of all securities of
the Corporation and shall in general perform all duties incident
to the position of Treasurer.
SECTION 5.10. The Secretary. The Secretary shall keep the
minutes of all proceedings of the Board of Directors and the
minutes of all meetings of the stockholders and also, unless
otherwise directed by such committee, the minutes of each
standing committee, in books provided for that purpose, of which
he shall be the custodian; he shall attend to the giving and
serving of all notices for the Corporation; he shall have charge
of the seal of the Corporation, of the stock certificate books
and such other books and papers as the Board of Directors may
direct; and he shall in general perform all the duties incident
to the office of Secretary and such other duties as may be
assigned to him by the Board of Directors.
SECTION 5.11. Vacancies. All vacancies among the officers
for any cause shall be filled only by the Board of Directors.
SECTION 5.12. Bonding. The Board of Directors shall have
power to require any officer or employee of the Corporation to
give bond for the faithful discharge of his duties in such form
and with such surety or sureties as the Board of Directors may
deem advisable.
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ARTICLE VI
Stock
SECTION 6.1. Form and Execution of Certificates. The
shares of stock of the Corporation shall be represented by
certificates in such form as shall be approved by the Board of
Directors; provided that the Board of Directors of the
Corporation may provide by resolution that some or all of any or
all classes or series of its stock (other than the Common stock
of the Corporation) shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate
until such certificate is surrendered to the Corporation; and,
notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and
every holder of uncertificated shares shall be entitled to a
certificate or certificates representing his shares upon delivery
of a written request therefor to the Secretary of the
Corporation. The certificates shall be signed by the President
or the Vice President and the Treasurer or the Secretary or an
Assistant Treasurer or Assistant Secretary, except that where any
such certificates shall be countersigned by a transfer agent and
by a registrar, the signatures of any of the officers above
specified, and the seal of the Corporation upon such
certificates, may be facsimiles, engraved or printed. In case
any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon such certificate shall
have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of its issue.
SECTION 6.2. Regulations. The Board of Directors may make
such rules and regulations consistent with any governing statute
as it may deem expedient concerning the issue, transfer and
registration of certificates of stock and concerning certificates
of stock issued, transferred or registered in lieu or replacement
of any lost, stolen, destroyed or mutilated certificates of
stock.
SECTION 6.3. Fixing of Record Date. For the purpose of
determining the stockholders entitled to notice of, and to vote
at, any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or for the purpose of determining stockholders entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix, in
advance, a date as the record date for any such determination of
stockholders, and all persons who are stockholders of record on
the date so fixed, and no others, shall be entitled to notice of,
and to vote at, such meeting or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock or to take any other
lawful action, as the case may be. Such record date shall not be
more than sixty (60) days nor less than ten (10) days before the
date of any such meeting, nor more than sixty (60) days prior to
any other action, provided that any record date established by
the Board of Directors may not precede the date of the resolution
establishing the record date. The record date for determining
stockholders entitled to consent to corporate actions in writing
shall not be more than ten (10) days after the date upon which
the resolution fixing the record date was adopted. If no record
date is established prior to an action undertaken by consent, the
record date shall be, if no action of the Board of Directors is
required, the first date on which a signed written consent
setting forth the action taken is delivered to the corporation.
If action by the Board of Directors is required, the record date
shall be the close of business on the day the board adopts the
resolution taking the prior action.
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Section 6.4. Transfer Agent and Registrar. The Board of
Directors may appoint a transfer agent or transfer agents and a
registrar or registrars for any or all classes of the capital
stock of the Corporation, and may require stock certificates of
any or all classes to bear the signature of either or both.
ARTICLE VII
Seal
SECTION 7.1. Seal. The seal of the Corporation shall be
circular in form and contain the name of the Corporation, the
year of its organization, and the words "CORPORATE SEAL,
DELAWARE", which seal shall be in charge of the Secretary to be
used as directed by the Board of Directors.
ARTICLE VIII
Fiscal Year
SECTION 8.1. Fiscal Year. The fiscal year of the
Corporation shall be the calendar year unless otherwise fixed by
resolution of the Board of Directors.
ARTICLE IX
Waiver of Notice
SECTION 9.1. Waiver of Notice. Any person may waive any
notice required to be given by law, in the Certificate of
Incorporation or under these Bylaws by attendance in person, or
by proxy if a stockholder, at any meeting, except when such
person attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, or by a
writing signed by the person or persons entitled to said notice,
whether before or after the time stated in said notice, which
waiver shall be deemed equivalent to such notice. Neither the
business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors, or members of a
committee appointed by the Board of Directors need be specified
in any written waiver of notice.
ARTICLE X
Checks, Notes, Drafts, Contracts, Voting of Securities, Etc.
SECTION 10.1. Checks, Notes, Drafts, Etc. All checks,
notes, drafts or other orders for the payment of money of the
Corporation shall be signed, endorsed or accepted in the name of
the Corporation by such officer, officers, person or persons as
from time to time may be designated by the Board of Directors or
by an officer or officers authorized by the Board of Directors to
make such designation.
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SECTION 10.2. Execution of Contracts, Deeds, Etc. The
Board of Directors may authorize any officer or officers, agent
or agents, in the name and on behalf of the Corporation, to enter
into or execute and deliver any and all deeds, bonds, mortgages,
contracts and other obligations or instruments, and such
authority may be general or confined to specific instances.
SECTION 10.3. Provision Regarding Conflicts of Interests.
No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and
any other corporation, partnership, association, or other
organization in which one or more of its directors or officers
are directors or officers, or have a financial interest, shall
be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting
of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because his or their votes
are counted for such purpose, if:
(a) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the Board of Directors or the committee, and
the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the shareholders entitled to vote thereon,
and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or
(c) The contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof, or
the shareholders.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors
or of a committee which authorizes the contract or transaction.
SECTION 10.4. Voting of Securities Owned by the
Corporation. Subject always to the specific directions of the
Board of Directors, any share or shares of stock or other
securities issued by any other corporation and owned or
controlled by the Corporation may be voted, whether by written
consent as set forth hereinbelow or at any meeting of such other
corporation, by the President of the Corporation, or in the
absence of the President, by any Vice President of the
Corporation who may be present at such meeting or available to
sign such written consent. Whenever in the judgment of the
President, or in his absence, of any Vice President, it shall be
desirable for the Corporation to execute a proxy or give a
consent with respect to any share or shares of stock or other
securities issued by any other corporation and owned by the
Corporation, such proxy or consent shall be executed in the name
of the Corporation by the President or one of the Vice Presidents
of the Corporation without necessity of any authorization by the
Board of Directors. Any person or persons so designated as the
proxy or proxies of the Corporation shall have full right, power
and authority to vote the share or shares of stock or other
securities issued by such other corporation and owned by the
Corporation.
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ARTICLE XI
Indemnification and Insurance
SECTION 11.1. Third-Party Actions. The Corporation shall
indemnify and hold harmless any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed proceeding (other than an action by or in the right of
the Corporation) by reason of the fact that he or she is or was a
director or officer of the Corporation, against expenses
(including reasonable attorneys' fees), judgments, fines,
liabilities, losses and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
proceeding if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best
interest of the Corporation, and, with respect to any criminal
proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
SECTION 11.2. Derivative Actions. The Corporation shall
indemnify and hold harmless any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or
she is or was a director or officer of the Corporation, against
expenses (including reasonable attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense
or settlement of such proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the
court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses that the
court shall deem proper.
SECTION 11.3. Right to Indemnification of Expenses. To the
extent that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any
proceeding referred to in Sections 11.1 and 11.2 or in defense of
any claim, issue or matter therein, he or she shall be
indemnified against expenses (including reasonable attorneys'
fees) actually and reasonably incurred by him or her in
connection therewith.
SECTION 11.4 Determination of Indemnification. Any
indemnification under Sections 11.1 and 11.2 (unless ordered by a
court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
director or officer is proper in the circumstances because he or
she has meet the applicable standards of conduct set forth in
Sections 11.1 and 11.2. Such determination shall be made (A) by
the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or
proceeding, (B) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or (C) by the
stockholders.
B-12
<PAGE>
SECTION 11.5 Expenses of Contested Indemnification Claims.
If a claim under Section 11.1 or 11.2 is not paid in full by the
Corporation within thirty (30) days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall also be entitled to be paid the expenses
of prosecuting such claim.
SECTION 11.6 Advancement of Expenses. Expenses (including
reasonable attorneys' fees) incurred by a director or officer in
defending any proceeding or prosecuting a claim under Section
11.5 shall be paid by the Corporation in advance of the final
disposition of such proceeding or suit upon receipt of a written
affirmation by the director or officer of his or her good faith
belief that he or she has met the standard of conduct necessary
for indemnification and a written undertaking by or on behalf of
the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 11.7 Indemnification Not Exclusive. The
indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate of
Incorporation, any other bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity
while holding such office.
SECTION 11.8 Survival of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director or officer and shall inure
to the benefit of the heirs, executors and administrators of such
person.
SECTION 11.9 Employees, Agents and Others. The
Corporation may, to the fullest extent of the provisions of this
Article with respect to directors and officers and to the extent
authorized from time to time by the Board of Directors, grant
rights of indemnification and advancement of expenses to any
employee or agent of the Corporation or any other person who is
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.
SECTION 11.10 Contract Right. Each of the rights of
indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall be a contract right and
any repeal or amendment of the provisions of this Article shall
not adversely affect any such right of any person existing at the
time of such repeal or amendment with respect to any act or
omission occurring prior to the time of such repeal or amendment,
and further, shall not apply to any proceeding, irrespective of
when the proceeding is initiated, arising from the service of
such person prior to such repeal or amendment.
SECTION 11.11 Insurance. The Corporation shall have power
to purchase and maintain insurance on behalf of any person who is
or was a director, officer,
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<PAGE>
employee or agent of the Corporation or is 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 liability asserted against him or
her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against such
liability under the provisions of this Article.
SECTION 11.12 Certain References Under Article XI. For
purposes of this Article, the following references shall have the
following meanings:
(A) "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or
merger that, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers,
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 the provisions of this Article 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;
(B) "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan;
(C) a person who acted in good faith and in a manner
he or she reasonably believed to be in the best interest of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the corporation;"
(D) "other enterprises" shall include employee benefit
plans;
(E) "proceeding" shall include any pending or
completed action, suit or proceeding, whether formal or informal
or civil, criminal, administrative, arbitrative or investigative,
any appeal in such an action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit or
proceeding;
(F) "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of
the Corporation that imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an
employee benefit plan.
B-14
<PAGE>
EXHIBIT C
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Merger Agreement") is
entered into on this 4th day of May, 2000 by and between
USARADIO.COM, INC., a Colorado corporation ("USARadio-Colorado")
and USARADIO.COM, INC., a Delaware corporation (hereinafter
referred to as "USARadio-Delaware").
RECITALS:
WHEREAS, USARadio-Colorado is a corporation duly organized
and existing under the laws of the State of Colorado;
WHEREAS, USARadio-Delaware is a corporation duly organized
and existing under the laws of the State of Delaware;
WHEREAS, on the date hereof, the authorized capital of
USARadio-Colorado consists of Twenty Million (20,000,000) shares
of common stock, no par value per share ("USARadio-Colorado
Common Stock"), of which 13,516,720 shares are issued and
outstanding;
WHEREAS, on the date hereof, the authorized capital of
USARadio-Delaware consists of (A) Thirty Million (30,000,000)
shares of common stock, par value $.001 per share ("USARadio-
Delaware Common Stock"), of which 100 shares are issued and
outstanding and (B) Five Million (5,000,000) shares of preferred
stock, par value $0.001 per share, of which no shares are issued
and outstanding;
WHEREAS, the respective Boards of Directors of USARadio-
Colorado and USARadio-Delaware have determined that it is
advisable and in the best interests of each such corporation that
USARadio-Colorado merge with and into USARadio-Delaware upon the
terms and subject to the conditions of this Merger Agreement for
the purpose of effecting the reincorporation of USARadio-Colorado
in the State of Delaware, and the respective Boards of Directors
of USARadio-Colorado and USARadio-Delaware have, by resolutions
duly adopted, approved and adopted this Merger Agreement; and
WHEREAS, the parties intend by this Merger Agreement to
effect a "reorganization" under Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, the
parties hereto agree as follows:
AGREEMENTS:
1. Merger. At the Effective Time (as hereinafter
defined), USARadio-Colorado shall be merged with and into
USARadio-Delaware (the "Merger"). USARadio-Delaware shall be the
surviving corporation of the Merger (hereinafter sometimes
referred to as the "Surviving Corporation"), and the separate
corporate existence of USARadio-Colorado shall cease. The Merger
shall become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Colorado. The date and time
when the Merger shall become effective is herein referred to as
the "Effective Time."
2. Governing Documents.
(a) The Certificate of Incorporation of USARadio-
Delaware as it may be amended or restated subject to
applicable law, and as in effect immediately prior to the
Effective Time, shall constitute
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<PAGE>
the Certificate of Incorporation of the Surviving Corporation
without further change or amendment until thereafter amended
in accordance with the provisions thereof and applicable law.
(b) The Bylaws of USARadio-Delaware as in effect
immediately prior to the Effective Time shall constitute the
Bylaws of the Surviving Corporation without change or
amendment until thereafter amended in accordance with the
provisions thereof and applicable law.
3. Officers and Directors. The persons who are officers
and directors of USARadio-Colorado immediately prior to the
Effective Time shall, after the Effective Time, be the officers
and directors of the Surviving Corporation, without change until
their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws and applicable law.
4. Rights, Privileges, Etc. At the Effective Time, the
separate corporate existence of USARadio-Colorado shall cease,
and the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public or private nature
and be subject to all the restrictions, disabilities and duties
of USARadio-Colorado; and all the rights, privileges, powers and
franchises of USARadio-Colorado on whatever account, as well for
share subscriptions and all other things in action, shall be
vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of the
Surviving Corporation as the same were of USARadio-Colorado, and
the title to any real estate vested by deed or otherwise shall
not revert or be in any way impaired by reason of the Merger, but
all rights of creditor and liens upon any property of USARadio-
Colorado shall be reserved unimpaired, and all debts, liabilities
and duties of USARadio-Colorado shall thenceforth attach to the
Surviving Corporation and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred
or contracted by it; provided, however, that such liens upon
property of USARadio-Colorado will be limited to the property
affected thereby immediately prior to the Merger. All corporate
acts, plans, policies, agreements, arrangements, approvals and
authorizations of USARadio-Colorado, its stockholders, Board of
Directors and committees thereof, officers and agents which were
valid and effective immediately prior to the Effective Time,
shall be taken for all purposes as the acts, plans, policies,
agreements, arrangements, approvals and authorizations of the
Surviving Corporation, its stockholders, Board of Directors and
committees thereof, respectively, and shall be as effective and
binding thereon a the same were with respect to USARadio-
Colorado.
5. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder
thereof:
a. Each share of USARadio-Colorado Common Stock
outstanding immediately prior to the Effective Time shall,
except as provided in Section 8 hereof, be converted into,
and shall become, one fully paid and nonassessable share of
USARadio-Delaware Common Stock.
b. Each share of USARadio-Colorado Common Stock held
in the treasury of USARadio-Colorado immediately prior to
the Effective Time shall be automatically converted into one
share of USARadio-Delaware Common Stock, which shares shall
continue to be retained and held by USARadio-Delaware in the
treasury thereof.
c. Each option, warrant, purchase right, convertible
debt instrument or other security of USARadio-Colorado
issued and outstanding immediately prior to the Effective
Time shall be changed and converted into and shall be an
identical security of USARadio-Delaware, and the same number
of shares of USARadio-Delaware Common Stock shall be
reserved for purposes of the exercise of such option,
warrant, purchase right, convertible debt instrument or
other securities as is equal to the number of shares of
USARadio-Colorado Common Stock so reserved at the Effective
Time.
C-2
d. Each share of USARadio-Delaware Common Stock
issued and outstanding immediately prior to the Effective
Time shall be canceled and retired, and no payment shall be
made with respect thereto, and such shares shall resume the
status of unauthorized and unissued shares of USARadio-
Delaware Common Stock.
<PAGE>
6. Stock Certificates. At and after the Effective Time,
all of the outstanding certificates which immediately prior to
the Effective Time represented shares of USARadio-Colorado Common
Stock shall be deemed for all purposes to evidence ownership of,
and to represent shares of, USARadio-Delaware Common Stock into
which the shares of USARadio-Colorado Common Stock formerly
represented by such certificates have been converted as herein
provided. The registered owner on the books and records of
USARadio-Colorado or its transfer agent of any such outstanding
stock certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the
Surviving Corporation or its transfer agent, have and be entitled
to exercise any voting or other rights with respect to and to
receive any dividends and other distributions upon the shares of
USARadio-Delaware Common Stock evidenced by such outstanding
certificate as above provided.
7. Employee Benefit Plans. As of the Effective Time, the
Surviving Corporation hereby assumes all obligations of USARadio-
Colorado under any and all employee benefit plans in effect as of
the Effective Time or with respect to which employee rights or
accrued benefits are outstanding as of the Effective Time.
8. Dissenting Stockholders.
a. Notwithstanding the provisions of Section 5.a.
hereof, any outstanding shares of USARadio-Colorado Common
Stock held by a stockholder who shall have elected to
dissent from the Merger and who shall have exercised and
perfected his right to dissent with respect to such shares
in accordance with Article 113 of the Colorado Business
Corporation Act (a "Dissenting Stockholder") shall not be
converted into shares of USARadio-Delaware Common Stock as a
result of the Merger, but such Dissenting Stockholders shall
be entitled to receive in lieu thereof only such
consideration as shall be provided in such Article 113,
except that shares of USARadio-Colorado Common Stock
outstanding immediately prior to the Effective Time and held
by a Dissenting Stockholder who shall thereafter withdraw
his election to dissent from the Merger or lose his right to
dissent from the Merger as provided in such Article 113
shall be deemed converted, as of the Effective Time, into
such number of shares of USARadio-Colorado Common Stock as
such holder otherwise would have been entitled to receive as
a result of the Merger.
b. USARadio-Delaware hereby agrees that it may be
served with process in the State of Colorado in any
proceeding to enforce any obligation or the rights of a
Dissenting Stockholder arising from the Merger. USARadio-
Delaware appoints the Secretary of State of Colorado as its
agent to accept service of process for any such proceeding
and a copy of such process shall be mailed by the Secretary
of State of the State of Colorado to USARadio-Delaware at
2290 Springlake Road, Suite 107, Dallas, Texas 75234,
Attention: Corporate Secretary.
9. Governing Law. This Merger Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware.
10. Amendment. Subject to applicable law and subject to
the rights of USARadio-Colorado's stockholders further to approve
any amendment which would have a material adverse effect on such
stockholders, this Merger Agreement may be amended, modified or
supplemented by written agreement of the parties hereto at any
time prior to the Effective Time with respect to any of the terms
contained herein.
11. Deferral or Abandonment. At any time prior to the
Effective Time, this Merger Agreement may be terminated and the
Merger may be abandoned or the time of consummation of the Merger
may be deferred for a reasonable time by the Board of Directors
of either USARadio-Colorado or USARadio-Delaware or both,
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<PAGE>
notwithstanding approval of this Merger Agreement by the
stockholders of USARadio-Colorado or the stockholders of USARadio-
Delaware, or both, if circumstances arise which, in the opinion
of the Board of Directors of USARadio-Colorado or USARadio-
Delaware, make the Merger inadvisable or such deferral of the
time of consummation thereof advisable.
12. Counterparts. This Merger Agreement may be executed in
any number of counterparts, each of which shall constitute an
original document but all of which together shall constitute one
and the same Agreement.
13. Further Assurances. From time to time, as and when
required or requested by either USARadio-Colorado or USARadio-
Delaware, as applicable, or by its respective successors and
assigns, there shall be executed and delivered on behalf of the
other corporation, or by its respective successors and assigns,
such deeds, assignments and other instruments, and there shall be
taken or caused to be taken by it all such further and other
action, as shall be appropriate or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to and possession of all property,
interests, assets, rights, privileges, immunities, powers,
franchise and authority of USARadio-Colorado and otherwise to
carry out the purposes of this Merger Agreement, and the officers
and directors of each corporation are fully authorized in the
name and on behalf of such corporation or otherwise, to take any
and all such action and to execute and deliver any and all such
deeds, assignments and other instruments.
IN WITNESS WHEREOF, USARadio-Colorado and USARadio-Delaware
have caused this Merger Agreement to be signed by their
respective duly authorized officers and delivered this 4th day of
May, 2000.
USARadio.com, Inc.
a Colorado corporation
/s/ MARK MADDOUS
----------------------------
By: Mark Maddoux
Its: Vice President
USARadio.com, Inc.
a Delaware corporation
/s/ ROBERT MARLIN MADDOUX
-----------------------------
By: Robert Marlin Maddoux
Its: President
C-4
<PAGE>
EXHIBIT D
COMPARISON OF COLORADO AND DELAWARE CORPORATION LAW
The rights of the stockholders of USARadio.com, Inc., a
Colorado corporation ("USARadio-Colorado") are governed by the
Colorado Business Corporation Act ("CBCA"). The stockholders of
USARadio-Colorado will become stockholders of a Delaware
corporation to be formed as a wholly-owned subsidiary of USARadio-
Colorado ("USARadio-Delaware") upon the consummation of the
merger of USARadio-Colorado into USARadio-Delaware (the
"Merger"). As stockholders of USARadio-Delaware, the
stockholders' rights will differ in certain respects (in some
cases materially) from those presently held under the CBCA and
the Articles of Incorporation of USARadio-Colorado (the "USARadio-
Colorado Articles").
Certain differences and similarities between the rights of
stockholders of USARadio-Delaware and those of USARadio-Colorado
are set forth below. This summary is not intended to be relied
upon as an exhaustive list of the differences or a detailed
description and analysis of the provisions discussed and is
qualified in its entirety by the CBCA, the USARadio-Colorado
Articles, the General Corporation Law of Delaware ("DGCL") and the
Certificate of Incorporation of USARadio-Delaware (the "USARadio-
Delaware Certificate").
Authorized Capital
- ------------------
The USARadio-Colorado Articles authorize an aggregate of
20,000,000 shares of USARadio-Colorado Common Stock.
The USARadio-Delaware Certificate authorizes an aggregate of
30,000,000 shares of USARadio-Delaware Common Stock.
The USARadio-Delaware Certificate authorizes an aggregate of
5,000,000 shares of USARadio-Delaware Preferred Stock. The
USARadio-Delaware Preferred Stock will have such designations,
preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as may be
determined by the Board of Directors. The Board of Directors is
required by Delaware law to make any determination to issue
shares of USARadio-Delaware Preferred Stock based upon its
judgment as to the best interests of the corporation. Although
the Board of Directors has no present intention of doing so, it
could issue shares of USARadio-Delaware Preferred Stock (within
the limits imposed by applicable law) that could, depending on
the terms of such series, make more difficult or discourage an
attempt to obtain control of the corporation by means of a
merger, tender offer, proxy contest or other means, when, in the
judgment of the Board of Directors, such action would be in the
best interests of the stockholders and the corporation. The
issuance of shares of USARadio-Delaware Preferred Stock could be
used to create voting or other impediments or to discourage
persons seeking to gain control of the corporation, for example,
by the sale of USARadio-Delaware Preferred Stock to purchasers
favorable to the Board of Directors. In addition, the Board of
Directors could authorize holders of a series of USARadio-
Delaware Preferred Stock to vote either separately as a class or
with the holders of the USARadio-Delaware Common Stock on any
merger, sale or exchange of assets by the corporation or any
other extraordinary corporate transaction. The existence of the
additional authorized shares could have the effect of
discouraging unsolicited takeover attempts. The issuance of new
shares could also be used to dilute the stock ownership of the
person or entity seeking to obtain control of the corporation
should the Board of Directors consider the action of such entity
or person not to be in the best interests of the stockholders and
the corporation. Such issuance of USARadio-Delaware Preferred
Stock could also have the effect of diluting the earnings per
share and book value per share of the USARadio-Delaware Common
Stock, if any.
Business Combinations
- ---------------------
Under the DGCL and the USARadio-Delaware Certificate, the
approval by the affirmative vote of the holders of a majority of
the outstanding stock of a corporation entitled to vote on the
matter is required to consummate a merger or consolidation or sale,
lease or exchange, of all or substantially all of a corporation's
assets.
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<PAGE>
No vote of stockholders of a constituent corporation surviving
a merger, however, is required (unless the Corporation provides otherwise
in its certificate of incorporation) if (i) the merger agreement does not
amend the certificate of incorporation of the surviving corporation, (ii)
each share of stock of the surviving corporation outstanding
before the merger is an identical outstanding or treasury share
after the merger, and (iii) the number of shares to be issued by
the surviving corporation in the merger does not exceed 20% of
the shares outstanding immediately prior to the merger. The
USARadio-Delaware Certificate does not make any provision with
respect to such mergers.
Under the CBCA, unless the CBCA, the articles of
incorporation, the bylaws adopted by the stockholders or the
board of directors acting pursuant to the CBCA require a greater
vote or a vote by voting groups, (i) a merger or share exchange
must be approved by each voting group entitled to vote separately
on the merger or share exchange by a majority of all the votes
entitled to be cast by the voting group and (ii) the sale, lease,
exchange or other disposition of all or substantially all of a
corporation's assets otherwise than in the usual and regular
course of business, must be approved by a majority of all the
votes entitled to be cast on the sale, lease, exchange or other
disposition.
The CBCA also provides that certain mergers need not be
approved by the stockholders of the surviving corporation if (i)
the articles of incorporation will not change in the merger,
except for specified permitted amendments, (ii) no change occurs
in the number, designations, preferences, limitations, and
relative rights of shares held by those stockholders who were
stockholders prior to the merger, (iii) the number of voting
shares outstanding immediately after the merger, plus the voting
shares issuable as a result of the merger, will not exceed 20% of
the total number of voting shares of the surviving corporation
outstanding immediately prior to the merger, or (iv) the number
of participating shares outstanding immediately after the merger,
plus the number of participating shares issuable as a result of
the merger, will not exceed 20% of the total number of
participating shares outstanding immediately prior to the merger.
Dissenters' Rights
- ------------------
Under the DGCL, stockholders generally have the right to
demand and receive payment of the fair value of their stock in
the event of a merger or consolidation; provided, however, that
no dissenters' or appraisal rights are available for the shares
of any class or series of stock which, at the record date for the
meeting held to approve such transaction, were either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the NASD,
or held of record by more than 2,000 holders, or in the case of a
merger in which the Delaware corporation is the surviving
corporation, if: (i) the agreement of merger does not amend the
certificate of incorporation of the surviving corporation; (ii)
each share of stock of the surviving corporation outstanding
immediately prior to the effective date of the merger is to be an
identical outstanding share of the surviving corporation after
the effective date of the merger; and (iii) the increase in the
outstanding shares as a result of the merger does not exceed 20%
of the shares of the surviving corporation outstanding
immediately prior to the merger. Notwithstanding the limitations
of the previous sentence, appraisal rights are available if the
stockholders receive in the merger or consolidation anything
except: (i) shares of stock of the Corporation surviving or
resulting from such merger or consolidation; (ii) shares of stock
of any other corporation which at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a National Market System
security on an interdealer quotation system by the NASD or held
of record by more than 2,000 holders; (iii) cash in lieu of
fractional shares of the Corporations described in clause (i) or
(ii) of this sentence; or (iv) any combination of shares of stock
and cash in lieu of fractional shares described in the foregoing
clauses (i), (ii) and (iii) of this sentence.
Under the CBCA, stockholders generally have the right to
dissent and obtain payment of the fair value of their shares in
the event of, a merger or consolidation, a share exchange or a
sale or exchange of all or substantially all of the property of a
corporation. Stockholders are not entitled to dissent and obtain
payment of the fair value of their shares which either were
listed on a national securities exchange or on the National
Market System of the Nasdaq, or were held of record by more than
two thousand stockholders. However, the limitation set forth in
the previous sentence shall not apply if the stockholder will
receive for the stockholder's shares anything except (i) shares
of the corporation surviving the merger or share exchange, (ii)
shares of any other corporation which at the
D-2
<PAGE>
effective date of the plan of merger or share exchange either
will be listed on a national securities exchange or on the
National Market System of the Nasdaq, or will be held of record
by more than two thousand stockholders,(iii) cash in lieu of
fractional shares; or (iv) any combination of the foregoing
described shares or cash in lieu of fractional shares.
The CBCA imposes significant duties on stockholders who wish
to avail themselves of the right to demand and receive payment of
the fair cash value of their stock, and any stockholder who does
not satisfy these duties will not be entitled to payment for his
or her shares. The stockholders of USARadio-Colorado will be
entitled to exercise dissenters' rights in connection with the
proposed redomestication merger.
Business Combinations With Interested Stockholders
- --------------------------------------------------
Section 203 of the DGCL generally prohibits any business
combination (defined to include a variety of transactions,
including (i) mergers and consolidations; (ii) sales or
dispositions of assets having an aggregate market value equal to
10% or more of either the aggregate market value of the
Corporation determined on a consolidated basis or all of the
Corporation's outstanding stock; (iii) issuances or transfers of
stock (except for certain pro rata and other issuances); and (iv)
disproportionate benefits from the Corporation (including loans
and guarantees)) between a Delaware corporation and any
interested stockholder (defined generally as any person who,
directly or indirectly, beneficially owns 15% or more of the
outstanding voting stock of the Corporation) for a period of
three years after the date on which the interested stockholder
became an interested stockholder. Section 203 only applies to
certain publicly held corporations that have voting stock that is
(i) listed on a national securities exchange, (ii) authorized for
quotation on the Nasdaq Stock Market, or (iii) held of record by
more than 2,000 stockholders. These restrictions were designed
to discourage hostile take-over attempts of Delaware corporations
by third parties. These restrictions do not apply, however, (a)
if, prior to such date, the board of directors of the Corporation
approved either the business combination or the transaction which
resulted in such stockholder becoming an interested stockholder;
(b) if, upon consummation of the transaction resulting in such
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
Corporation at the time the transaction was commenced (excluding,
for the purposes of determining the number of shares outstanding,
shares owned by persons who are directors and also officers and
by certain employee plans of the Corporation); (c) if, on or
subsequent to such date, the business combination is approved by
the board of directors and the holders of at least two-thirds of
the shares not involved in the transaction; or (d) under certain
other circumstances.
A Delaware corporation may elect not to be governed by
Section 203 of the DGCL if, the corporation's original
Certificate of Incorporation contains a provision expressly
electing not to be governed by Section 203 of the DGCL.
The USARadio-Delaware Certificate contains a provision
expressly electing not to be governed by Section 203 of the DGCL.
Therefore, USARadio-Delaware will not be entitled to the
protections of Section 203 of the DGCL.
The CBCA contains no corresponding prohibition on business
combinations with interested stockholders.
Transactions with Officers or Directors
- ---------------------------------------
The DGCL provides that contracts or transactions between a
corporation and one or more of its officers or directors or an
entity in which they have an interest is not void or voidable
solely because of such interest or the participation of the
director or officer in a meeting of the board or a committee
which authorizes the contract or transaction if: (i) the
material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the board
or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes
of a majority of disinterested directors, even though the
disinterested directors are less than a quorum; or (ii) the
material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or
ratified, by the board of directors, a committee thereof, or the
stockholders.
D-3
<PAGE>
The CBCA has similar provisions with respect to conflicting
interest transactions involving directors. A conflicting
interest transaction shall not be void or voidable or be
enjoined, set aside, or give rise to an award of damages or other
sanctions in a proceeding by a stockholder or by or in the right
of the Corporation, solely because the conflicting interest
transaction involves a director of the Corporation or an entity
in which a director of the Corporation is a director or officer
or has a financial interest solely because the director is
present at or participates in the meeting of the Corporation's
board of directors or of the committee of the board of directors
which authorizes, approves, or ratifies the conflicting interest
transaction or solely because the director's vote is counted for
such purpose if: (i) the material facts as to the director's
relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the board of directors
or the committee, and the board of directors or committee in good
faith authorizes, approves, or ratifies the conflicting interest
transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors
are less than a quorum; or (ii) the material facts as to the
director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the conflicting
interest transaction is specifically authorized, approved, or
ratified in good faith by a vote of the stockholders; or (iii)
the conflicting interest transaction is fair as to the
Corporation.
Amendments to Certificate of Incorporation/Articles of
Incorporation
- -------------------------------------------------------
Under the DGCL, unless otherwise provided in the certificate
of incorporation, a proposed amendment to the certificate of
incorporation requires the affirmative vote of a majority of all
shares outstanding and entitled to be cast on the matter. The
holders of the outstanding shares of a class shall be entitled to
vote as a class upon a proposed amendment, whether or not
entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the aggregate number of
authorized shares of such class, increase or decrease the par
value of the shares of such class, or alter or change the powers,
preferences, or special rights of the shares of such class so as
to affect them adversely. The USARadio-Delaware Certificate does
not provide additional requirements regarding amendments to its
Certificate of Incorporation except that the affirmative vote of
at least 66 2/3% of the outstanding shares of the Common Stock of
the Corporation shall be required to amend or repeal Article
Sixth and Seventh of the USARadio-Delaware Certificate dealing
with limitation of liability of directors and indemnification of
directors and officers.
The CBCA authorizes a corporation's board of directors to
make various changes to its articles of incorporation without
stockholder approval. These so called housekeeping changes
include changes of the words corporation, incorporated, company
or limited in the corporate name, and deletions of the names and
addresses of the initial directors and of the initial registered
agent or registered office. Otherwise, amendments to a
corporation's articles of incorporation must be recommended to
the stockholders by the board of directors or the holders of
shares representing at least 10% (ten percent) of all of the
votes entitled to be cast on the amendment, unless the board
determines that because of a conflict of interest or other
special circumstances, it should make no recommendation and
communicates the basis for its determination to the stockholders
with the amendment. Such amendment then must be approved by the
voting groups entitled to vote on the amendment. An amendment is
approved if the votes cast within the voting group(s) favoring
the action exceed the votes cast within the voting group(s)
opposing the action unless a greater number of affirmative votes
is required by the CBCA, the articles of incorporation, bylaws
adopted by the stockholders, or the proposing board of directors
or the proposing stockholders condition the effectiveness of the
amendment on a greater vote.
Preemptive Rights
- -----------------
Under the DGCL, a stockholder does not possess preemptive
rights unless such rights are specifically granted in the
certificate of incorporation. The USARadio-Delaware Certificate
does not provide for preemptive rights.
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<PAGE>
Under the CBCA, a stockholder does not possess preemptive
rights unless such rights are specifically granted in the
articles of incorporation. The USARadio-Colorado Articles do not
provide for preemptive rights.
Dividend Sources
- ----------------
Under the DGCL, a board of directors may authorize a
corporation to make distributions to its stockholders, subject to
any restrictions in its certificate of incorporation, either (i)
out of surplus; or (ii) if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. Under the DGCL, no
distribution out of net profits is permitted, however, if the
Corporation's capital is less than the amount of capital
represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets, until such
deficiency has been repaired. The USARadio-Delaware Certificate
does not provide additional requirements regarding the
distribution of dividends.
Under the CBCA, a board of directors may authorize a
corporation to make distributions to its stockholders subject to
any restrictions imposed by the articles of incorporation,
provided that no distribution may be made if after giving it
effect (i) the Corporation would not be able to pay its debts as
they become due in the usual course of business, or (ii) the
Corporation's total assets would be less than the sum of its
total liabilities plus (unless the articles of incorporation
permit otherwise) the amount that would be needed, if the
Corporation were to be dissolved at the time of distribution, to
satisfy the preferential rights upon dissolution of stockholders
whose preferential rights are superior to those receiving the
distribution. The USARadio-Colorado Articles do not provide
additional requirements regarding the distribution of dividends.
Duration of Proxies
- -------------------
Generally, under the DGCL, no proxy is valid for more than
three years after its date unless otherwise provided in the
proxy. The USARadio-Delaware Bylaws provide that no proxy shall
be voted or acted upon after eleven months from its date unless
the proxy provides for a longer period.
Under the CBCA, no proxy is valid for more than eleven
months unless a longer period is expressly provided in the proxy.
The USARadio-Colorado Bylaws do not alter the effective period of
a proxy.
Stockholder Action Without a Meeting
- ------------------------------------
Under the DGCL, unless otherwise provided in the certificate
of incorporation, action requiring the vote of stockholders may
be taken without a meeting, without prior notice and without a
vote, by the written consent of stockholders having not less than
the minimum number of votes that would be necessary to take such
action at a meeting at which all shares entitled to vote thereon
were present and acted. The USARadio-Delaware Certificate does
not prohibit the stockholders from acting by written consent.
Under the CBCA, action without a meeting by stockholders may
be taken only if written consents setting forth such action are
signed by holders of all of the outstanding shares entitled to
vote thereon.
Special Stockholder Meetings
- ----------------------------
The DGCL provides that a special meeting of stockholders may
be called by the board of directors or by such person or persons
as may be authorized by the certificate of incorporation or by
the bylaws. The USARadio-Delaware Bylaws allow the President or
a majority of the Board of Directors or the whole Executive
Committee, if any, to call such a meeting.
The CBCA provides that a special meeting of stockholders may
be called by the board of directors, any person or persons
authorized by the articles of incorporation or bylaws, or the
holders of at least 10% of all votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting
upon one or more written demands by such holders.
Cumulative Voting
- -----------------
D-5
<PAGE>
The DGCL permits cumulative voting for the election of
directors if provided for in a corporation's certificate of
incorporation. The USARadio-Delaware Certificate does not
provide for cumulative voting for the election of directors.
The CBCA permits cumulative voting for the election of
directors unless otherwise provided in the Corporation's Articles
of Incorporation. The USARadio-Colorado Articles provide that
stockholders may not cumulate their votes in the election of
directors.
Number and Election of Directors
- --------------------------------
The DGCL permits the certificate of incorporation or the
bylaws of a corporation to contain provisions governing the
number and terms of directors. However, if the certificate of
incorporation contains provisions fixing the number of directors,
such number may not be changed without amending the certificate
of incorporation. The USARadio-Delaware Certificate does not fix
the number of directors. The USARadio-Delaware Bylaws provide
that from time to time, the number of members of the Board of
Directors shall be determined by resolution of the Board of
Directors or by the stockholders at an annual or special meeting
held for that purpose.
The DGCL permits the certificate of incorporation of a
corporation, the initial bylaws or a bylaw adopted by the
stockholders to provide that directors be divided into one, two
or three classes. The term of office of one class of directors
shall expire each year with the terms of office of no two classes
expiring the same year.
The CBCA requires that the number of persons constituting a
corporation's board of directors, whether a specified number or a
range of size, be fixed by or in accordance with the bylaws,
provided that the number of directors shall not be less than one.
The CBCA permits either the board of directors or the
stockholders to amend the provision in the bylaws that
establishes the number of directors, although a bylaw adopted by
the stockholders fixing the size of the board might prohibit
further amendment by the directors. The terms for all directors
expire at the next annual meeting of the stockholders following
their election unless their terms are staggered under the
provisions of the CBCA. The USARadio-Colorado Bylaws provide for
not more than nine (9) nor less than two (2) directors.
Removal of Directors
- --------------------
The DGCL provides that a director or directors may be
removed with or without cause by the holders of a majority of the
shares then entitled to vote at an election of directors, except
that (i) members of a classified board may be removed only for
cause, unless the certificate of incorporation provides otherwise
and (ii) in the case of a corporation having cumulative voting,
if less than the entire board is to be removed, no director may
be removed without cause if the votes cast against such
director's removal would be sufficient to elect such director if
then cumulatively voted at an election of the entire board of
directors or of the class of directors of which such director is
a part. The USARadio-Delaware Bylaws provide a director may be
removed with or without cause.
The CBCA provides that the stockholders may remove one or
more directors with or without cause unless the articles of
incorporation provide that the directors may be removed only for
cause. If a director is elected by a voting group of
stockholders, only the stockholders of that voting group may
participate in the vote to remove him. A director may be removed
only if the number of votes cast in favor of removal exceeds the
number of votes cast against removal, except that if cumulative
voting is in effect, a director may not be removed if the number
of votes sufficient to elect the director under cumulative voting
is voted against such removal. A director may be removed by the
stockholders only at a meeting called for the purpose of removing
him and the meeting notice shall state that the purpose or one of
the purposes of the meeting is removal of a director.
Vacancies
- ---------
Under the DGCL, unless otherwise provided in the certificate
of incorporation or the bylaws, vacancies on the board of
directors and newly created directorships resulting from an
increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a
quorum, or by the sole
D-6
<PAGE>
remaining director, provided that, in the
case of a classified board, such vacancies and newly created
directorships may be filled by a majority of the directors
elected by such class, or by the sole remaining director so
elected. In the case of a classified board, directors elected to
fill vacancies or newly created directorships shall hold office
until the next election of the class for which such directors
have been chosen, and until their successors have been duly
elected and qualified. In addition, if, at the time of the
filling of any such vacancy or newly created directorship, the
directors in office constitute less than a majority of the whole
board (as constituted immediately prior to any such increase),
the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total
number of outstanding shares entitled to vote for such directors,
summarily order an election to fill any such vacancy or newly
created directorship, or replace the directors chosen by the
directors then in office. Neither the USARadio-Delaware
Certificate nor the USARadio-Delaware Bylaws provide additional
requirements regarding vacancies of directors.
Under the CBCA, unless the articles of incorporation provide
otherwise, if a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of
directors, the stockholders or the board of directors may fill
the vacancy, except that if the directors remaining in office
constitute fewer than a quorum, the board of directors may fill
the vacancy by the affirmative vote of a majority of all
directors remaining in office. If the vacancy was held by a
director elected by a voting group of stockholders (i) if such
vacancy is to be filled by the stockholders, only the holders of
shares of that voting group are entitled to vote to fill such
vacancy, and (ii) if such vacancy is to be filled by directors,
only such directors who were elected by the same voting group are
entitled to vote to fill such vacancy by the affirmative vote of
a majority of such directors remaining in office.
Indemnification of Directors and Officers
- -----------------------------------------
Under the DGCL, a corporation may indemnify a director,
officer, employee or agent of a corporation who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. In the case of
an action brought by or in the right of a corporation, the
Corporation may indemnify a director, officer, employee or agent
of the Corporation against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with
the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to, the best interests of the
Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless
the court in which such action or suit was brought or the
Delaware Court of Chancery determines that, in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the Court of Chancery
or such other court shall deem proper. The USARadio-Delaware
Bylaws provide that such persons shall be indemnified to the
fullest extent authorized by the DGCL.
A present or former director or officer of a corporation who
is successful, on the merits or otherwise, in defense of any
proceeding subject to the DGCL's (as the case may be)
indemnification provisions shall be indemnified by the
Corporation for reasonable expenses incurred therein, including
attorneys' fees. The DGCL states that any indemnification,
unless ordered by a court, shall be made only upon a
determination that a present or former director, officer,
employee or agent has met the required standard of conduct before
such person may be indemnified. Such determination shall be
made, with respect to a person who is a director or officer at
the time of such determination (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors,
or if such directors so direct, by independent legal counsel in a
written opinion, or (4) by the stockholders.
USARadio-Delaware may advance reasonable expenses to a
director or officer in advance of the final disposition of such
proceeding or suit upon a written undertaking by or on behalf of
the director or officer to repay such amount to the Corporation
if it is ultimately determined that the required standard of
conduct has not been met,
D-7
<PAGE>
and that he or she is not entitled to
be indemnified by the Corporation. This indemnification and
advancement of expenses is not exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any Bylaw, agreement, vote of stockholders
or disinterested directors or otherwise. Delaware corporations
may procure insurance for purposes of indemnification of
directors, officers, employees or agents of the corporation.
Under the CBCA, a corporation has the power to indemnify a
director, officer, employee, fiduciary or agent made a party to a
proceeding, or advance or reimburse reasonable expenses incurred
in a proceeding, under any circumstances, except that no such
indemnification shall be allowed on account of: (i) acts or
omissions of such persons finally adjudged liable to the
Corporation or (ii) any transaction with respect to which it was
finally adjudged that such person derived an improper personal
benefit.
Under the CBCA, a corporation may indemnify an individual
made a party to a proceeding because the individual is or was a
director, officer, employee, fiduciary or agent against
reasonable expenses (including counsel fees), judgments,
settlements, penalties and fines incurred by him or her in
connection with the proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best
interests of the Corporation in the case of conduct in his or her
official capacity as a director, officer, employee, fiduciary or
agent and in all other cases not opposed to the best interests of
the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct
was unlawful. In the case of an action brought by or in the
right of a corporation, indemnification is limited to reasonable
expenses incurred in connection with the proceeding and the
Corporation may not indemnify a director, officer, employee,
fiduciary or agent if the director, officer, employee, fiduciary
or agent was adjudged to be liable to the Corporation. A
corporation also may not indemnify a director, officer, employee,
fiduciary or agent in connection with any other proceeding
charging improper personal benefit to the director, officer,
employee, fiduciary or agent in which the director, officer,
employee, fiduciary or agent was adjudged liable on the basis
that personal benefit was improperly received. A director,
officer, employee, fiduciary or agent who was wholly successful,
on the merits or otherwise, in defense of any proceeding to which
the director, officer, employee or agent was a party because of
being a director, officer, employee, fiduciary or agent of the
Corporation must be indemnified by the Corporation for reasonable
expenses incurred therein in connection with the proceeding. The
CBCA states that any indemnification described above in this
paragraph shall be made only upon a determination that the
director, officer, employee, fiduciary or agent has met the
required standard of conduct before the director, officer,
employee, fiduciary or agent may be indemnified. The
determination shall be made (i) by a majority vote of a quorum of
directors not at the time a party to the proceedings; (ii) if a
quorum of directors not at the time a party to the proceedings is
not obtainable, by a majority vote of a committee duly designated
by the board of directors, consisting solely of two or more
directors not at the time a party to the proceedings; or (iii) by
independent legal counsel; or (iv) by the stockholders.
The CBCA permits USARadio-Colorado to pay for or reimburse
the reasonable expenses of a director, officer, employee,
fiduciary or agent who is a party to a proceeding in advance of
final disposition of the proceeding if such director, officer,
employee, fiduciary or agent provides a written affirmation of
his or her good faith belief that he or she meets the standard of
conduct described above and a written undertaking to repay the
Corporation if it is ultimately determined that the required
standard of conduct has not been met. Colorado corporations may
procure insurance for purposes of indemnification of directors,
officers, employees, fiduciaries or agents of the Corporation.
In addition, a director, officer, employee, fiduciary or
agent of a Colorado corporation who is or was a party to a
proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction.
USARadio-Colorado's Articles provide that any person who is
or was a director, officer, agent, fiduciary or employee of the
Corporation shall be indemnified to the fullest extent authorized
by the CBCA.
Limitation of Personal Liability of Directors
- ---------------------------------------------
The DGCL provides that a corporation's Certificate of
Incorporation may include a provision limiting the personal
liability of a director to the Corporation or its stockholders
for monetary damages for breach of a fiduciary
D-8
<PAGE>
duty as a director. However, no such provision can eliminate or
limit the liability of a director for (i) any breach of the director's
duty of loyalty to the Corporation or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law; (iii) violation of
certain provisions of the DGCL; (iv) any transaction from which
the director derived an improper personal benefit; or (v) any act
or omission prior to the adoption of such a provision in the
Certificate of Incorporation. The USARadio-Delaware Certificate
provides a provision eliminating the personal liability for
monetary damages of its directors to the fullest extent permitted
under the DGCL.
The CBCA provides that a corporation's articles of
incorporation may include a provision that eliminates or limits
the personal liability of a director to the Corporation or its
stockholders for monetary damages for breach of a fiduciary duty
as a director. The provision, however, may not eliminate or
limit the liability of a director for acts or omissions not in
good faith or that involve intentional misconduct by a director,
a knowing violation of law by a director, for unlawful
distributions, or for any transaction from which the director
will personally receive a benefit in money, property, or services
to which the director is not legally entitled. The USARadio-
Colorado Articles eliminate the personal liability of its
directors for money damages to the fullest extent permitted under
the CBCA.
D-9
<PAGE>
EXHIBIT E
COLORADO BUSINESS CORPORATIONS ACT
DISSENTERS' RIGHTS STATUTE
CBCA Section 7-113-101. Definitions
For purposes of this article:
(1) "Beneficial stockholder" means the beneficial owner of shares
held in a voting trust or by a nominee as the record stockholder.
(2) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or
acquiring domestic or foreign corporation, by merger or share
exchange of that issuer.
(3) "Dissenter" means a stockholder who is entitled to dissent
from corporate action under section 7-113-102 and who exercises
that right at the time and in the manner required by part 2 of
this article.
(4) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effective date of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate
action except to the extent that exclusion would be inequitable.
(5) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate
currently paid by the Corporation on its principal bank loans or,
if none, at the legal rate as specified in section 5-12-101,
C.R.S.
(6) "Record stockholder" means the person in whose name shares
are registered in the records of a corporation or the beneficial
owner of shares that are registered in the name of a nominee to
the extent such owner is recognized by the Corporation as the
stockholder as provided in section 7-107-204.
(7) "Stockholder" means either a record stockholder or a
beneficial stockholder.
CBCA Section 7-113-102. Right to dissent
(1) A stockholder, whether or not entitled to vote, is entitled
to dissent and obtain payment of the fair value of the
stockholder's shares in the event of any of the following
corporate actions:
(a) Consummation of a plan of merger to which the Corporation is
a party if:
(I) Approval by the stockholders of that corporation is required
for the merger by section 7-111-103 or 7-111-104 or by the
articles of incorporation; or
(II) The Corporation is a subsidiary that is merged with its
parent corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the
Corporation is a party as the Corporation whose shares will be
acquired;
(c) Consummation of a sale, lease, exchange, or other disposition
of all, or substantially all, of the property of the Corporation
for which a stockholder vote is required under section 7-112-102
(1); and
(d) Consummation of a sale, lease, exchange, or other disposition
of all, or substantially all, of the property of an entity
controlled by the Corporation if the stockholders of the
Corporation were entitled to vote upon the consent of the
Corporation to the disposition pursuant to section 7-112-102 (2).
E-1
<PAGE>
(1.3) A stockholder is not entitled to dissent and obtain
payment, under subsection (1) of this section, of the fair value
of the shares of any class or series of shares which either were
listed on a national securities exchange registered under the
federal "Securities Exchange Act of 1934", as amended, or on the
national market system of the national association of securities
dealers automated quotation system, or were held of record by
more than two thousand stockholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine
the stockholders entitled to receive notice of the stockholders'
meeting at which the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine
stockholders entitled to sign writings consenting to the
corporate action; or
(c) The effective date of the corporate action if the corporate
action is authorized other than by a vote of stockholders.
(1.8) The limitation set forth in subsection (1.3) of this
section shall not apply if the stockholder will receive for the
stockholder's shares, pursuant to the corporate action, anything
except:
(a) Shares of the Corporation surviving the consummation of the
plan of merger or share exchange;
(b) Shares of any other corporation which at the effective date
of the plan of merger or share exchange either will be listed on
a national securities exchange registered under the federal
"Securities Exchange Act of 1934", as amended, or on the national
market system of the national association of securities dealers
automated quotation system, or will be held of record by more
than two thousand stockholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in
lieu of fractional shares.
(2.5) A stockholder, whether or not entitled to vote, is entitled
to dissent and obtain payment of the fair value of the
stockholder's shares in the event of a reverse split that reduces
the number of shares owned by the stockholder to a fraction of a
share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A stockholder is entitled to dissent and obtain payment of
the fair value of the stockholder's shares in the event of any
corporate action to the extent provided by the bylaws or a
resolution of the board of directors.
(4) A stockholder entitled to dissent and obtain payment for the
stockholder's shares under this article may not challenge the
corporate action creating such entitlement unless the action is
unlawful or fraudulent with respect to the stockholder or the
Corporation.
CBCA Section 7-113-103. Dissent by nominees and beneficial owners
(1) A record stockholder may assert dissenters' rights as to
fewer than all the shares registered in the record stockholder's
name only if the record stockholder dissents with respect to all
shares beneficially owned by any one person and causes the
Corporation to receive written notice which states such dissent
and the name, address, and federal taxpayer identification
number, if any, of each person on whose behalf the record
stockholder asserts dissenters' rights. The rights of a record
stockholder under this subsection (1) are determined as if the
shares as to which the record stockholder dissents and the other
shares of the record stockholder were registered in the names of
different stockholders.
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(2) A beneficial stockholder may assert dissenters' rights as to
the shares held on the beneficial stockholder's behalf only if:
(a) The beneficial stockholder causes the Corporation to receive
the record stockholder's written consent to the dissent not later
than the time the beneficial stockholder asserts dissenters'
rights; and
(b) The beneficial stockholder dissents with respect to all
shares beneficially owned by the beneficial stockholder.
(3) The Corporation may require that, when a record stockholder
dissents with respect to the shares held by any one or more
beneficial stockholders, each such beneficial stockholder must
certify to the Corporation that the beneficial stockholder and
the record stockholder or record stockholders of all shares owned
beneficially by the beneficial stockholder have asserted, or will
timely assert, dissenters' rights as to all such shares as to
which there is no limitation on the ability to exercise
dissenters' rights. Any such requirement shall be stated in the
dissenters' notice given pursuant to section 7-113-203.
CBCA Section 7-113-201. Notice of dissenters' rights
(1) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is submitted to a vote at a stockholders'
meeting, the notice of the meeting shall be given to all
stockholders, whether or not entitled to vote. The notice shall
state that stockholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by
a copy of this article and the materials, if any, that, under
articles 101 to 117 of this title, are required to be given to
stockholders entitled to vote on the proposed action at the
meeting. Failure to give notice as provided by this subsection
(1) shall not affect any action taken at the stockholders'
meeting for which the notice was to have been given, but any
stockholder who was entitled to dissent but who was not given
such notice shall not be precluded from demanding payment for the
stockholder's shares under this article by reason of the
stockholder's failure to comply with the provisions of section 7-
113-202 (1).
(2) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is authorized without a meeting of
stockholders pursuant to section 7-107-104, any written or oral
solicitation of a stockholder to execute a writing consenting to
such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that
stockholders are or may be entitled to assert dissenters' rights
under this article, by a copy of this article, and by the
materials, if any, that, under articles 101 to 117 of this title,
would have been required to be given to stockholders entitled to
vote on the proposed action if the proposed action were submitted
to a vote at a stockholders' meeting. Failure to give notice as
provided by this subsection (2) shall not affect any action taken
pursuant to section 7-107-104 for which the notice was to have
been given, but any stockholder who was entitled to dissent but
who was not given such notice shall not be precluded from
demanding payment for the stockholder's shares under this article
by reason of the stockholder's failure to comply with the
provisions of section 7-113-202 (2).
CBCA Section 7-113-202. Notice of intent to demand payment
(1) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is submitted to a vote at a stockholders'
meeting and if notice of dissenters' rights has been given to
such stockholder in connection with the action pursuant to
section 7-113-201 (1), a stockholder who wishes to assert
dissenters' rights shall:
(a) Cause the Corporation to receive, before the vote is taken,
written notice of the stockholder's intention to demand payment
for the stockholder's shares if the proposed corporate action is
effectuated; and
(b) Not vote the shares in favor of the proposed corporate
action.
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(2) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is authorized without a meeting of
stockholders pursuant to section 7-107-104 and if notice of
dissenters' rights has been given to such stockholder in
connection with the action pursuant to section 7-113-201 (2), a
stockholder who wishes to assert dissenters' rights shall not
execute a writing consenting to the proposed corporate action.
(3) A stockholder who does not satisfy the requirements of
subsection (1) or (2) of this section is not entitled to demand
payment for the stockholder's shares under this article.
CBCA Section 7-113-203. Dissenters' notice
(1) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is authorized, the Corporation shall give
a written dissenters' notice to all stockholders who are entitled
to demand payment for their shares under this article.
(2) The dissenters' notice required by subsection (1) of this
section shall be given no later than ten days after the effective
date of the corporate action creating dissenters' rights under
section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the
effective date or proposed effective date of the corporate
action;
(b) State an address at which the Corporation will receive
payment demands and the address of a place where certificates for
certificated shares must be deposited;
(c) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(d) Supply a form for demanding payment, which form shall request
a dissenter to state an address to which payment is to be made;
(e) Set the date by which the Corporation must receive the
payment demand and certificates for certificated shares, which
date shall not be less than thirty days after the date the notice
required by subsection (1) of this section is given;
(f) State the requirement contemplated in section 7-113-103 (3),
if such requirement is imposed; and
(g) Be accompanied by a copy of this article.
CBCA Section 7-113-204. Procedure to demand payment
(1) A stockholder who is given a dissenters' notice pursuant to
section 7-113-203 and who wishes to assert dissenters' rights
shall, in accordance with the terms of the dissenters' notice:
(a) Cause the Corporation to receive a payment demand, which may
be the payment demand form contemplated in section 7-113-203 (2)
(d), duly completed, or may be stated in another writing; and
(b) Deposit the stockholder's certificates for certificated
shares.
(2) A stockholder who demands payment in accordance with
subsection (1) of this section retains all rights of a
stockholder, except the right to transfer the shares, until the
effective date of the proposed corporate action giving rise to
the stockholder's exercise of dissenters' rights and has only the
right to receive payment for the shares after the effective date
of such corporate action.
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(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b),
the demand for payment and deposit of certificates are
irrevocable.
(4) A stockholder who does not demand payment and deposit the
stockholder's share certificates as required by the date or dates
set in the dissenters' notice is not entitled to payment for the
shares under this article.
CBCA Section 7-113-205. Uncertificated shares
(1) Upon receipt of a demand for payment under section 7-113-204
from a stockholder holding uncertificated shares, and in lieu of
the deposit of certificates representing the shares, the
Corporation may restrict the transfer thereof.
(2) In all other respects, the provisions of section 7-113-204
shall be applicable to stockholders who own uncertificated
shares.
CBCA Section 7-113-206. Payment
(1) Except as provided in section 7-113-208, upon the effective
date of the corporate action creating dissenters' rights under
section 7-113-102 or upon receipt of a payment demand pursuant to
section 7-113-204, whichever is later, the Corporation shall pay
each dissenter who complied with section 7-113-204, at the
address stated in the payment demand, or if no such address is
stated in the payment demand, at the address shown on the
Corporation's current record of stockholders for the record
stockholder holding the dissenter's shares, the amount the
Corporation estimates to be the fair value of the dissenter's
shares, plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section
shall be accompanied by:
(a) The Corporation's balance sheet as of the end of its most
recent fiscal year or, if that is not available, the
Corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen months before the date of payment, an
income statement for that year, and, if the Corporation
customarily provides such statements to stockholders, a statement
of changes in stockholders' equity for that year and a statement
of cash flow for that year, which balance sheet and statements
shall have been audited if the Corporation customarily provides
audited financial statements to stockholders, as well as the
latest available financial statements, if any, for the interim or
full-year period, which financial statements need not be audited;
(b) A statement of the Corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under
section 7-113-209; and
(e) A copy of this article.
CBCA Section 7-113-207. Failure to take action
(1) If the effective date of the corporate action creating
dissenters' rights under section 7-113-102 does not occur within
sixty days after the date set by the Corporation by which the
Corporation must receive the payment demand as provided in
section 7-113-203, the Corporation shall return the deposited
certificates and release the transfer restrictions imposed on
uncertificated shares.
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(2) If the effective date of the corporate action creating
dissenters' rights under section 7-113-102 occurs more than sixty
days after the date set by the Corporation by which the
Corporation must receive the payment demand as provided in
section 7-113-203, then the Corporation shall send a new
dissenters' notice, as provided in section 7-113-203, and the
provisions of sections 7-113-204 to 7-113-209 shall again be
applicable.
CBCA Section 7-113-208. Special provisions relating to shares
acquired after announcement of proposed corporate action
(1) The Corporation may, in or with the dissenters' notice given
pursuant to section 7-113-203, state the date of the first
announcement to news media or to stockholders of the terms of the
proposed corporate action creating dissenters' rights under
section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section
7-113-204, whether or not the dissenter (or the person on whose
behalf dissenters' rights are asserted) acquired beneficial
ownership of the shares before that date. With respect to any
dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf
the dissenter asserts dissenters' rights acquired beneficial
ownership of the shares before such date, the Corporation may, in
lieu of making the payment provided in section 7-113-206, offer
to make such payment if the dissenter agrees to accept it in full
satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section
shall include or be accompanied by the information required by
section 7-113-206 (2).
CBCA Section 7-113-209. Procedure if dissenter is dissatisfied
with payment or offer
(1) A dissenter may give notice to the Corporation in writing of
the dissenter's estimate of the fair value of the dissenter's
shares and of the amount of interest due and may demand payment
of such estimate, less any payment made under section 7-113-206,
or reject the Corporation's offer under section 7-113-208 and
demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-
113-206 or offered under section 7-113-208 is less than the fair
value of the shares or that the interest due was incorrectly
calculated;
(b) The Corporation fails to make payment under section 7-113-206
within sixty days after the date set by the Corporation by which
the Corporation must receive the payment demand; or
(c) The Corporation does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated
shares as required by section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under this
section unless the dissenter causes the Corporation to receive
the notice required by subsection (1) of this section within
thirty days after the Corporation made or offered payment for the
dissenter's shares.
CBCA Section 7-113-301. Court action
(1) If a demand for payment under section 7-113-209 remains
unresolved, the Corporation may, within sixty days after
receiving the payment demand, commence a proceeding and petition
the court to determine the fair value of the shares and accrued
interest. If the Corporation does not commence the proceeding
within the sixty-day period, it shall pay to each dissenter whose
demand remains unresolved the amount demanded.
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(2) The Corporation shall commence the proceeding described in
subsection (1) of this section in the district court of the
county in this state where the Corporation's principal office is
located or, if the Corporation has no principal office in this
state, in the district court of the county in which its
registered office is located. If the Corporation is a foreign
corporation without a registered office, it shall commence the
proceeding in the county where the registered office of the
domestic corporation merged into, or whose shares were acquired
by, the foreign corporation was located.
(3) The Corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unresolved parties
to the proceeding commenced under subsection (2) of this section
as in an action against their shares, and all parties shall be
served with a copy of the petition. Service on each dissenter
shall be by registered or certified mail, to the address stated
in such dissenter's payment demand, or if no such address is
stated in the payment demand, at the address shown on the
Corporation's current record of stockholders for the record
stockholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is
commenced under subsection (2) of this section is plenary and
exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to such order.
The parties to the proceeding are entitled to the same discovery
rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the
amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the
Corporation, or for the fair value, plus interest, of the
dissenter's shares for which the Corporation elected to withhold
payment under section 7-113-208.
CBCA Section 7-113-302. Court costs and counsel fees
(1) The court in an appraisal proceeding commenced under section
7-113-301 shall determine all costs of the proceeding, including
the reasonable compensation and expenses of appraisers appointed
by the court. The court shall assess the costs against the
Corporation; except that the court may assess costs against all
or some of the dissenters, in amounts the court finds equitable,
to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under
section 7-113-209.
(2) The court may also assess the fees and expenses of counsel
and experts for the respective parties, in amounts the court
finds equitable:
(a) Against the Corporation and in favor of any dissenters if the
court finds the Corporation did not substantially comply with the
requirements of part 2 of this article; or
(b) Against either the Corporation or one or more dissenters, in
favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this article.
(3) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should
not be assessed against the Corporation, the court may award to
said counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.
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