Exhibit 10.59
AGREEMENT AND PLAN OF MERGER
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By and Among
▇▇▇▇▇ Broadcasting, Inc.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
Radio One, Inc.
March 11, 2000
Table of Contents
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Recitals............................................................................ 1
Agreement........................................................................... 2
ARTICLE 1: THE MERGERS......................................................... 2
1.1 The Mergers........................................................... 2
1.2 Effective Time........................................................ 2
1.3 Effect of the Mergers................................................. 2
1.4 Certificates of Incorporation and of Formation and Company Agreement.. 2
1.5 Managers, Members, Directors and Officers............................. 3
1.6 Stock................................................................. 3
1.7 Merger Consideration.................................................. 3
1.8 Post-Closing Escrow................................................... 4
1.9 Deposit............................................................... 4
1.10 Adjustment............................................................ 5
1.11 Closing............................................................... 5
1.12 FCC Applications...................................................... 6
1.13 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇..................................................... 6
1.14 Employment Agreement.................................................. 6
1.15 Preclosing Reorganizations............................................ 6
ARTICLE 2: COMPANY REPRESENTATIONS AND WARRANTIES.............................. 6
2.1 Organization.......................................................... 6
2.2 Capitalization........................................................ 7
2.3 Subsidiaries and Investments.......................................... 7
2.4 Books and Records..................................................... 7
2.5 Authority............................................................. 7
2.6 No Conflicts.......................................................... 7
2.7 Financial Statements.................................................. 8
2.8 Tax Matters........................................................... 9
2.9 Assets................................................................ 10
2.10 FCC Authorizations................................................... 10
2.11 Personal Property.................................................... 11
2.12 Real Property........................................................ 11
2.13 Contracts............................................................ 12
2.14 Intangible Property.................................................. 12
2.15 Employees............................................................ 12
2.16 Employee Benefit Matters............................................. 13
2.17 Compliance with Law; Litigation...................................... 13
2.18 Insurance............................................................ 13
2.19 Environmental........................................................ 13
2.20 Affiliates........................................................... 14
2.21 Guaranties, Indemnities, Etc......................................... 14
2.22 No Finder............................................................ 14
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2.23 Powers of Attorney.................................................. 14
2.24 Year 2000 Compliance................................................ 14
2.25 Disclosure.......................................................... 14
ARTICLE 3: MAJORITY SHAREHOLDER REPRESENTATIONS AND WARRANTIES................ 14
3.1 Authority............................................................ 14
3.2 Binding Effect....................................................... 15
3.3 No Conflicts......................................................... 15
ARTICLE 4: RADIO ONE REPRESENTATIONS AND WARRANTIES........................... 15
4.1 Organization......................................................... 15
4.2 Authority............................................................ 15
4.3 No Conflicts......................................................... 15
4.4 No Finder............................................................ 16
4.5 Qualification........................................................ 16
4.6 Reorganizations...................................................... 16
ARTICLE 5: COVENANTS OF COMPANY AND THE SHAREHOLDERS.......................... 16
5.1 Operation of the Business............................................ 16
5.2 Reports.............................................................. 17
5.3 Access............................................................... 17
5.4 Confidentiality...................................................... 18
5.5 Consents............................................................. 18
5.6 Estoppel Certificates; Title Insurance; Liens........................ 18
5.7 Environmental........................................................ 18
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5.8 Employment Matters................................................... 19
5.9 Exclusive Dealing.................................................... 19
5.10 Shareholders' Approval.............................................. 19
5.11 Inter-▇▇▇▇▇ Companies Debt.......................................... 19
5.12 Cancellation of Subordinated Lenders' Conversion, Purchase Option
and Put Rights Agreement............................................ 19
5.13 Qualification....................................................... 20
5.14 FCC Compliance...................................................... 20
5.15 Bank Accounts....................................................... 20
ARTICLE 6: ADDITIONAL COVENANTS............................................... 20
6.1 Representations and Warranties....................................... 20
6.2 Notice of Proceedings................................................ 20
ARTICLE 7: SHAREHOLDERS CONDITIONS............................................ 20
7.1 Representations, Warranties and Covenants............................ 20
7.2 Proceedings.......................................................... 21
7.3 FCC Consent.......................................................... 21
7.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.................................................... 21
7.5 Deliveries........................................................... 21
7.6 Columbus Sub......................................................... 21
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ARTICLE 8: RADIO ONE CONDITIONS........................................... 21
8.1 Representations, Warranties and Covenants........................ 21
8.2 Proceedings...................................................... 21
8.3 FCC Consent...................................................... 21
8.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇................................................ 21
8.5 Deliveries....................................................... 21
8.6 Required Consents................................................ 22
8.7 Material Adverse Change.......................................... 22
8.8 Title Commitments................................................ 22
8.9 Surveys.......................................................... 22
8.10 Estoppel Certificates........................................... 22
8.11 Environmental................................................... 22
8.12 Net Operating Losses............................................ 22
8.13 Subordinated Lenders' Conversion Rights......................... 22
8.14 Inter-Company Debt.............................................. 22
8.15 Shareholders' Approval.......................................... 22
8.16 Liens........................................................... 22
ARTICLE 9: ITEMS TO BE DELIVERED AT THE CLOSING........................... 23
9.1 Deliveries by the Company and the Shareholders................... 23
9.2 Deliveries by Radio One.......................................... 24
9.3 Satisfaction of ▇▇▇▇▇ Companies Indebtedness for Long Term Debt.. 24
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ARTICLE 10: SURVIVAL; RELEASE; INDEMNIFICATION............................ 24
10.1 Survival; Release............................................... 24
10.2 Indemnification................................................. 24
10.3 Deficiencies.................................................... 25
10.4 Exceptions...................................................... 26
10.5 Procedures...................................................... 26
(a) Third Party Claims.......................................... 26
(b) Direct Claims............................................... 26
10.6 Payment......................................................... 26
10.7 Legal Expenses.................................................. 27
10.8 Sole Remedy..................................................... 27
ARTICLE 11: MISCELLANEOUS................................................ 27
11.1 Termination..................................................... 27
11.2 Specific Performance............................................ 27
11.3 Expenses........................................................ 28
11.4 Further Assurances.............................................. 28
11.5 Broadcast Transmission Interruption............................. 28
11.6 Risk of Loss.................................................... 28
11.7 Cooperation..................................................... 29
11.8 Tax Matters..................................................... 29
ARTICLE 12: GENERAL PROVISIONS........................................... 30
12.1 Successors and Assigns.......................................... 30
12.2 Amendments; Waivers............................................. 30
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12.3 Notices......................................................... 30
12.4 Captions........................................................ 31
12.5 Governing Law................................................... 31
12.6 Entire Agreement................................................ 31
12.7 Counterparts.................................................... 31
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
March 11, 2000 among ▇▇▇▇▇ Broadcasting, Inc., a Delaware corporation (the
"Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Majority Shareholder"), and Radio One, Inc.,
a Delaware corporation ("Radio One").
Recitals
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The other shareholders of the Company are listed on Schedule 2.2 of
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this Agreement (the "Minority Shareholders") (the Majority Shareholder and the
Minority Shareholders, collectively, the "Shareholders"). The Shareholders own
all of the issued and outstanding shares of capital stock of the Company as of
the date hereof (the "Company Stock"). The Company owns all of the issued and
outstanding shares of capital stock of ▇▇▇▇▇ Broadcasting of Charlotte, Inc., a
Delaware corporation ("DBC") and ▇▇▇▇▇ Broadcasting, Inc. of Augusta, a Delaware
corporation ("DBA"). DBA owns all of the issued and outstanding shares of
capital stock of ▇▇▇▇▇ Broadcasting Inc., of ▇▇▇▇▇, a Delaware corporation
("DBE") (DBC, DBA and DBE, collectively, the "Station Subs").
The Station Subs own and operate the following radio broadcast
stations (the "▇▇▇▇▇ Stations") pursuant to certain licenses, permits and
authorizations issued by the Federal Communications Commission (the "FCC"):
DBC: WCCJ(FM), Harrisburg, North Carolina
DBA: WFXA-FM, Augusta, Georgia
WTHB(AM), Augusta, Georgia
WAKB(FM), Wrens, Georgia
DBE: WAEG(FM), Evans, Georgia
WAEJ(FM), Waynsboro, Georgia
The Company also owns all of the issued and outstanding shares of
capital stock of ▇▇▇▇▇ Broadcasting, Inc. of Columbus, a Delaware corporation
(the "Columbus Sub"). The Columbus Sub owns and operates the following radio
broadcast station and the Company owns and operates the following Columbus radio
broadcast stations (the "Columbus Stations") pursuant to licenses, permits and
authorizations issued by the FCC:
Company: WFXE(FM), Columbus, Georgia
WOKS(AM), Columbus, Georgia
Columbus Sub: WKZJ(FM), Greenville, Georgia
The parties have determined that it is in their respective best
interests to merge the Company with and into a limited liability company to be
formed ("Radio One of Charlotte, LLC"), which will be a subsidiary of a new
corporation to be formed ("NewCo"), which NewCo just prior to the Merger of the
Company into Radio One of Charlotte, LLC, will be a wholly-owned subsidiary of
the Company. On the day following the merger of the Company with and into Radio
One of Charlotte, LLC, NewCo will be merged with and into Radio One, all in
accordance with the Delaware Limited Liability Company Act and the Delaware
General Corporation Law (the "Delaware Laws") on the terms and conditions of
this Agreement. The parties have, or their respective boards of directors have,
approved such mergers (the "Mergers").
The parties intend that the Mergers shall constitute a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the respective boards of directors have adopted this Agreement as a
plan of reorganization under the treasury regulations.
Agreement
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NOW, THEREFORE, taking the foregoing into account, and in
consideration of the mutual covenants and agreements set forth herein, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1: THE MERGERS
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1.1 The Mergers. Upon the terms and conditions of this
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Agreement, and in accordance with the Delaware Laws, on the day before the
Closing Date (defined below) the Company shall be merged with and into Radio One
of Charlotte, LLC, (the "Company/LLC Merger") and upon Closing (defined below)
NewCo shall be merged with and into Radio One (the "NewCo/ROI Merger"). As a
result of the Mergers, the separate existence of the Company and NewCo shall
cease and Radio One of Charlotte, LLC, and Radio One shall continue as the
surviving companies of the Mergers. Radio One of Charlotte, LLC, and Radio One
as the surviving companies after the Mergers are hereinafter sometimes referred
to as a "Surviving Company" or the "Surviving Companies." Capitalized terms
used in this Agreement and not otherwise defined shall have the respective
meanings set forth in Annex A attached hereto.
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1.2 Effective Time. The parties hereto shall cause the Mergers to be
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consummated by filing certificates of merger (the "Certificates of Merger") with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with the relevant provisions of, the Delaware Laws.
The "Effective Time" of the Company/LLC Merger shall be on the day before the
Closing Date, and the "Effective Time" of the NewCo/ROI Merger shall be Closing.
Such effective times shall be specified in the Certificates of Merger.
1.3 Effect of the Mergers. As of the respective effective times, the
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Mergers shall have the effects set forth in the Delaware Laws. Without limiting
the generality of the foregoing, and subject thereto, as of the Effective Time
of the Company/LLC Merger all the property, rights, privileges, powers and
franchises of the Company shall vest in Radio One of Charlotte, LLC, the
Surviving Company, and all debts, liabilities and duties of the Company shall
become the debts, liabilities and duties of the Surviving Company. As of the
Effective Time of the NewCo/ROI Merger, all property, rights, privileges, powers
and franchises of NewCo shall vest in Radio One, the Surviving Company, and all
debts, liabilities and duties of NewCo shall become the debts, liabilities and
duties of the Surviving Company.
1.4 Certificates of Incorporation and of Formation and Company
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Agreement:
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(a) As of the Effective Time of the Company/LLC Merger, the
Certificate of Formation of Radio One of Charlotte, LLC, as in effect
immediately prior to the Effective Time, shall be the Certificate of Formation
of the Surviving Company, until thereafter amended as provided by law and such
Certificate of Formation. As of the Effective Time of the Company/LLC Merger,
the limited liability company agreement of Radio One of Charlotte, LLC, as in
effect immediately prior to the Effective Time, shall be the limited liability
company agreement of the Surviving Company, until thereafter amended as provided
by law, the Certificate of Formation of Radio One of Charlotte, LLC, and such
limited liability company agreement.
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(b) As of the Effective Time of the NewCo/ROI Merger, the
Certificate of Incorporation of Radio One, as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Company, until thereafter amended as provided by law and such Certificate of
Incorporation. As of the Effective Time of the NewCo/ROI Merger, the by-laws of
Radio One, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Company, until thereafter amended as provided by law,
the Certificate of Incorporation of Radio One and such by-laws.
1.5. Managers, Members, Directors and Officers.
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(a) As of the Effective Time of the Company/LLC Merger, the managers
designated by Radio One shall be the managers of Radio One of Charlotte, LLC,
each to hold office in accordance with the Certificate of Formation and limited
liability company agreement of Radio One of Charlotte, LLC, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be. As of the Effective
Time of the Company/LLC Merger, the officers designated by Radio One shall be
the officers of Radio One of Charlotte, LLC, each to hold office in accordance
with the Certificate of Formation and limited liability company agreement of
Radio One of Charlotte, LLC, until the earlier of their resignation or removal
or until their respective successors are duly elected or appointed and
qualified, as the case may be. As of the Effective Time of the Company/LLC
Merger, the sole member of Radio One of Charlotte, LLC, shall be NewCo.
(b) The officers and directors of Radio One immediately prior to the
Effective Time of the NewCo/ROI Merger shall be the officers and directors of
Radio One as of the Effective Time of the NewCo/ROI Merger, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be, in accordance with the
Certificate of Incorporation and by-laws of Radio One.
1.6. Stock. As of the Effective Time of the NewCo/ROI Merger, by virtue
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of the Mergers and without need for any action by any party, all shares of
Company Stock shall be converted as provided by Section 1.7 and shall no longer
be outstanding, all such Company Stock being automatically canceled and retired
and ceasing to exist, and the Shareholders shall no longer have any rights with
respect thereto, except to receive the Merger Consideration as set forth herein.
1.7. Merger Consideration.
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(a) As of the Closing, each Shareholder shall cease to have any
rights with respect to its shares of Company Stock, and for all purposes, the
Company Stock shall be converted into the right to receive the consideration
provided for pursuant to Sections 1.7(b) and 1.7(c) below (the "Merger
Consideration").
(b) Each share of Class A Common Stock shall be converted into the
right to receive a pro rata share (as among the other shares of Class A Common
Stock) of the Minority Cash Amount; provided, however, that each holder of Class
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A Common Stock may elect, upon written notice to Radio One given not less than
thirty (30) days after the date hereof, to forego all of the cash consideration
due such holder hereunder and for its shares of Class A Common Stock to instead
be converted into the right to receive, upon the due execution and delivery of a
Subscription Agreement, the number of shares of Radio One's common stock
determined by dividing the cash consideration that would have been paid
hereunder to such holder by the Closing Price.
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(c) Each share of Class B Common Stock shall be converted into the
right to receive a pro rata share (as among the other shares of Class B Common
Stock) of (i) the Cash Amount minus the aggregate amount cash to be paid to the
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holders of Class A Common Stock pursuant to Section 1.7(b), (ii) upon the due
execution and delivery of a Subscription Agreement, the Stock Consideration
minus the number of shares of Radio One common stock issued to the holders of
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the Class A Common Stock pursuant to Section 1.7(b) minus the Escrowed Shares,
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(iii) the rights to the Escrowed Shares under Section 1.8, and (iv) plus or
minus the amount of any adjustment to the Merger Consideration to be paid or
received pursuant to Section 1.10.
(d) Radio One shall issue the Stock Consideration and pay the Cash
Amount on the Closing Date upon presentation and surrender to Radio One of the
certificates representing all of the issued and outstanding Company Stock duly
endorsed in blank or with separate executed stock powers attached. Payment of
the Cash Amount shall be in immediately available funds pursuant to written
instructions of the Majority Shareholder to be delivered to Radio One no later
than three (3) business days prior to Closing.
1.8. Post-Closing Escrow. As of the Effective Time, the Escrowed Shares
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shall be delivered to the Escrow Agent (as hereinafter defined) pursuant to the
Post-Closing Escrow Agreement as an indemnification and adjustment fund (without
limiting Radio One's other rights under this Agreement). The Escrowed Shares
shall be distributed as follows: (i) if after Closing the Merger Consideration
is adjusted in favor of Radio One under Section 1.10, then Radio One shall be
entitled to redeem shares from the Escrowed Shares equal to the amount of such
adjustment; (ii) if after Closing a Deficiency (as defined in Section 10.3(a))
is established pursuant to Article 10, then Radio One shall be entitled to
redeem shares from the Escrowed Shares equal to the amount of such Deficiency;
and (iii) on the date twelve months after Closing, the Escrow Agent shall
release to the holders of Class B Common Stock shares from the Escrowed Shares
in excess of any such adjustment and Deficiency amounts delivered to Radio One
and the amount of any pending indemnification claims made under Section 10.2(a).
The number of shares of Radio One common stock to be redeemed shall be
determined by dividing the amount of the adjustment, Deficiency or claim
therefor by the Closing Price.
1.9. Deposit. One business day after the date of this Agreement, Radio
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One shall deposit the Escrow Amount in cash (the "Deposit") into escrow with
Wilmington Trust Company (the "Escrow Agent"), pursuant to the Escrow Agreement
of even date herewith among Radio One, the Majority Shareholder, and the Escrow
Agent. At Closing, the Deposit and all interest earned thereon shall be
disbursed to or at the direction of Radio One (and Radio One may elect to apply
all or part of such amounts to payment of the Cash Amount). If this Agreement
is terminated by the Majority Shareholder pursuant to Section 11.1(g) or
11.1(h), then the indebtedness of the ▇▇▇▇▇ Companies to Radio One in the amount
of $350,000 together with accrued interest thereon shall be forgiven and the
note dated December 15, 1999, representing same returned marked paid and the
Deposit shall be disbursed to the Shareholders as liquidated damages and such
forgiveness and disbursement shall be the sole and exclusive remedy of the
Shareholders and the Company. The Majority Shareholder and the Company hereby
waive all other legal and equitable rights and remedies each may otherwise have
as a result of any breach or default by Radio One under this Agreement. If this
Agreement is terminated without a Closing for any other reason, then the Deposit
and all interest thereon shall be returned to Radio One. The parties shall each
instruct the Escrow Agent to disburse the Deposit and all interest thereon to
the party entitled thereto and shall not, by any act or omission, delay or
prevent any such disbursement.
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1.10. Adjustment.
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(a) Not later than five (5) business days before Closing, the
Majority Shareholder shall deliver to Radio One a statement (the "Preliminary
Adjustment Statement") that sets forth a good faith estimate of the amount of
the Consolidated Accounts Payable, the Consolidated Accounts Receivable, the
Consolidated Current Assets, the Consolidated Liabilities (including the
Transaction Fees and Costs) at Closing and the Majority Shareholder's
calculation of the Adjusted Consideration and the Merger Consideration. The
Preliminary Adjustment Statement shall show the Majority Shareholder's
calculations in reasonable detail and shall be accompanied by a good faith,
estimated balance sheet of the ▇▇▇▇▇ Companies (as of the date of the
Preliminary Adjustment Statement) prepared by the Company Accountant in
accordance with GAAP and other supporting documentation. The Preliminary
Adjustment Statement shall also be accompanied by a certificate of the Majority
Shareholder (the "Preliminary Adjustment Certificate") certifying that the
Shareholders' calculations are in accordance with the provisions of this
Agreement.
(b) Not later than 90 days after Closing, Radio One shall deliver to
the Majority Shareholder a statement (the "Final Adjustment Statement") that
sets forth the amount of the Consolidated Accounts Payable, the Consolidated
Accounts Receivable, the Consolidated Current Assets and the Consolidated
Liabilities at Closing and Radio One's calculation of the Adjusted Consideration
and the Merger Consideration for each Shareholder. The Final Adjustment
Statement shall show Radio One's calculations in reasonable detail and shall be
accompanied by a balance sheet of the Company (as of the Closing Date) prepared
by Radio One's Accountant in accordance with GAAP and other supporting
documentation. The Final Adjustment Statement shall also be accompanied by a
certificate of Radio One certifying that Radio One's calculations are in
accordance with the provisions of this Agreement.
(c) If the Majority Shareholder disputes any item in the Final
Adjustment Statement, the Majority Shareholder shall notify Radio One in writing
thereof (specifying the amount of each item in dispute and setting forth in
detail the basis for each item in dispute) within ten (10) business days of the
Majority Shareholder's receipt of the Final Adjustment Statement. If the
Majority Shareholder does not notify Radio One of any such dispute within such
time, then the Final Adjustment Statement shall be deemed to be final and
binding on the parties. In the event of such a dispute, the parties shall
negotiate in good faith to attempt to reconcile their differences. If such
dispute has not been resolved within twenty (20) business days, the parties
shall submit the items remaining in dispute for resolution to the Independent
Accounting Firm, which shall, as promptly as practicable but in any event within
twenty (20) business days, resolve the disputed items and report to the parties,
and such report shall have the effect of an arbitral award and shall be final
and binding on the parties. The fees and disbursements of the Independent
Accounting Firm shall be allocated between the parties in the same proportion as
the award of the amount in dispute.
(d) If the Merger Consideration as determined in accordance with
Section 1.10(c) differs from the amount calculated at the Effective Time, then
within five (5) business days of such determination, the parties shall make
appropriate settlement thereof. In any such settlement, the number of shares of
Radio One stock subject to settlement shall be determined by dividing the amount
of the settlement by the Closing Price.
1.11 Closing. The consummation of the Mergers (the "Closing") shall take
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place at a date and time designated by Radio One after the date of the FCC
Consent pursuant to the FCC's initial order, but in no event later than the
earlier of: (a) nine months after the date the FCC gives public notice of the
filing of the FCC Applications (the "Final Closing Date"), (b)
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ten business days after the date the FCC Consent becomes Final, or (c) at Radio
One's election, upon ten business days notice after the date the FCC Consent is
granted by initial order, in any case subject to the satisfaction or waiver of
the last of the conditions required to be satisfied or waived pursuant to
Articles 7 or 8 below (other than those requiring a delivery of a certificate or
other document, or the taking of other action, at the Closing). Alternatively,
the Closing may take place at such other place, time or date as the parties may
mutually agree upon in writing. The date on which the Closing is to occur is
referred to herein as the "Closing Date."
1.12. FCC Applications. As soon as possible (but in no event later than
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five business days after the date of this Agreement) the parties shall file
applications with the FCC (the "FCC Applications") requesting the FCC's written
consent to the transfer of control of the Company to Radio One pursuant to this
Agreement, including the Merger Reorganization. The parties shall diligently
take all steps that are necessary, proper or desirable to expedite the
prosecution of the FCC Applications to a favorable conclusion. Each party shall
promptly provide the other with a copy of any pleading, order or other document
served on it relating to the FCC Applications, shall furnish all information
required by the FCC, and shall be represented at all meetings or hearings
scheduled to consider the FCC Applications. The FCC's written consent to the
FCC Applications is referred to herein as the "FCC Consent."
1.13. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. If necessary, as soon as possible (but in no
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event later than ten business days after the date of this Agreement), the
parties shall prepare and file with the Federal Trade Commission and the United
States Department of Justice any documents that may be necessary to comply with
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇")
(including a request for early termination of the waiting period thereunder) and
shall thereafter promptly furnish all materials thereafter requested by such
agencies.
1.14. Employment Agreement. At Closing, Radio One and the Majority
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Shareholder shall enter into an Employment Agreement in the form attached hereto
as Exhibit A.
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1.15. Preclosing Reorganizations. Notwithstanding anything herein to
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the contrary, prior to and at Closing, the Company, the Majority Shareholder and
Radio One shall undertake the transactions when and as described in Schedule
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1.15 ("Merger Reorganizations").
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ARTICLE 2: COMPANY REPRESENTATIONS AND WARRANTIES
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To induce Radio One to enter into this Agreement and to consummate the
transactions contemplated hereby, the Majority Shareholder and the Company
represent and warrant to Radio One as follows:
2.1 Organization. The ▇▇▇▇▇ Companies are duly organized, validly
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existing and in good standing under the laws of the jurisdiction of their
organization (as first set forth above), and, except as set forth in Schedule
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2.1, are in good standing in each state or other jurisdiction in which their
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assets are located or in which their business or operations as presently
conducted make such qualification necessary. The ▇▇▇▇▇ Companies have the
requisite power and authority to own and operate the ▇▇▇▇▇ Stations, to carry on
the ▇▇▇▇▇ Stations' business as now conducted by them, and to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by the Company pursuant hereto (collectively, the
"Company Ancillary Agreements"), to consummate the transactions contemplated
hereby and thereby and to comply with the terms, conditions and provisions
hereof and thereof.
2.2 Capitalization. The entire authorized capital stock and the
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entire issued and outstanding capital stock of the ▇▇▇▇▇ Companies are described
on Schedule 2.2. The
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Shareholders own and hold all legal and beneficial right, title and interest in
and to the Company Stock (being all of the issued and outstanding shares of
stock of the Company), the Company owns and holds all legal and beneficial
right, title and interest in and to all of the issued and outstanding shares of
capital stock of DBA (the "DBA Stock") and DBC (the "DBC Stock"), and DBA owns
and holds all legal and beneficial right, title and interest in and to all of
the issued and outstanding shares of capital stock of DBE (the "DBE Stock") (the
Company Stock, DBA Stock, DBC Stock and DBE Stock, collectively, the "▇▇▇▇▇
Company Shares"), in each case free and clear of Liens except as set forth in
Schedule 2.2. All ▇▇▇▇▇ Company Shares have been duly authorized, are validly
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issued, fully paid, and nonassessable, and the Company Stock is held of record
by the persons set forth on Schedule 2.2. No shares of the ▇▇▇▇▇ Companies are
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held in treasury. Except as provided by this Agreement, there are no outstanding
subscriptions, options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for the
purchase, issuance or sale of any shares of the ▇▇▇▇▇ Companies. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the ▇▇▇▇▇ Companies. Except as
set forth in Schedule 2.2, there are no stockholder agreements, voting trusts,
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proxies, or other agreements or understandings with respect to the voting or
transfer of any shares of the ▇▇▇▇▇ Companies. Schedule 2.2 contains a complete
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listing of all the officers and directors of the ▇▇▇▇▇ Companies.
2.3 Subsidiaries and Investments. Except for the Station Subs and the
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Columbus Sub, the ▇▇▇▇▇ Companies have no Subsidiaries. None of the ▇▇▇▇▇
Companies is a member of (nor is any part of their business conducted through)
any partnership, nor are any of the ▇▇▇▇▇ Companies a participant in any joint
venture or similar arrangement. None of the ▇▇▇▇▇ Companies owns directly or
indirectly, any other capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture.
2.4 Books and Records. The minute books of the ▇▇▇▇▇ Companies, true and
-----------------
correct copies of which have been provided to Radio One, contain materially
accurate records of all meetings of, and corporate actions taken by, (including
actions taken by written consent) the shareholders and directors of the ▇▇▇▇▇
Companies. At Closing all of the books and records of the ▇▇▇▇▇ Companies will
be in the possession of the Company.
2.5 Authority. The execution, delivery and performance of this
---------
Agreement and the Company Ancillary Agreements by the Company have been duly
authorized and approved by the board of directors of the Company and do not
require any further authorization or consent of the Company except as provided
in Section 5.10 below. This Agreement is, and each Company Ancillary Agreement
when executed and delivered by the Company and the other parties thereto will
be, a legal, valid and binding agreement of the Company enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
2.6 No Conflicts. Except as set forth in Schedule 2.6, neither the
------------ ------------
execution and delivery by the Company of this Agreement and the Company
Ancillary Agreements nor the consummation by the Company of any of the
transactions contemplated hereby or thereby nor compliance by the Company with
or fulfillment by the Company of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of
-7-
any Lien upon any of the Assets under, the charter or other organizational
documents of any of the ▇▇▇▇▇ Companies, or any contract, lease, agreement or
instrument, or any governmental license, permit or authorization, or any
judgment, order, award or decree to which any of the ▇▇▇▇▇ Companies are a party
or any of the Assets are subject or by which any of the ▇▇▇▇▇ Companies are
bound, or any statute, other law or regulatory provision affecting any of the
▇▇▇▇▇ Companies or the Assets; or
(ii) require the approval, consent, authorization or act of, or the
making by any of the ▇▇▇▇▇ Companies of any declaration, filing or registration
with, any third party or any foreign, federal, state or local court,
governmental or regulatory authority or body, except for such of the foregoing
as are necessary pursuant to the HSR Act and the Communications Act.
2.7 Financial Statements.
--------------------
(a) The Majority Shareholder has furnished Radio One with audited
financial statements used by the ▇▇▇▇▇ Companies in the preparation of its
federal and state tax returns and copies of its filed federal and state tax
returns for fiscal years ending June 30, 1996, 1997, 1998 and 1999 as well as
unaudited monthly financial statements for the period from July 1, 1999 through
February 29, 2000. The financial statements described in the preceding sentences
and in Section 5.2 shall be collectively referred to as "Financial Statements."
The Financial Statements: (x) have been and will be prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved and as
compared with prior periods subject in the case of unaudited statements to the
absence of notes and normal year-end adjustments after audit; and (y) fairly
present the ▇▇▇▇▇ Companies' financial position, income, expenses, assets,
liabilities, and the results of operations of the ▇▇▇▇▇ Companies as of the
dates and for the periods indicated. There has been no sale of material
properties or assets, other than broadcast time, or loss or material injury to
the business and no material adverse change in the business, assets, properties
or condition (financial or otherwise) of the ▇▇▇▇▇ Companies since the
preparation of the most recent annual or monthly Financial Statement. No event
has occurred that would make any Financial Statement misleading in any material
respect.
(b) Except as reflected in the balance sheets included in the
Financial Statements dated January 31, 2000 (the "Balance Sheet Date"),
including the notes thereto or otherwise disclosed in this Agreement or the
schedules hereto, and except for the current liabilities and obligations
incurred in the ordinary course of business of the ▇▇▇▇▇ Companies (not
including for this purpose any tort-like liabilities or breach of contract)
since the Balance Sheet Date, there exist no liabilities or obligations of the
▇▇▇▇▇ Companies, contingent or absolute, matured or unmatured, known or unknown
of the type that would, in accordance with GAAP, consistently applied, be
required to be set forth in the Financial Statements. Since the Balance Sheet
Date: (i) the ▇▇▇▇▇ Companies have not made any contract, agreement or
commitment or incurred any liability or obligation of any kind or nature except
in the ordinary course of business and consistent with past business practices;
(ii) there has not been any discharge or satisfaction of any obligation or
liability owed by the ▇▇▇▇▇ Companies, which is not in the ordinary course of
business or which is inconsistent with past business practices; (iii) there has
been no material damage, destruction or loss to any of the Assets or any asset
or property, tangible or intangible, of the ▇▇▇▇▇ Companies; (iv) the ▇▇▇▇▇
Companies have operated their business in the ordinary course; and (v) the ▇▇▇▇▇
Companies have not increased the salaries or any other compensation of any of
its employees or agreed to the payment of any bonuses, except in the ordinary
course of business consistent with existing employment practices. The monthly
balance sheets: (x) have been and will be prepared on a consistent basis
throughout the periods involved and as compared with prior periods; and (y)
fairly present the ▇▇▇▇▇ Companies' financial position, income, expenses,
assets, liabilities, and
-8-
results of operations as of the dates and for the periods indicated, subject to
year end adjustments which do not materially affect the operations of the ▇▇▇▇▇
Companies.
2.8 Tax Matters.
-----------
(a) The ▇▇▇▇▇ Companies have been corporations for U.S. federal
income tax purposes at all times since their formation up to and including the
Closing Date and have never elected to be treated as another kind or type of
entity.
(b) The ▇▇▇▇▇ Companies have duly filed or caused to be filed all
Tax Returns required to have been filed by or with respect to the ▇▇▇▇▇
Companies, and each such Tax Return correctly and completely reports the Tax
liability required to be reported thereon. The ▇▇▇▇▇ Companies have paid all
Taxes (whether or not shown on any Tax Return) owed by or with respect the ▇▇▇▇▇
Companies.
(c) The amount of the liability of the ▇▇▇▇▇ Companies for unpaid
Taxes as of the Balance Sheet Date did not exceed the current liability accruals
for Taxes (excluding any reserves for deferred Taxes) set forth on the Financial
Statements dated as of the Balance Sheet Date. The amount of the liability of
the ▇▇▇▇▇ Companies for unpaid Taxes as of the date of any Financial Statements
provided pursuant to Section 5.2 will not exceed the current liability accruals
for Taxes (excluding any reserves for deferred Taxes) set forth on such
Financial Statements. The amount of the liability of the ▇▇▇▇▇ Companies for
unpaid Taxes as of the Closing Date will not exceed the current liability
accruals for Taxes (excluding any reserves for deferred Taxes) set forth on the
Financial Statements dated as of the Balance Sheet Date, as such accruals are
adjusted on the books and records of the ▇▇▇▇▇ Companies through the Closing
Date in accordance with past custom and practice, excluding, however, Taxes
arising from the spinoff of the Columbus Stations and the Columbus Sub.
(d) The ▇▇▇▇▇ Companies are not a party or subject to any agreement
extending the time within which to file any Tax Return. No claim has ever been
made by any Tax Authority in any jurisdiction in which the ▇▇▇▇▇ Companies do
not file Tax Returns that they are or may be subject to taxation by that
jurisdiction. The ▇▇▇▇▇ Companies have not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency.
(e) The ▇▇▇▇▇ Companies have withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and record-keeping requirements with respect to, any amounts paid or
owing to any employee, creditor, independent contractor or other third party.
(f) No Tax Proceedings are pending with regard to any Tax Returns or
Taxes of the ▇▇▇▇▇ Companies, and no notice has been received by the ▇▇▇▇▇
Companies (whether in writing or orally) of the expected commencement of a Tax
Proceeding. No issues have been raised in any audit or examination by or with
respect to the ▇▇▇▇▇ Companies which, by application of similar principles,
could be reasonably expected to result in a proposed deficiency for any other
period not so examined. The ▇▇▇▇▇ Companies have neither received any written
ruling of a Tax Authority relating to Taxes nor entered into any closing
agreement or similar written binding agreement with a Tax Authority relating to
Taxes.
(g) Schedule 2.8 attached hereto lists all material federal, state,
------------
local and foreign income and franchise Tax Returns required to be filed by or
with respect to the ▇▇▇▇▇ Companies for the prior three Taxable Periods. With
respect to each such Tax Return, Schedule 2.8 indicates if such Tax Return has
------------
been audited and, if so, whether it is open or closed. The ▇▇▇▇▇ Companies have
delivered to Radio One complete and correct copies of all
-9-
federal, state, local and foreign income and franchise Tax Returns filed by or
with respect to, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, the ▇▇▇▇▇ Companies for the prior three
Taxable Periods.
(h) The ▇▇▇▇▇ Companies are neither a party to any Tax allocation,
Tax indemnity, Tax sharing agreement, or any similar arrangement pursuant to
which any of them have agreed to be liable for Taxes of any other person or
entity nor do any of them have any liability for Taxes of any other person or
entity as a transferee or successor.
(i) Except for an adjustment of not more than $200,000 to convert
from the cash to the accrual method of accounting, the ▇▇▇▇▇ Companies will not
be required to include any adjustment in taxable income in any Taxable Period
ending after the Closing Date under Section 481 of the Code (or any similar
provision of the Tax laws of any jurisdiction) as a result of any change in any
method of accounting occurring in a Taxable Period ending on or before the
Closing Date. No Tax Authority has proposed any such change in any accounting
method. The ▇▇▇▇▇ Companies use the cash method of accounting for income Tax
purposes.
(j) There are (and immediately following the Closing there will be)
no Liens on any of the assets of the ▇▇▇▇▇ Companies relating or attributable to
Taxes (other than liens for Taxes not yet due and payable). No deficiencies for
any Taxes have been asserted or assessed against the ▇▇▇▇▇ Companies which, if
unpaid, might result in a Lien on any of the assets of the ▇▇▇▇▇ Companies
relating or attributable to the taxes (other than Liens for Taxes not yet due
and payable).
(k) There is no contract or agreement covering any employee or
former employee of the ▇▇▇▇▇ Companies that, individually or collectively, could
give rise to the payment of any amount (or portion thereof) that would not be
deductible pursuant to Sections 280G, 404 or 162 of the Code.
(l) The ▇▇▇▇▇ Companies' net operating losses as of June 30, 1999
for federal and Georgia state tax purposes are as set forth on Schedule 2.8.
------------
2.9 Assets. The Assets include all the assets used or held for use in
------
the business or operation of the ▇▇▇▇▇ Stations. The ▇▇▇▇▇ Companies have no
business or operations other than the business and operation of the ▇▇▇▇▇
Stations. The ▇▇▇▇▇ Companies have good title to and ownership of the Assets,
free and clear of Liens, except for those described in Schedule 2.9 and for
------------
the Permitted Encumbrances.
2.10 FCC Authorizations.
------------------
(a) The Station Subs are the holders of the FCC Authorizations
listed and described on Schedule 2.10. Such FCC Authorizations constitute all of
-------------
the licenses and authorizations required under the Communications Act of 1934,
as amended (the "Communications Act"), or the rules, regulations and policies of
the FCC for, and used in the operation of, the ▇▇▇▇▇ Stations. The FCC
Authorizations are in full force and effect and have not been revoked,
suspended, canceled, rescinded or terminated and have not expired. There is not
pending or threatened any action by or before the FCC to revoke, suspend,
cancel, rescind or modify any of the FCC Authorizations (other than proceedings
to amend FCC rules of general applicability), and there is not now issued or
outstanding or pending or threatened, by or before the FCC, any order to show
cause, notice of violation, notice of apparent liability, or notice of
forfeiture or complaint against the ▇▇▇▇▇ Companies or the ▇▇▇▇▇ Stations.
(b) Except as set forth in Schedule 2.10: (i) all reports and
-------------
filings required to be filed with, and all regulatory fees required to be paid
to, the FCC by the ▇▇▇▇▇
-10-
Companies with respect to the ▇▇▇▇▇ Stations have been timely filed and paid;
(ii) all such reports and filings are accurate and complete; (iii) the ▇▇▇▇▇
Companies maintain public files for the ▇▇▇▇▇ Stations as required by FCC rules;
(iv) with respect to FCC licenses, permits and authorizations, the ▇▇▇▇▇
Companies are operating only those facilities for which an appropriate FCC
Authorization has been obtained and is in effect, and the ▇▇▇▇▇ Companies are
meeting the conditions of each such FCC Authorization; and (v) the ▇▇▇▇▇
Stations are operating in compliance in all material respects with the FCC
Authorizations, the Communications Act, and the rules, regulations and policies
of the FCC.
(c) The Majority Shareholder and the ▇▇▇▇▇ Companies are aware of no
facts indicating that the Shareholders, the ▇▇▇▇▇ Companies or the ▇▇▇▇▇
Stations are not in compliance with all requirements of the FCC, the
Communications Act, or any other applicable federal, state and local statutes,
regulations and ordinances. The Majority Shareholder and the ▇▇▇▇▇ Companies are
aware of no facts and Company has received no notice or communication, formal or
informal, indicating that the FCC is considering revoking, suspending,
canceling, rescinding or terminating any FCC Authorization.
(d) The operation of the ▇▇▇▇▇ Stations does not cause or result in
exposure of workers or the general public to levels of radio frequency radiation
in excess of the "Radio Frequency Protection Guides" recommended in "American
National Standard Safety Levels with Respect to Human Exposure to Radio
Frequency Electromagnetic Fields 3 kHz to 300 GHz" (ANSI/IEEE C95.1-1992) issued
by the American National Standards Institute, adopted by the FCC effective
October 15, 1997, and described in OET Bulletin No. 65. Renewal of the FCC
Authorizations would not constitute a "major action" within the meaning of
Section 1.1301, et seq., of the FCC's rules.
-- ---
(e) Each communications tower structure used in the operation of the
▇▇▇▇▇ Stations (whether owned or leased) has been registered under the rules and
regulations of the FCC, and the Federal Aviation Administration has issued a
determination of no hazard to air navigation with respect to each such tower for
which such a determination is required.
2.11 Personal Property. Schedule 2.11 contains a list of all machinery,
----------------- -------------
equipment, vehicles, furniture and other tangible personal property owned by the
▇▇▇▇▇ Companies as of the date hereof with a value in excess of $2,500. Each
item of Tangible Personal Property is in good operating condition and repair, is
free from material defect or damage, is functioning in the manner and purposes
for which it was intended, and has been maintained in accordance with industry
standards.
2.12 Real Property. Schedule 2.12 contains a description of all real
------------- -------------
property owned or leased by the ▇▇▇▇▇ Companies. One of the ▇▇▇▇▇ Companies has
good and marketable fee simple title to all owned Real Property (the "Owned Real
Property"), including all real property described on Schedule 2.12 as owned, and
-------------
including all buildings and other improvements thereon. Schedule 2.12 includes
-------------
a description of each lease or similar agreement under which any of the ▇▇▇▇▇
Companies are lessee or licensee of, or holds, uses or operates, any real
property in the business or operation of the ▇▇▇▇▇ Stations (the "Real Property
Leases"). The Owned Real Property includes, and the Real Property Leases
provide, sufficient access to the ▇▇▇▇▇ Stations' facilities without the need to
obtain any other access rights. Neither the whole nor any part of any Real
Property is subject to any pending, or to the knowledge of the Company
threatened, suit for condemnation or other taking by any public authority. All
buildings and other improvements included in the Real Property are in good
operating condition and repair, and free from material defect or damage, and
comply with applicable zoning, health and safety laws and codes. The Majority
Shareholder has delivered to Radio One copies of all title insurance policies in
its possession that are applicable to the Real Property.
-11-
2.13 Contracts. Schedule 2.13 contains a complete and correct list of
--------- -------------
all Station Contracts as of the date hereof (other than Time Sales Agreements).
Each of the Station Contracts (including without limitation each of the Real
Property Leases) constitutes a valid and binding obligation of Company and, to
the best knowledge of Company, the other parties thereto (subject to bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally) and is in full force and effect and
(except as set forth in Schedule 2.6 and except for those Station Contracts
------------
which by their terms will expire prior to the Closing Date or will be otherwise
terminated prior to the Closing Date in accordance with the provisions hereof)
may be assigned or transferred to the Surviving Companies pursuant to this
Agreement and will be in full force and effect at the time of such transfer or
assignment, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. The
▇▇▇▇▇ Companies have performed in all material respects their obligations under
each of the Station Contracts, and the ▇▇▇▇▇ Companies are not in, or to the
best knowledge of the Company alleged to be in, breach or default under any of
the Station Contracts, and, to the best knowledge of the Company, no other party
to any of the Station Contracts has breached or defaulted thereunder, and no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by the ▇▇▇▇▇ Companies or, to the best knowledge of the Company, by
any such other party. Complete and correct copies of each of the Station
Contracts, together with all amendments thereto, have been delivered to Radio
One by the Majority Shareholder and the Company.
2.14 Intangible Property. The ▇▇▇▇▇ Companies have all right, title and
-------------------
interest in and to all trademarks, service marks, trade names, copyrights,
Websites and all other intangible property necessary to conduct its business and
operations as presently operated. Schedule 2.14 contains a description of all
-------------
material Intangible Property. The ▇▇▇▇▇ Companies have received no notice of
any claim that any Intangible Property or the use thereof conflicts with, or
infringes upon, any rights of any third party (and there is no basis for any
such claim of conflict) other than any claim which could not reasonably be
expected to have a material adverse effect on the ▇▇▇▇▇ Companies. The ▇▇▇▇▇
Companies have the sole and exclusive right to use the Intangible Property. No
service provided by the ▇▇▇▇▇ Companies or any programming or other material
used, broadcast or disseminated by the ▇▇▇▇▇ Stations infringes upon any
copyright, patent or trademark of any other party.
2.15 Employees. Schedule 2.15 contains a list of all employees of the
--------- -------------
▇▇▇▇▇ Companies as of the date hereof and their position and rate of
compensation, and a description of all the ▇▇▇▇▇ Companies' employee benefit
plans. The Majority Shareholder and the Company have delivered to Radio One
copies of all the ▇▇▇▇▇ Companies' handbooks, policies and procedures. The
▇▇▇▇▇ Companies have complied in all material respects with all labor and
employment laws, rules and regulations applicable to their business, including
without limitation those which relate to prices, wages, hours, discrimination in
employment and collective bargaining, and are not liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the foregoing.
The ▇▇▇▇▇ Companies are not a party to any collective bargaining agreement and
no collective bargaining agreement is currently being negotiated by the ▇▇▇▇▇
Companies. There is no (i) unfair labor practice charge or complaint against
the ▇▇▇▇▇ Companies in respect of its business pending or threatened before the
National Labor Relations Board, any state labor relations board or any court or
tribunal, or (ii) strike, dispute, request for representation, slowdown or
stoppage pending or threatened in respect of its business, in each case, other
than any such items which could not reasonably be expected to result in a
material adverse effect upon the ▇▇▇▇▇ Companies.
2.16 Employee Benefit Matters. Except as set forth in Schedule 2.15, the
------------------------ -------------
▇▇▇▇▇
-12-
Companies have never maintained, sponsored or contributed to, or been
obligated to contribute to, any employee pension benefit plan as defined in
Section 3(2) of ERISA. All employee benefit plans (including those defined in
Section 3(3) of ERISA) and all benefits arrangements that have been maintained,
sponsored or contributed to by the ▇▇▇▇▇ Companies have been maintained,
administered and funded in material compliance with their terms and, both as to
form and operation, with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such plans, including but
not limited to ERISA and the Code. There are no unfunded benefit liabilities
and no accumulated funding deficiencies in respect of any such employee benefit
plans. As to each employee benefit for which an annual report, including
schedules, or comparable report is required to be filed under ERISA or the Code,
no liabilities, with respect to such plan, existed on the dates of such annual
report except as disclosed therein, and no material adverse change has occurred
with respect to the financial data covered by such annual report since the date
thereof. Neither the ▇▇▇▇▇ Companies nor any such employee benefit plan will
have at Closing any present or future obligation to make any payment to or with
respect to any present or former employee of the ▇▇▇▇▇ Companies pursuant to any
retiree medical benefit plan, or other retiree welfare plan (within the meaning
of Section 3(1) of ERISA), and no condition exists which would prevent the ▇▇▇▇▇
Companies from amending or terminating any such employee benefit plan, including
any such welfare plan. Each such welfare plan has been operated in compliance
with the provisions of Part 6 of Title I of ERISA and Sections 162 and 4980B of
the Code at all times.
2.17 Compliance with Law; Litigation. The ▇▇▇▇▇ Companies have complied
-------------------------------
in all material respects with all laws, regulations, rules, writs, injunctions,
ordinances, franchises, decrees or orders of any court or of any foreign,
federal, state, municipal or other governmental authority which are applicable
to them, the Assets, the ▇▇▇▇▇ Stations or their business. Except as set forth
in Schedule 2.17, as of the date hereof there is no action, suit or proceeding
-------------
pending, or to the best knowledge of the Company threatened, against the ▇▇▇▇▇
Companies, and there are no claims or investigations pending, or to the best
knowledge of the Company threatened, against the ▇▇▇▇▇ Companies. There are no
unsatisfied judgments issued or outstanding against the ▇▇▇▇▇ Companies.
2.18 Insurance. The ▇▇▇▇▇ Companies maintain insurance policies bearing
---------
the policy numbers with the companies set forth on Schedule 2.18 hereto. All of
-------------
such policies are in full force and effect and the ▇▇▇▇▇ Companies are not in
default thereunder. The ▇▇▇▇▇ Companies have not received notice from any
issuer of any such policies of its intention to cancel, terminate or refuse to
renew any policy issued by them.
2.19 Environmental. No hazardous or toxic substance or waste (including
-------------
without limitation petroleum products) or other material regulated under any
applicable environmental, health or safety law (each a "Contaminant") has been
generated, stored, transported or released (each a "Release") on, in, from or to
any of the Assets in material violation of applicable law. Neither the ▇▇▇▇▇
Companies nor any of the Assets are subject to any order from or agreement with
any governmental authority or private party respecting (i) any environmental,
health or safety law, (ii) any environmental clean-up, removal, prevention or
other remedial action or (iii) any obligation or liability arising from the
Release of a Contaminant. Neither the ▇▇▇▇▇ Companies nor any of the Assets
includes any underground storage tanks installed or used by the ▇▇▇▇▇ Companies
or surface impoundment containing hazardous materials installed or used by the
▇▇▇▇▇ Companies, or to the best knowledge of the Company installed by others or
any asbestos containing material, or any polychlorinated biphenyls. The ▇▇▇▇▇
Companies have not received any notice or claim to the effect that they are or
may be liable as a result of the Release of a Contaminant. To the best
knowledge of the Company neither the ▇▇▇▇▇ Stations nor any of the Assets is the
subject of any investigation by any governmental authority with respect to a
Release of a Contaminant. The Majority Shareholder and the Company have
delivered to Radio One copies of all environmental
-13-
surveys, analyses and assessments in their possession relating to any of the
Real Property.
2.20 Affiliates. No Shareholders or relative of any of the Shareholders
----------
and no Affiliate of the ▇▇▇▇▇ Companies has an interest in, or option to
acquire, any of the Assets. None of the ▇▇▇▇▇ Companies, the Shareholders, any
Affiliate of the ▇▇▇▇▇ Companies or the Shareholders, or any officer or director
of the ▇▇▇▇▇ Companies possesses, directly or indirectly, any ownership interest
in, or is a director, officer or employee of, any person which is a supplier,
advertiser, customer, lessor, lessee, licensor, licensee, developer, competitor
or potential competitor of the ▇▇▇▇▇ Companies. Ownership of securities of a
company whose securities are registered under the Securities Exchange Act of
1934 of 5% or less of any class of such securities shall not be deemed to be a
financial interest for purposes of this Section.
2.21 Guaranties, Indemnities, Etc. The ▇▇▇▇▇ Companies are not a
----------------------------
guarantor nor otherwise liable for any liability or obligation (including
indebtedness) of any other person. The ▇▇▇▇▇ Companies have not agreed to
indemnify or otherwise hold harmless any person from any liability, known or
unknown, existing or future, direct or indirect, contingent or primary. The
▇▇▇▇▇ Companies are not a party to any non-competition, covenant-not-to-compete
or similar agreement except as the beneficiary of any such agreement.
2.22 No Finder. No broker, finder or other person is entitled to a
---------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of the Shareholders or the ▇▇▇▇▇ Companies or any party acting on
their behalf.
2.23 Powers of Attorney The ▇▇▇▇▇ Companies have not granted a power of
------------------
attorney to any person or entity.
2.24 Year 2000 Compliance. All of the Assets (including all systems,
--------------------
machinery, information technology, computer software and hardware, and other
data sensitive technology) are operating without error or interruption related
to date data (meaning data or input that includes an indication of or reference
to a date) and without other problems commonly referred to as "year 2000
problems."
2.25 Disclosure. With respect to the ▇▇▇▇▇ Companies, the Shareholders,
----------
the Company Stock, the ▇▇▇▇▇ Stations and the Assets, this Agreement, the
Company Ancillary Agreements and all information and other materials delivered
to Radio One pursuant to this Agreement do not and will not contain any untrue
statement of material fact or omit to state a material fact required to be made
in order to make the statements herein and therein not misleading in light of
the circumstances in which they are made.
ARTICLE 3: MAJORITY SHAREHOLDER REPRESENTATIONS AND WARRANTIES
---------------------------------------------------
To induce Radio One to enter into this Agreement and to consummate the
transactions contemplated hereby, the Majority Shareholder represents and
warrants to Radio One as follows:
3.1 Authority. Each Shareholder resides in the jurisdiction set forth
---------
on Schedule 2.2 hereto and has the requisite power and authority to execute and
------------
deliver all of the agreements and instruments to be executed and delivered by
each such Shareholder (collectively, the "Shareholder Ancillary Agreements"), to
consummate the transactions contemplated hereby and thereby and to comply with
the terms, conditions and provisions hereof and thereof.
3.2 Binding Effect. Each of the Shareholder Ancillary Agreements when
--------------
executed
-14-
and delivered by each such Shareholder and the other parties thereto will be, a
legal, valid and binding agreement of each such Shareholder enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
3.3 No Conflicts. Each Shareholder has the full legal right, power and
------------
authority to consummate the Mergers without the consent of any other person.
ARTICLE 4: RADIO ONE REPRESENTATIONS AND WARRANTIES
----------------------------------------
To induce the Majority Shareholder and the Company to enter into this
Agreement and to perform and consummate the transactions contemplated hereby,
Radio One represents and warrants to the Shareholders and the Company as
follows:
4.1 Organization. Radio One is duly organized, validly existing and in
------------
good standing under the laws of the jurisdiction of its organization (first set
forth above). Radio One has the requisite power and authority to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by them (collectively, the "Radio One Ancillary
Agreements"), to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.
4.2 Authority. The execution, delivery and performance of this Agreement
---------
and the Radio One Ancillary Agreements by Radio One have been duly authorized
and approved by all necessary action of Radio One and does not require any
further authorization or consent of Radio One. This Agreement is, and each
Radio One Ancillary Agreement when executed and delivered by Radio One and the
other parties thereto will be, a legal, valid and binding agreement of Radio One
enforceable in accordance with its respective terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization or other similar laws affecting or limiting the enforcement of
creditors' rights generally and except as such enforceability is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Upon issuance of the Stock
Consideration, the shares comprising the Stock Consideration will be duly
authorized, validly issued and fully paid and non-assessable.
4.3 No Conflicts. Neither the execution and delivery by Radio One of
------------
this Agreement and the Radio One Ancillary Agreements nor the consummation by
Radio One of any of the transactions contemplated hereby or thereby nor
compliance by Radio One with or fulfillment by Radio One of the terms,
conditions nd provisions hereof or thereof will: (i) conflict with the charter
or other organizational documents of Radio One or any judgment, order or decree
to which Radio One is subject; or (ii) require the approval, consent,
authorization or act of, or the making by Radio One of any declaration, filing
or registration with, any third party or any foreign, federal, state or local
court, governmental or regulatory authority or body, except for such of the
foregoing as are necessary pursuant to the HSR Act and the Communications Act.
4.4 No Finder No broker, finder or other person is entitled to a
--------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Radio One or any party acting on its behalf.
-15-
4.5 Qualification Radio One is qualified under the Communications Act
-------------
and the rules, regulations and policies of the FCC to control the FCC
Authorizations.
4.6 Representations Neither Radio One nor any of its Affiliates has
---------------
taken, or agreed to take, any action that will prevent the Mergers from
qualifying as reorganization under Section 368(a) of the Code, and Radio One
will use commercially reasonable efforts to cause the Mergers to constitute a
reorganization under such section.
ARTICLE 5: COVENANTS OF COMPANY AND THE SHAREHOLDERS
-----------------------------------------
The Company and the Majority Shareholder covenant and agree that from the date
hereof until the completion of the Closing:
5.1 Operation of the Business
-------------------------
(a) Subject to Section 1.15 the ▇▇▇▇▇ Companies shall: (i) continue
to carry on their business and keep their books and accounts, records and files
in the usual and ordinary manner in which the business has been conducted in the
past; (ii) operate their business in all material respects in accordance with
the terms of the FCC Authorizations and in compliance in all material respects
with the Communications Act, FCC rules, regulations and policies, and all other
applicable laws, rules and regulations, and maintain the FCC Authorizations in
full force and effect and timely file and prosecute any necessary applications
for renewal of the FCC Authorizations; (iii) use best efforts to preserve their
business organization intact, retain substantially as at present their
employees, consultants and agents, preserve the goodwill of their suppliers,
advertisers, customers and others having business relations with it, and
broadcast all time due under barter time sales agreements to the extent possible
and permissible under such barter agreements; (iv) keep all Tangible Personal
Property and Real Property in good operating condition (ordinary wear and tear
excepted) and repair and maintain adequate and usual supplies of inventory,
office supplies, spare parts and other materials as have been customarily
maintained in the past; (v) preserve intact the Assets and maintain in effect
its current insurance policies with respect to the ▇▇▇▇▇ Stations and the
Assets; and (vi) collect accounts receivable only in the ordinary course of
business consistent with past practice. Nothing contained in this Agreement
shall give Radio One any right to control the programming, operations or any
other matter relating to the ▇▇▇▇▇ Stations prior to the Closing, and the ▇▇▇▇▇
Companies shall have complete control of the programming, operations and all
other matters relating to the ▇▇▇▇▇ Stations up to the Closing.
(b) Subject to Section 1.15 and notwithstanding Section 5.1(a), the
▇▇▇▇▇ Companies shall not, without the prior written consent of Radio One: (i)
sell, lease, transfer, or agree to sell, lease or transfer, any Assets except
for non-material sales or leases, in the ordinary course of business of items
which are being replaced by assets of comparable or superior kind, condition and
value; (ii) grant any raises to employees, pay any substantial bonuses or enter
into any contract of employment with any employee or employees other than in the
ordinary course of business consistent with existing employment practices; (iii)
adopt or increase any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
of its employees; (iv) amend or terminate any existing Time Sales Agreements
except in the ordinary course of business; (v)
-16-
amend or terminate any of the Station Contracts or enter into any contract,
lease or agreement except those entered into in the ordinary course of business
consistent with past practices and except for barter time sales agreements that
will be paid and performed in full before Closing; (vi) by any act or omission
cause any representation or warranty made herein to become untrue or inaccurate;
(vii) discount, or otherwise reduce the amount receivable in respect of, any
accounts receivable; (viii) increase its indebtedness for borrowed money, except
current borrowings in the ordinary course of business; (ix) cancel, compromise
or waive any claim or right of substantial value; (x) except as set forth in
Section 1.15, declare or make any dividend or other distribution of any kind or
for any purpose to any stockholder; (xi) redeem, purchase or otherwise acquire
any of its capital stock; (xii) make any change in accounting methods or
practices, except as required by law or generally accepted accounting
principles; (xiii) issue or sell any shares of capital stock or any other
securities, or issue any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or enter into any arrangement or contract
with respect to the issue or sale of, any shares of its capital stock or any
other securities, or make any other changes in its capital structure; or (xiv)
amend or modify its certificate of incorporation or bylaws.
(c) The Majority Shareholder and the ▇▇▇▇▇ Companies shall not, and
shall not solicit, negotiate or enter into any agreement to, sell, transfer,
assign, encumber or pledge the Company Stock or any of the other ▇▇▇▇▇ Company
Shares.
5.2 Reports The Majority Shareholder shall furnish to Radio One by the
-------
end of each calendar month for the preceding calendar month: (a) unaudited
monthly Financial Statements for the ▇▇▇▇▇ Companies and for the year to date
period, and (b) such other reports as Radio One may reasonably request relating
to the ▇▇▇▇▇ Companies. The Financial Statements so delivered shall include the
comparable month and year to date period for the previous fiscal year. Each of
the Financial Statements delivered pursuant to this Section shall be prepared in
accordance with GAAP subject to the absence of notes and normal year-end
adjustments after audit (except as disclosed therein).
5.3 Access Between the date hereof and the Closing Date, Radio One and
------
the officers, employees, accountants, counsel, agents, consultants and
representatives of Radio One shall be given reasonable access to all Assets,
employees of the ▇▇▇▇▇ Companies, accounts, statements, books, records, minutes,
deeds, title papers, insurance policies, licenses, agreements, contracts,
commitments, state and federal tax returns, records and files of every
character, equipment, machinery, fixtures, furniture, vehicles, notes and
accounts payable and receivable of the ▇▇▇▇▇ Companies, and any other
information concerning the affairs of the ▇▇▇▇▇ Companies as Radio One may
reasonably request provided that Radio One does not unreasonably interfere with
the business and operations of the ▇▇▇▇▇ Companies. It is expressly understood
that, pursuant to this Section, Radio One, at its expense, shall be entitled to
conduct such inspections and reviews of the ▇▇▇▇▇ Companies, the ▇▇▇▇▇ Stations,
the Assets, and financial records relating to the ▇▇▇▇▇ Companies and the ▇▇▇▇▇
Stations as Radio One may desire, so long as the same do not unreasonably
interfere with the operation of the ▇▇▇▇▇ Stations. No inspection or
investigation made by or on behalf of Radio One, or Radio One's failure to make
any inspection or investigation, shall affect the Majority Shareholder's or the
Company's representations, warranties and covenants hereunder or be deemed to
constitute a waiver of any of those representations, warranties and covenants.
Immediately after the date hereof, the Majority Shareholder and the Company
shall also cooperate, and shall cause their respective accountants to cooperate,
with Radio One to conduct an audit by Radio One's accountants at Radio One's
expense of the Financial Statements for the ▇▇▇▇▇ Stations for the years 1996,
1997, 1998 and 1999, and Radio One may disclose such financial
-17-
statements provided or created hereunder in reports filed by Radio One with any
governmental or regulatory authority, including the Securities and Exchange
Commission.
5.4 Confidentiality Until the Closing, Radio One agrees to, and to
---------------
cause its employees and agents to, protect the confidentiality of all
proprietary and confidential information received from the ▇▇▇▇▇ Companies
pursuant to this Agreement or otherwise, using the same care and procedures used
to protect Radio One's own proprietary and confidential information, and agrees
not to disclose, and to cause its Affiliates, employees and agents not to
disclose, such proprietary and confidential information to any other persons
except as may be reasonably necessary in connection with the transactions
contemplated herein or except to the extent (i) such information is or becomes
publicly available or obtainable from independent, nonconfidential sources and
not in breach of Radio One's obligations hereunder or any other party's
confidentiality obligations owed to the ▇▇▇▇▇ Companies and known by Radio One;
(ii) such information is required to be disclosed by law or by governmental
authorities having jurisdiction over Radio One; (iii) such information was known
by Radio One prior to any disclosure by the ▇▇▇▇▇ Companies; (iv) disclosure is
necessary for Radio One to enforce any or all of its rights under this
Agreement; or (v) such disclosure is consistent with Radio One's usual and
customary disclosure practices with respect to its own information. In the event
this Agreement is terminated prior to the Closing Date, Radio One shall return
to the ▇▇▇▇▇ Companies all written confidential information provided to Radio
One by the ▇▇▇▇▇ Companies and all copies thereof.
5.5 Consents The Majority Shareholder and the Company shall use their
--------
reasonable best efforts to obtain all necessary consents to the assignment and
transfer of Station Contracts and all of the consents noted on Schedules 2.6,
-------------
2.12 and 2.13 hereto. Marked with an asterisk on Schedules 2.12 and 2.13 are
------------- -----------------------
those consents the receipt of which is a condition precedent to Radio One's
obligation to close under this Agreement (the "Required Consents").
5.6 Estoppel Certificates; Title Insurance; Liens The Majority
---------------------------------------------
Shareholder and the Company, at the Shareholders' expense, will use their
reasonable best efforts to obtain and deliver to Radio One: (i) written
estoppel certificates (the "Estoppel Certificates") duly executed by the lessors
under the Real Property Leases, in form and substance satisfactory to Radio One;
and (ii) all UCC, litigation, judgment and state and federal tax lien search
reports showing searches in such names and jurisdictions as shall be reasonably
necessary to assure that no Liens are filed or recorded against the ▇▇▇▇▇
Company Shares or the Assets (the "Lien Search Reports"). The Estoppel
Certificates shall be dated within fifteen days prior to Closing. The Lien
Search Reports shall be delivered within thirty days after the date of this
Agreement and shall be updated within fifteen days prior to Closing.
5.7 Environmental Subject to the receipt of any permits or approvals
-------------
required by governmental authorities and, as to any leased Real Property, any
landlord, Radio One shall have the right at its expense to conduct one or more
reviews of the Real Property and take soil and water samples (including
groundwater samples) from the Real Property, and to test and analyze those
samples to determine the extent of any contamination of the soils and water
(including groundwater) on or about the Real Property. Any such reviews and
tests shall be undertaken and completed within forty-five days after the date
hereof. If, based on the results of those inspections and/or tests, Radio One
reasonably determines that the condition of the Owned Real Property is
unsatisfactory or if Radio One believes that its ownership of any parcel of
Owned Real Property would expose Radio One to undue risks of government
-18-
intervention or third-party liability, Radio One may notify the Majority
Shareholder and the Company that it desires to terminate this Agreement unless
such environmental hazard or violation is remediated prior to the Closing Date.
No information contained in any report of an environmental review shall relieve
Company of any obligation with respect to any representation, warranty or
covenant herein or waive any condition to Radio One's obligations hereunder. The
Majority Shareholder and Company shall use their reasonable best efforts to
remove any such hazardous material or correct any violations noted prior to the
Closing Date, provided, however, in the event that Radio One's environmental
-------- -------
consultant's written estimate of the cost to remediate the hazardous materials
or violations exceeds $100,000, the Majority Shareholder and Company may elect
by written notice to Radio One to refuse to undertake or pay for such
remediation in excess of $100,000 and in such event Radio One may terminate this
Agreement upon written notice to the Majority Shareholder and the Company. In
the event that the cost is estimated to be less than $100,000, or if it is
greater and Radio One does not terminate this Agreement, the Majority
Shareholder and the Company shall remediate such environmental hazard or
violation, and if they are unable to accomplish same prior to the Closing Date,
an appropriate adjustment to the Merger Consideration shall be made as a part of
the adjustments and they shall indemnify and hold Radio One harmless from and
against any and all costs and expenses incurred by Radio One in order to
complete such remediation action following the Closing Date, up to a maximum
aggregate cost of $100,000, to the extent an adjustment is not made. Absent a
termination of this Agreement, Radio One shall be responsible for any costs in
excess of $100,000.
5.8 Employment Matters Radio One shall have the right, but not the
------------------
obligation, to retain all or any of the employees of the ▇▇▇▇▇ Companies as
employees after the Closing.
5.9 Exclusive Dealing None of the Shareholders, the ▇▇▇▇▇ Companies,
-----------------
any of its respective affiliates or representatives or any officers or directors
of the ▇▇▇▇▇ Companies shall take any action directly or indirectly, to
encourage, initiate, solicit or engage in discussions or negotiations with, or
provide any information to any person other than Radio One and its affiliates
and representatives concerning any purchase of any capital stock of the ▇▇▇▇▇
Companies or any merger, asset sale or similar transaction involving the Company
or any of the Assets.
5.10 Shareholders' Approval. The Majority Shareholder and the Board of
----------------------
Directors of the Company shall submit this Agreement and the Mergers to the
Stockholders for approval within thirty (30) days after the date of this
Agreement. The Majority Shareholder and the Company shall recommend that the
Shareholders vote to approve this Agreement and the Mergers. The Majority
Shareholder shall vote his shares of the Company Stock in favor of the Mergers
and for approval of this Agreement. Following approval by the Shareholders,
the Majority Shareholder shall request each of the Minority Shareholders to
execute an agreement or a power of attorney appointing the Majority Shareholder
as the custodian of the Minority Shareholders' Company Stock for all purposes of
this Agreement and the Mergers, with full right, power and authority to perform
any act arising under this Agreement which the Minority Shareholders themselves
could do including the right, power and authority to deliver the Minority
Shareholders' Company Stock upon Closing and the right to receive the issuance
and payment of the Merger Consideration on their behalf and in connection
therewith to direct Radio One as to the specific Merger Consideration to be
received by each Shareholder. Prior to or at such time that the Minority
Shareholders deliver the custodial agreement, they shall further execute such
document or documents as may be necessary or appropriate to waive any appraisal
rights they may have under Delaware law, and they shall deliver to the Majority
Shareholder the certificates representing their shares of Company Stock either
endorsed in
-19-
blank or with separate executed stock powers attached, and with signatures
guaranteed if requested by Radio One.
5.11 Inter-▇▇▇▇▇ Companies Debt Prior to the Closing Date, the Majority
--------------------------
Shareholder and the Company shall cause the ▇▇▇▇▇ Companies to take whatever
actions may be necessary or appropriate in order to cancel and eliminate all
inter-company debt and other obligations.
5.12 Cancellation of Subordinated Lenders' Conversion, Purchase Option
-----------------------------------------------------------------
and Put Rights Agreement Between the date hereof and the Closing Date,
------------------------
Majority Shareholder and the Company shall use their best and all reasonable
efforts to obtain from DBC's subordinated lenders, Syndicated Communications
Venture Partners III, L.P., Medallion Capital, Inc. (successor in interest to
Capital Dimensions Venture Fund, Inc.), Alliance Enterprise Corporation and
Mesbic Ventures, Inc., (collectively the "Subordinated Lenders") waivers of
their rights to convert their subordinated indebtedness into common stock of DBC
and of their right and option to acquire the Charlotte Station pursuant to the
Conversion, Purchase Option and Put Rights Agreement dated October 22, 1997. As
of the date hereof, Majority Shareholder and Company have obtained all such
waivers, copies of which are contained in Schedule 5.12 hereto.
-------------
5.13 Qualification The Majority Shareholder and the Company shall
-------------
cause DBE to qualify to do business in South Carolina within thirty (30) days
after the date hereof.
5.14 FCC Compliance The Majority Shareholder and the Company shall
--------------
cure any exceptions to FCC compliance described in Schedule 2.10 as promptly as,
-------------
and to the extent, possible and prior to the Closing Date.
5.15 Bank Accounts Within thirty (30) days after the date hereof the
-------------
Majority Shareholder and the Company shall deliver to Radio One an accurate
and complete list showing the name and address of each bank in which the ▇▇▇▇▇
Companies have an account or safe deposit box, the number of any such account or
box and the names of all persons authorized to draw thereon or to have access
thereto.
ARTICLE 6: ADDITIONAL COVENANTS
--------------------
Radio One, the Company and the Majority Shareholder covenant and agree
that from the date hereof until the completion of the Closing:
6.1 Representations and Warranties Each party shall give the other
------------------------------
detailed written notice promptly upon learning of the occurrence of any event
that would cause or constitute a breach (or would have caused a breach had such
event occurred or been known to it prior to the date hereof) of any of its
representations and warranties contained in this Agreement.
6.2 Notice of Proceedings Each party shall promptly notify the other
---------------------
in writing upon: (a) becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated
-20-
hereunder; or (b) receiving any notice from any governmental department, court,
agency or commission of its intention (i) to institute an investigation into, or
institute a suit or proceeding to restrain or enjoin, the consummation of this
Agreement or such transactions, or (ii) to nullify or render ineffective this
Agreement or such transactions if consummated.
ARTICLE 7: SHAREHOLDERS CONDITIONS
----------------------
The obligations of the Shareholders under this Agreement are, at their option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
7.1 Representations, Warranties and Covenants Each of the
-----------------------------------------
representations and warranties of Radio One contained in this Agreement shall
have been true and correct as of the date when made and shall be true and
correct in all material respects on the Closing Date as if made on the Closing
Date, except to the extent changes are permitted pursuant to this Agreement.
Radio One shall have performed and complied with each and every covenant and
agreement required by this Agreement to be performed or complied with by them
prior to or on the Closing Date. Radio One shall have furnished the Majority
Shareholder with a certificate, dated the Closing Date and duly executed by an
officer of Radio One authorized on behalf of Radio One to give such a
certificate, to the effect that the conditions set forth in this Section have
been satisfied.
7.2 Proceedings None of the parties shall be subject to any restraining
----------
order or injunction restraining or prohibiting the consummation of the
transactions contemplated hereby. In the event such a restraining order or
injunction is in effect, this Agreement may not be terminated by Company or the
Majority Shareholder pursuant to this Section prior to the Final Closing Date,
but the Closing shall be delayed during such period. This Agreement may be
terminated after the Final Closing Date if such restraining order or injunction
remains in effect.
7.3 FCC Consent The FCC Consent shall have been granted by the FCC by
-----------
initial order.
7.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ If applicable, the waiting period under the
-----------------
HSR Act shall have expired or been terminated.
7.5 Deliveries Radio One shall have complied with its obligations
----------
set forth in Section 9.2.
7.6 Columbus Sub The distribution of the Columbus Stations and the
------------
Columbus Sub pursuant to Section 1.15 shall have been consummated prior to the
Closing Date.
ARTICLE 8: RADIO ONE CONDITIONS
-------------------
-21-
The obligations of Radio One under this Agreement are, at its option, subject to
the fulfillment of the following conditions prior to or on the Closing Date:
8.1 Representations, Warranties and Covenants Each of the
-----------------------------------------
representations and warranties of the Company and the Majority Shareholder
contained in this Agreement shall have been true and correct as of the date when
made and shall be true and correct in all material respects on the Closing Date
as if made on the Closing Date, except to the extent changes are permitted
pursuant to this Agreement. The Company and the Shareholders shall have
performed and complied with each and every covenant and agreement required by
this Agreement to be performed or complied with by each prior to or on the
Closing Date. The Majority Shareholder shall have furnished Radio One with a
certificate, dated the Closing Date and duly executed by the Company to the
effect that the conditions set forth in this Section have been satisfied.
8.2 Proceedings None of the parties shall be subject to any
-----------
restraining order or injunction restraining or prohibiting the consummation of
the transactions contemplated hereby. In the event such a restraining order or
injunction is in effect, this Agreement may not be terminated by Radio One
pursuant to this Section prior to the Final Closing Date, but the Closing shall
be delayed during such period. This Agreement may be terminated after such date
if such restraining order or injunction remains in effect.
8.3 FCC Consent The FCC Consent shall have been granted by the FCC
-----------
by Final order, without any conditions materially adverse to Radio One.
8.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ If applicable, the waiting period under the
-----------------
HSR Act shall have expired or been terminated.
8.5 Deliveries The Company and the Shareholders shall have complied
----------
with their obligations set forth in Section 9.1.
8.6 Required Consents The Majority Shareholder and the Company shall
-----------------
have obtained and delivered to Radio One all of the Required Consents.
8.7 Material Adverse Change None of the ▇▇▇▇▇ Companies, the ▇▇▇▇▇
-----------------------
Stations, nor any of the Assets shall have suffered a material adverse change
since the date hereof in the business, operations, condition (financial or
otherwise), properties, assets, liabilities, capitalization or ownership of the
▇▇▇▇▇ Companies, the ▇▇▇▇▇ Stations or any of the Assets, except changes
permitted by this Agreement and changes which are not (either individually or in
the aggregate) materially adverse to the ▇▇▇▇▇ Stations.
8.8 Title Commitments Radio One shall have obtained commitments from a
-----------------
title insurance company acceptable to Radio One to issue to Radio One or its
designee at standard rates ALTA extended coverage owner's and leasehold title
insurance policies with respect to the owned and leased Real Property with no
exceptions other than Permitted Encumbrances (the "Title Commitments").
-22-
8.9 Surveys Radio One shall have obtained an ALTA survey of each
-------
parcel of Owned Real Property (the "Surveys").
8.10 Estoppel Certificates The Majority Shareholder and the Company
---------------------
shall have obtained and delivered to Radio One the Estoppel Certificates.
8.11 Environmental The Shareholders and the Company shall have
-------------
remediated any environmental hazards or violations required to be remediated or
cured by them pursuant to Section 5.6 or the estimated costs and expenses
thereof in an amount acceptable to Radio One shall have been set forth in the
Preliminary Adjustment Statement as a credit to Radio One to the extent required
by Section 5.7.
8.12 Net Operating Losses As of the Closing on the Closing Date, the
--------------------
▇▇▇▇▇ Companies then current net operating losses for tax purposes shall not be
less than the amounts set forth on Schedule 2.8, minus the amounts of such net
------------
operating losses used to offset (i) earnings for the ▇▇▇▇▇ Companies since June
30, 1999, and (ii) gain from the spin off of the Columbus Sub pursuant to
Section 1.15 and Schedule 1.15.
-------------
8.13 Subordinated Lenders' Conversion All of the Subordinated Lenders
--------------------------------
shall have waived their conversion and purchase option rights with respect to
DBC as set forth in Section 5.12.
8.14 Inter-Company Debt All inter-company indebtedness by and among the
------------------
▇▇▇▇▇ Companies shall have been satisfied and eliminated without any adverse tax
consequences of any kind or nature upon Radio One or the Surviving Company.
8.15 Shareholders' Approval The Shareholders shall have approved this
----------------------
Agreement and the Mergers, and the Minority Shareholders shall have satisfied
the requirements of Section 5.10 to Radio One's reasonable satisfaction.
8.16 Liens Radio One shall have received evidence reasonably
-----
satisfactory to it that, upon consummation of the Closing, the Assets shall be
free and clear of all liens other than Permitted Encumbrances.
-23-
ARTICLE 9: ITEMS TO BE DELIVERED AT THE CLOSING
------------------------------------
9.1 Deliveries by the Company and the Shareholders At Closing, the
----------------------------------------------
Company and the Shareholders, as appropriate, shall deliver to Radio One duly
executed by Company, the Shareholders or such other signatory as may be required
by the nature of the document:
(a) the certificates representing (i) the Company Stock accompanied by stock
powers duly endorsed in blank, sufficient to cancel all right, title and
interest in and to the Company Stock and (ii) the other ▇▇▇▇▇ Company Shares;
(b) certified copies of resolutions duly adopted by the Shareholders and the
board of directors of the Company, which shall be in full force and effect at
the time of the Closing, authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby;
(c) the certificate referred to in Section 8.1;
(d) the corporate minute book, stock ledger and all other original and
duplicate corporate records of the ▇▇▇▇▇ Companies;
(e) copies of the certificate of incorporation of the ▇▇▇▇▇ Companies,
including all amendments thereto, certified by the Secretary of State or other
appropriate official of the jurisdiction of incorporation of the ▇▇▇▇▇ Companies
dated within 10 business days of the Closing Date;
(f) copies of the bylaws of the ▇▇▇▇▇ Companies, certified by an officer of
the Company as being true and correct and in effect on the Closing Date;
(g) certificates from the Secretaries of State or other appropriate
officials of the jurisdiction of incorporation of the ▇▇▇▇▇ Companies and any
jurisdiction in which the ▇▇▇▇▇ Companies have qualified to do business, dated
within 10 business days of the Closing Date and showing that the ▇▇▇▇▇ Companies
are duly incorporated and in good standing in its jurisdiction of incorporation
and that it is in good standing in each jurisdiction in which it has qualified
to do business;
(h) a certificate as to the tax status of the ▇▇▇▇▇ Companies from the
appropriate official of the jurisdiction of incorporation of the ▇▇▇▇▇ Companies
and each jurisdiction in which the ▇▇▇▇▇ Companies have qualified to do
business;
(i) resignations and releases of all officers and directors of the ▇▇▇▇▇
Companies and releases of the Shareholders of the ▇▇▇▇▇ Companies;
-24-
(j) the Required Consents and any other consents obtained by Shareholders
and Company under Section 5.4;
(k) opinions of Company's counsel in the forms of Exhibit B attached hereto;
---------
(l) the Preliminary Adjustment Statement and the Preliminary Adjustment
Certificate;
(m) the Estoppel Certificates obtained by Majority Shareholder and Company
and Lien Search Reports;
(n) the Subscriptions and the Registration Rights Agreements; and
(o) the Post-Closing Escrow Agreement.
9.2 Deliveries by Radio One At the Closing, Radio One shall deliver
-----------------------
to the Shareholders:
(a) certified copies of resolutions authorizing the execution, delivery and
performance by Radio One of this Agreement, which shall be in full force and
effect at the time of the Closing;
(b) the certificate referred to in Section 7.1;
(c) at the Effective Time, the Merger Consideration as provided by Sections
1.7 and 1.8;
(d) the Post-Closing Escrow Agreement; and
(e) the Registration Rights Agreements.
9.3 Satisfaction of ▇▇▇▇▇ Companies Indebtedness for Long Term Debt
---------------------------------------------------------------
Simultaneously with Closing onUhe Closing Date, the ▇▇▇▇▇ Companies long term
indebtedness payable to Amresco, the Subordinated Lenders, First Union National
Bank, and all other ▇▇▇▇▇ Companies' financial institutions and banks, and
Transactions Fees and Costs, shall be paid and satisfied in full out of the
Total Consideration with such amounts so paid to be treated as Indebtedness and
a part of the Consolidated Liabilities. In connection with such satisfactions,
the ▇▇▇▇▇ Companies' lenders shall release and discharge any and all security
interests, stock pledges, mortgage, liens, claims and encumbrances whatsoever
that they may have or possess against and in respect of the ▇▇▇▇▇ Companies'
Assets, including, without limitation, the execution, delivery and filing of
mortgage satisfactions and UCC termination
-25-
statements in all required jurisdictions.
ARTICLE 10: SURVIVAL; RELEASE; INDEMNIFICATION
----------------------------------
10.1 Survival; Release All representations and warranties contained in
-----------------
this Agreement, or in any certificate, agreement, or other document or
instrument, delivered pursuant hereto, shall survive (and not be affected in any
respect by) the Closing, any investigation conducted by any party hereto and any
information which any party may receive, for a period of one (1) year after the
Closing Date, provided, however, that representations and warranties with
-------- -------
respect to authorization, title, taxes and environmental matters shall survive
without limitation.
10.2 Indemnification
---------------
(a) From and after Closing, subject to the limitation set forth in Section
5.7, if applicable, the Majority Shareholder (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Radio One and Radio One of Charlotte, the
shareholders, directors, officers and employees of Radio One and Radio One of
Charlotte, LLC, and all persons which directly or indirectly, through one or
more intermediaries, control, are controlled by, or are under common control
with Radio One, and their respective successors and assigns (collectively, the
"Radio One Indemnitees") from, against and in respect of, and to reimburse the
Radio One Indemnitees for, the amount of any and all Deficiencies (as defined in
Section 10.3(a)). Effective upon Closing, the Majority Shareholder hereby
assumes and agrees to pay and perform when due any and all such Deficiencies.
Notwithstanding anything to the contrary set forth in this Agreement, the
Majority Shareholder shall have no obligation to indemnify any Radio One
Indemnitees on account of (i) any Taxes required to be paid by, or on behalf of,
any ▇▇▇▇▇ Company as a result of the Mergers not being treated as
reorganizations under Section 368(a) of the Code, or (ii) any breach of Section
2.8 resulting from the Mergers not being treated as reorganizations under
Sections 368(a) of the Code.
(b) From and after Closing, Radio One (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless the Majority Shareholder and its
respective successors and assigns (collectively, the "Majority Shareholder
Indemnitees") from, against and in respect of, and to reimburse the Majority
Shareholder Indemnitees for, the amount of any and all Deficiencies (as defined
in Section 10.3(b)). Radio One shall have no obligation whatsoever to indemnify
any of the Minority Shareholders for any Deficiencies.
10.3 Deficiencies
----------
(a) As used in this Article 10, the term "Deficiencies" when asserted by
Radio One Indemnitees or arising out of a third party claim against Radio One
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Radio One Indemnitees and arising out of, based upon or
resulting from: (i) any misrepresentation, breach of warranty, or any failure to
comply with any covenant, obligation or agreement on the part of the Majority
Shareholder or the Company contained in or made pursuant to this Agreement to
the extent not
-26-
covered by proceeds of insurance; (ii) any obligation or liability arising from
the business or operations of the ▇▇▇▇▇ Companies prior to Closing of a nature
or type required to be reflected on the Closing Date consolidated balance sheet
of the ▇▇▇▇▇ Companies in accordance with GAAP to the extent not covered by
proceeds of insurance, except for Assumed Obligations and except for
Consolidated Liabilities that are taken into account in calculating the Merger
Consideration; (iii) without limiting the foregoing, any litigation, proceeding
or claim by any third party relating to the business or operation of the ▇▇▇▇▇
Companies prior to Closing to the extent not covered by proceeds of insurance;
or (iv) any obligation or liability arising from the business or operations of,
and any litigation proceeding or claim by any third party relating to the
business or operations of, the Columbus Stations and the Columbus Sub, whether
prior to or after Closing. Such Deficiencies include without limitation any and
all acts, suits, proceedings, demands, assessments and judgments, and all fees,
costs and expenses of any kind, related or incident to any of the foregoing
(including, without limitation, any and all Legal Expenses (as defined in
Section 10.6 below)).
(b) As used in this Article 10, the term "Deficiencies" when asserted by the
Majority Shareholder Indemnitees or arising out of a third party claim against
the Majority Shareholder Indemnitees shall mean any and all losses, damages,
liabilities and claims sustained by the Majority Shareholder Indemnitees and
arising out of, based upon or resulting from: (i) any misrepresentation, breach
of warranty, or any failure to comply with any covenant, obligation or agreement
on the part of Radio One contained in or made pursuant to this Agreement to the
extent not covered by proceeds of insurance; (ii) any failure by the Radio One
Indemnitees to pay or perform any of the Assumed Obligations and Consolidated
Liabilities that are taken into account in calculating the Merger Consideration
to the extent not covered by proceeds of insurance; or (iii) any litigation,
proceeding or claim by any third party relating to the business or operation of
the ▇▇▇▇▇ Companies after Closing to the extent not covered by proceeds of
insurance. Such Deficiencies include without limitation any and all acts, suits,
proceedings, demands, assessments and judgments, and all fees, costs and
expenses of any kind, related or incident to any of the foregoing (including,
without limitation, any and all Legal Expenses (as defined in Section 10.6
below)).
10.4 Exceptions Neither party shall be required to indemnify and hold
----------
harmless the other party or parties with respect to deficiencies described in
Sections 10.3(a)(i) and 10.3(b)(i) until the aggregate amount of such
deficiencies exceed $100,000, provided, however, that if such amount exceeds
$100,000 the indemnifying party shall be liable to the indemnified party or
parties for the entirety of the amount claimed and not just that portion in
excess of $100,000. The aggregate amount that Majority Shareholder and the
Company shall be required to indemnify and hold harmless Radio One Indemnitees
for Deficiencies with respect to Section 10.3(a)(i) above shall not exceed the
amount of the Merger Consideration.
10.5 Procedures
----------
(a) Third Party Claims In the event that any claim shall be asserted by any
------------------
third party against the Radio One Indemnitees or the Majority Shareholder
Indemnitees (Radio One Indemnitees or the Majority Shareholder Indemnitees, as
the case may be, hereinafter, the "Indemnitees"), which, if sustained, would
result in a Deficiency, then the Indemnitees, as promptly as practicable but in
no event later than 10 business days, after learning of such
-27-
claim, shall notify the Indemnifying Party of such claim, and shall extend to
the Indemnifying Party a reasonable opportunity to defend against such claim,
at the Indemnifying Party's sole expense and through legal counsel reasonably
acceptable to the Indemnitees, provided that the Indemnifying Party proceeds
in good faith, expeditiously and diligently. The Indemnitees shall, at their
option and expense, have the right to participate in any defense undertaken by
the Indemnifying Party with legal counsel of their own selection. No
settlement or compromise of any claim which may result in a Deficiency may be
made by the Indemnifying Party without the prior written consent of the
Indemnitees unless: (A) prior to such settlement or compromise the
Indemnifying Party acknowledges in writing its obligation to pay in full the
amount of the settlement or compromise and all associated expenses; (B) the
Indemnitees are furnished with a full release from the party or parties
asserting the claim; and (C) the Indemnifying Party has the ability (financial
or otherwise) to pay or perform such settlement or compromise.
(b) Direct Claims In the event that the Indemnitees assert the existence of
-------------
any Deficiency (other than a Deficiency arising out of any litigation,
proceeding claim, by any third party) against the Indemnifying Party, they shall
give written notice to the Indemnifying Party of the nature and amount of the
Deficiency asserted. If the Indemnifying Party, within a period of thirty (30)
days after the giving of notice by the Indemnitees, shall not give written
notice to the Indemnitees announcing its intent to contest such assertion of the
Indemnitees (such notice by the Indemnifying Party being hereinafter referred to
as the "Contest Notice"), such assertion of the Indemnitees shall be deemed
accepted and the amount of the Deficiency shall be deemed established. In the
event, however, that a Contest Notice is given to the Indemnitees within said
30-day period, then the contested assertion of a Deficiency shall be settled
by arbitration to be held in Washington, D.C. in accordance with the
Commercial Rules of the American Arbitration Association then existing. The
determination of the arbitrator shall be delivered in writing to the
Indemnifying Party and the Indemnitees and shall be final, binding and
conclusive upon all of the parties hereto, and the amount of the Deficiency,
if any, determined to exist, shall be deemed established.
(c) The Indemnitees and the Indemnifying Party may agree in writing, at any
time, as to the existence and amount of a Deficiency, and, upon the execution of
such agreement such Deficiency shall be deemed established.
10.6 Payment The Indemnifying Party hereby agrees to pay the amount of
-------
established Deficiencies within 15 days after the establishment thereof. The
amount of established Deficiencies shall be paid in cash except as provided in
the Post-Closing Escrow Agreement, which shall be used for such purpose on a
priority basis. At the option of the Indemnitees, the Indemnitees may offset any
Deficiency or any portion thereof that has not been paid by the Indemnifying
Party to the Indemnitees against any obligation the Indemnitees, or any of them,
may have to the Indemnifying Party.
10.7 Legal Expenses As used in this Article 10, the term "Legal
--------------
Expenses" shall mean any and all reasonable fees (whether of attorneys,
accountants or other professionals), costs and expenses of any kind reasonably
incurred by any person identified herein and its counsel in investigating,
preparing for, defending against, or providing evidence, producing documents or
taking other action with respect to any threatened or asserted claim.
-28-
10.8 Sole Remedy Except as set forth Sections 11.1 and 11.2 below, from
-----------
and after the Closing Date, the rights pursuant to this Article 10 and Sections
1.8 and 1.10 above shall be the parties' exclusive remedies with respect to all
breaches of representations, warranties and covenants under this Agreement
(specifically excluding breaches of representations, warranties and covenants
set forth in the Employment Agreement), and the parties' waive all other rights
and remedies whatsoever in law or equity with respect to the foregoing, except
for rights and remedies that the Majority Shareholder may have as a shareholder
of Radio One arising out of securities laws.
ARTICLE 11: MISCELLANEOUS
-------------
11.1 Termination This Agreement may be terminated at any time prior to
-----------
Closing: (a) by the mutual consent of the Majority Shareholder and Radio One;
(b) by the Majority Shareholder or Radio One if the FCC has denied the approvals
contemplated by this Agreement in an order which has become Final; (c) by Radio
One as provided in Section 5.6 (Environmental), Section 11.5 (Broadcast
Transmission Interruption) or Section 11.6 (Risk of Loss); (d) except as set
forth in Section 11.6, by Radio One or the Majority Shareholder if the Closing
has not taken place by the Final Closing Date; (e) by Radio One, if on the
Closing Date the Company or the Majority Shareholder has failed to satisfy any
of the conditions set forth in Section 8.1, 8.5, 8.6, 8.7, 8.10, 8.11, 8.12,
8.13, 8.14, 8.15 or 8.16; (f) by Radio One if the Company or the Majority
Shareholder has failed to cure a material breach of any of their
representations, warranties or covenants under this Agreement within fifteen
(15) calendar days after they receive notice from Radio One of such breach; (g)
by the Majority Shareholder, if on the Closing Date Radio One has failed to
satisfy either of the conditions set forth in Section 7.1 or 7.5; or (h) by the
Majority Shareholder if Radio One has failed to cure a material breach of any of
its representations, warranties or covenants under this Agreement within fifteen
(15) calendar days after they receive notice from the Majority Shareholder of
such breach. A termination pursuant to this Section 11.1 shall not relieve any
party of any liability it would otherwise have for a breach of this Agreement.
11.2 Specific Performance In the event of a breach by the Majority
--------------------
Shareholder or the Company of any representation, warranty, covenant or
agreement under this Agreement, at Radio One's election, in addition to any
other remedy available to it, Radio One shall be entitled to an injunction
restraining any such breach or threatened breach and, subject to obtaining any
requisite approval of the FCC, to enforcement of this Agreement by a decree of
specific performance requiring the Company and the Majority Shareholder to
fulfill their obligations under this Agreement, in each case without the
necessity of showing economic loss or other actual damage and without any bond
or other security being required. The remedies provided Radio One in this
Agreement shall be cumulative and shall not preclude the assertion by Radio One
of any other rights or the seeking of any other remedies against the Company or
the Majority Shareholder.
-29-
11.3 Expenses Each party hereto shall bear all of its expenses
--------
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith; provided that: (i) the Majority Shareholder and Radio One shall each
pay one-half of the filing fees required to be paid in connection with the FCC
Applications and the Merger Reorganizations; (ii) the Majority Shareholder shall
be exclusively responsible for, and Radio One shall not have any liability or
responsibility for, any sales or transfer taxes (including without limitation
any real estate transfer taxes), arising from the consummation of the Mergers;
and (iii) Radio One shall pay the HSR Act filing fee, if any.
11.4 Further Assurances From time to time prior to and after Closing,
------------------
each party hereto will use their respective reasonable best efforts to take all
actions required hereunder to consummate this Agreement and the Mergers and will
execute all such instruments and take all such actions as any other party shall
reasonably request, without payment of further consideration, in connection with
carrying out and effectuating the intent and purpose hereof and all transactions
contemplated by this Agreement, including without limitation the execution and
delivery of any and all confirmatory and other instruments in addition to those
to be delivered at Closing, and any and all actions which may reasonably be
necessary to complete the transactions contemplated hereby, including the Merger
Reorganizations. The parties shall cooperate fully with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement.
11.5 Broadcast Transmission Interruption If before Closing the regular
-----------------------------------
broadcast transmission of the ▇▇▇▇▇ Stations in the normal and usual manner is
interrupted for a period of eight consecutive hours or more, the Company shall
give prompt written notice thereof to Radio One. Radio One shall then have the
right, by giving written notice, to postpone (and if necessary re-postpone) the
Closing to a date that is fifteen (15) days after the end of any such
interruption. If regular broadcast transmission in the normal and usual manner
is interrupted for a continuous period of eighteen (18) hours or more at any
time prior to Closing, then (a) the Company immediately shall give written
notice thereof to Radio One and (b) Radio One shall have the right, by giving
written notice, to (i) terminate this Agreement, or (ii) postpone the Closing as
provided above.
11.6 Risk of Loss The risk of loss, damage or destruction to any of the
------------
Assets shall be borne by the Company and the Shareholders at all times up to
12:01 a.m. local time on the Closing Date. In the event of any such loss,
damage, or destruction, the proceeds of any claim for any loss, payable under
any insurance policy with respect thereto, shall be used to repair, replace, or
restore any such property to its former condition, subject to the conditions
stated below. In the event of any loss or damage to any of the Assets, the
Company and the Majority Shareholder shall notify Radio One thereof in writing
immediately. Such notice shall specify with particularity the loss or damage
incurred, the cause thereof (if known or reasonably ascertainable), and the
insurance coverage. If any part of the Assets are damaged or destroyed by
casualty loss prior to the Closing Date, and the cost of restoring the damaged
or destroyed
-30-
Assets to a condition reasonably comparable to their prior condition does not
exceed $500,000, at Radio One's option, (a) the Company shall perform such
restoration, and in such event, the Closing shall be postponed until restoration
can be completed or (b) the amount of the Merger Consideration shall be reduced
by the estimated cost of such incomplete restoration (as estimated by a
qualified firm reasonably acceptable to Radio One and the Company) minus the
amount of expected insurance proceeds attributable to such casualty loss (not
including any such proceeds received before the Closing Date). If the cost of
restoration is in excess of $500,000, the Majority Shareholder and Company may
elect to perform such restoration and in such event, at Radio One's option (x)
the Closing shall be postponed until restoration can be completed, (y) the
Merger Consideration shall be reduced by such estimated cost of restoration
minus the amount of expected insurance proceeds attributable to such casualty
-----
loss (not including any such proceeds received before the Closing Date), or (z)
this Agreement shall be terminated. If the cost of the restoration is in excess
of $500,000 and the Majority Shareholder and Company elect not to perform the
restoration, Radio One may elect to terminate this Agreement. If necessary, the
Company and the Majority Shareholder shall join Radio One in requesting from the
FCC any extensions of time in which to consummate the Closing that may be
required in order to complete such repairs.
11.7 Cooperation From the date of Closing and for a period of three (3)
-----------
years thereafter, the Majority Shareholder shall provide Radio One with such
cooperation and information as Radio One shall reasonably request in Radio
One's: (i) analysis and review of Financial Statements or information provided
or created hereunder, or (ii) preparation of any reports or analyses prepared by
Radio One. The Majority Shareholder shall also make the accountants employed by
the Company prior to Closing available, including any work papers, opinions and
financial statements relating to the Company or the Shareholders, to provide
explanations of any documents or information provided hereunder and to permit
disclosure of such information by Radio One, including disclosure to any
governmental authority, including the Securities and Exchange Commission.
11.8 Tax Matters Prior to Closing, the Majority Shareholder shall cause
-----------
the Company to prepare and timely file, or cause to be prepared and timely
filed, all tax returns of the ▇▇▇▇▇ Companies that are due prior to Closing,
which shall be prepared by treating items on such tax returns in a manner
consistent with the past practices with respect to such items, unless otherwise
required by law. The Majority Shareholder shall cause the Company to provide to
Radio One drafts of all tax returns (and accompanying work papers) of the ▇▇▇▇▇
Companies at least thirty (30) days prior to filing. Not less than fifteen (15)
days prior to filing, Radio One shall notify the Majority Shareholder of the
existence of any objection (specifying in reasonable detail the nature and basis
for such objection) Radio One may have to any items set forth on such draft tax
returns. Radio One and the Majority Shareholder agree to consult and resolve in
good faith any such objection. After Closing, Radio One shall prepare and timely
file, or cause to be prepared and timely filed, all tax returns of the ▇▇▇▇▇
Companies; provided, however, that in the case of any return that includes any
-------- -------
period prior to Closing, Radio One shall provide to the Majority Shareholder
drafts of such tax returns (and accompanying work papers) at least thirty (30)
days prior to filing. No less than fifteen (15) days prior to filing, the
Majority Shareholder shall notify Radio One of the existence of any objection
(specify in reasonable detail the nature and basis for such objection) the
Majority Shareholder may have to any items set forth on such draft tax return to
the extent that such return would adversely impact the Majority Shareholder
indemnification obligations hereunder. Radio One and the Majority Shareholder
agree to consult and resolve in good faith any such objection and any such
objection that is not resolved shall be determined by an independent
-31-
certified public accountant who is acceptable to both Radio One and the Majority
Shareholder. The parties shall treat the spin-off of ▇▇▇▇▇ Broadcasting of
Columbus, Inc. as a Code Section 355 transaction, and for purposes of
determining taxable gain under Code Section 355(e), shall value the stock of
such corporation at $2,500,000. The Majority Shareholder shall not file or cause
to be filed any amended tax return without the prior written consent of Radio
One, which consent shall not be unreasonably withheld. The Majority Shareholder
and Radio One shall cooperate with one another in connection with the
preparation, filing and any inquiries relating to any tax returns. Any refund of
taxes relating to the ▇▇▇▇▇ Companies received by the Shareholders after Closing
shall be paid by the Shareholders to Radio One within ten business days after
such refund is received by the Shareholders.
ARTICLE 12: GENERAL PROVISIONS
------------------
12.1 Successors and Assigns This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto, and their respective
representatives, successors and assigns. Neither the Company nor the
Shareholders may assign any rights or delegate any duties hereunder without the
prior written consent of Radio One, and any such attempted assignment or
delegation without such consent shall be void. Radio One may assign its rights
and obligations hereunder in whole or in part without consent of the Company or
the Majority Shareholder to: (a) any person which directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with Radio One; and (b) Radio One's senior lender as collateral.
12.2 Amendments; Waivers The terms, covenants, representations,
-------------------
warranties and conditions of this Agreement may be changed, amended, modified,
waived, or terminated only by a written instrument executed by the party waiving
compliance. The failure of any party at any time or times to require performance
of any provision of this Agreement shall in no manner affect the right of such
party at a later date to enforce the same. No waiver by any party of any
condition or the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
12.3 Notices All notices, requests, demands and other communications
-------
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by Federal
Express or a similar overnight courier service, expenses prepaid, or, if sent by
telex, graphic scanning or other facsimile communications equipment, delivered
by such equipment, addressed as follows:
if to the Company or the Majority Shareholder: c/o Davis Broadcasting, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-33-
if to Radio One: Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and Wiley, Rein & Fielding
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section providing for the giving of notice.
12.4 Captions The captions of Articles and Sections of this Agreement
--------
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
12.5 Governing Law This Agreement and all questions relating to
------------
its validity,
-34-
interpretation, performance and enforcement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
12.6 Entire Agreement This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof, and supersedes all prior agreements, understandings, inducements
or conditions, express or implied, oral or written, relating to the subject
matter hereof. The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
This Agreement has been prepared by all of the parties hereto, and no inference
of ambiguity against the drafter of a document therefore applies against any
party hereto.
12.7 Counterparts This Agreement may be executed in any number of
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counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
-35-
SIGNATURE PAGE TO MERGER AGREEMENT
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
RADIO ONE:
RADIO ONE, INC.
By:
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Name:
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Title:
-----------------------------
COMPANY: ▇▇▇▇▇ BROADCASTING, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
MAJORITY SHAREHOLDER:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-36-
ANNEX A
Certain Defined Terms
For the purposes of this Agreement, the following terms have the meanings set
forth below.
"Adjusted Consideration" means the Total Consideration less the Consolidated
Liabilities and (i) plus one half of the amount by which Consolidated Current
Assets exceed the Consolidated Accounts Payable, or (ii) less the amount by
which Consolidated Accounts Payable exceed Consolidated Current Assets, as the
case may be.
"Affiliate" of any particular person means any other person controlling,
controlled by, or under common control with, such particular person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a person whether through the ownership of voting
securities, contract or otherwise.
"Assets" means all right, title and interest of the ▇▇▇▇▇ Companies in all
properties, assets, privileges, rights, interests and claims, real and personal,
tangible and intangible, of every type and description, wherever located,
including its business and goodwill, including, without limitation, the FCC
Authorizations, Tangible Personal Property, Real Property, the DBC Stock, Time
Sales Agreements, Station Contracts, Intangible Property, Programming and
Copyrights, Files and Records and Websites.
"Assumed Obligations" means the obligations arising on and after the Closing for
Consolidated Accounts Payable and under the Station Contracts other than those
required by this Agreement to be terminated at or prior to Closing.
"Barter Balance" on a given date means the difference between the value of air
time (based upon the ▇▇▇▇▇ Stations' then prevailing rates) to be provided and
the fair market value of goods or services to be received therefor pursuant to
trade, barter or similar agreements for the sale of time for goods or services.
"Cash Amount" means the amount of Two Million Dollars ($2,000,000).
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"Closing Price" means $61.89 per share of Radio One's common stock.
"Company Accountant" means ▇▇▇▇▇▇▇ & ▇▇▇▇▇.
"Consolidated Accounts Payable" means the trade account payable of the ▇▇▇▇▇
Companies incurred in the usual and ordinary course of business consistent with
past practices with maturities of less than thirty (30) days.
"Consolidated Accounts Receivable" means the trade accounts receivable of the
▇▇▇▇▇ Companies net after the deduction of reserve for bad debts equal to two
percent (2%) of net sales for the prior 12 month period.
"Consolidated Current Assets" means the sum of the cash and Consolidated
Accounts Receivable of the ▇▇▇▇▇ Companies.
"Consolidated Liabilities" means all Indebtedness of the ▇▇▇▇▇ Companies other
than the Assumed Obligations, including without limitation all indebtedness of
the ▇▇▇▇▇ Companies owing to Radio One, all other indebtedness for borrowed
money, all change of control payments the ▇▇▇▇▇ Companies are obligated to
make as a result of the transaction contemplated by this Agreement, the amount
of any negative Barter Balance and Transaction Fees and Costs.
"▇▇▇▇▇ Companies" means the Company and the Station Subs collectively.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Escrow Amount" means $850,000, being an amount equal to (i) five percent
(5%) of the Total Consideration less (ii) the $350,000 principal amount of
indebtedness for borrowed money owed by the Company to Radio One.
"Escrowed Shares" means the number of shares of Radio One common stock equal
to $1,200,000 based on the Closing Price, which shares issued in the name of the
Majority Shareholder shall be deposited by Radio One into the post-closing
Escrow Account pursuant to Section 1.8 from the Stock Consideration.
"FCC Authorizations" means all of the FCC authorizations issued with respect
to the ▇▇▇▇▇ Stations, including without limitation all rights in and to the
▇▇▇▇▇ Stations' call letters and any variations thereof, and all of those FCC
authorizations listed and described on Schedule 2.10 attached hereto, and all
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applications therefor, together with any renewals or extensions thereof and
additions thereto.
"Files and Records" means all FCC logs and all files and other records of
the ▇▇▇▇▇ Companies (other than duplicate copies of such files ("Duplicate
Records")), including
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without limitation all schematics, blueprints, engineering data, customer lists,
reports, specifications, projections, statistics, promotional graphics, original
art work, mats, plates, negatives and other advertising, marketing or related
materials, and all other technical and financial information.
"Final" means that action shall have been taken by the FCC (including action
duly taken by the FCC's staff, pursuant to delegated authority) which shall not
have been reversed, stayed, enjoined, set aside, annulled or suspended; with
respect to which no timely request for stay, petition for rehearing, appeal or
certiorari or sua sponte action of the FCC with comparable effect shall be
--- ------
pending; and as to which the time for filing any such request, petition, appeal,
certiorari or for the taking of any such sua sponte action by the FCC shall have
--- ------
expired or otherwise terminated.
"GAAP" means generally accepted accounting principles as of the date hereof
consistently applied throughout the specified period and in prior periods.
"Indebtedness" means all indebtedness, liabilities and obligations of every
kind and nature, both current and long term, which are vested, absolute, and
accrued, including but not limited to, all indebtedness for borrowed money (and
interest thereon and prepayment penalties incurred as a result of prepaying such
indebtedness, if any, pursuant to Section 9.3) of the ▇▇▇▇▇ Companies, all
determined in accordance with GAAP on a consolidated basis.
"Independent Accounting Firm" means a "big-five" accounting firm other than
the Company Accountant and Radio One's Accountant.
"Intangible Property" means all interests of the ▇▇▇▇▇ Companies as of the
date of this Agreement in all trademarks, trade names, service marks,
franchises, patents, jingles, slogans, logotypes and other intangible rights,
including without limitation all right, title and interest in and to the marks
consisting of the ▇▇▇▇▇ Stations' call letters and any variations thereof, and
all of those listed and described on Schedule 2.14 attached hereto, and those
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acquired by the ▇▇▇▇▇ Companies between the date hereof and the Closing Date.
"Knowledge", including the phrases "to the knowledge of" or "to the best
knowledge of" any person and any similar phrase means, with respect to the
Company the actual knowledge of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Liens" means any mortgages, liens, deeds of trust, security interests,
pledges, restrictions, prior assignments, charges, claims, defects in title and
encumbrances of any kind or type whatsoever.
"Minority Cash Amount" means the portion of the Cash Amount equal to the
excess of (i) the Adjusted Consideration multiplied by the Minority Percentage
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over (ii) $500,000.
"Minority Percentage" means the percentage of Company Stock (both Class A
Common Stock and Class B Common Stock) held by the Minority Shareholders as set
forth in Schedule 2.2, determined prior to the redemption of the shares of Class
------------
B Common Stock pursuant to Schedule 1.15.
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"Permitted Encumbrances" means: (i) liens for real estate taxes not yet due
and payable (all such taxes for the periods prior to Closing being a part of the
Consolidated Liabilities); (ii) the Assumed Obligations (iii) statutory or
common law liens to secure landlords, lessors or renters under leases or rental
agreements confined to the premises rented to the extent that no payment or
performance under any such lease or rental agreement is in
A3
arrears or is otherwise past due, (iv) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance or
old age pension programs mandated under applicable laws or other social security
regulations, (v) statutory or common law liens to secure claims for labor,
materials or supplies and other liens, which secure obligations to the extent
the payment thereof is not in arrears or otherwise past due, (vi) non-monetary
easements, rights of way or other reservations or imperfections of title and
encumbrances of record that do not, individually or in the aggregate, materially
impair the continued use and operation of the Assets.
"Post-Closing Escrow Agreement" means a Post-Closing Escrow Agreement in the
form of C Attached hereto.
"Programming and Copyrights" means all interests of the ▇▇▇▇▇ Companies as
of the date of this Agreement in all programs and programming materials and
elements of whatever form or nature, whether recorded on tape or any other
substance or intended for live performance, and whether completed or in
production, and all related common-law and statutory copyrights, together with
all such programs, materials, elements and copyrights acquired by the ▇▇▇▇▇
Companies between the date hereof and the Closing Date.
"Radio One's Accountant" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
"Real Property" means all interests of the ▇▇▇▇▇ Companies as of the date of
this Agreement in all land, leaseholds, licenses, rights-of-way and other
interests of every kind and description in and to all of the real property and
buildings and other improvements thereon, including without limitation those
listed and described on Schedule 2.12 attached hereto, and any additions and
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improvements thereto between the date of this Agreement and the Closing Date.
"Registration Rights Agreements" means registration rights agreements in the
form of Exhibit E attached hereto.
"Station Contracts" means (i) those contracts and agreements used in
connection with the business or operation of the ▇▇▇▇▇ Stations that are listed
and described on Schedule 2.13 attached hereto (ii) the Time Sales Agreements,
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and (iii) and those contracts that Radio One shall elect in writing to assume at
Closing.
"Stock Consideration" means a number of shares of Radio One's common stock
equal to the Adjusted Consideration less the Cash Amount divided by the Closing
Price.
"Subscriptions" means written subscriptions delivered by the Shareholders to
Radio One in form and substance as set forth on Exhibit D attached hereto.
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"Subsidiary" means any other corporation, partnership, limited liability
company or other business entity in which a person owns, directly or indirectly,
any equity security or other equity interest and which is controlled, directly
or indirectly, by such person.
"Tangible Personal Property" means all interests of the ▇▇▇▇▇ Companies as
of the date of this Agreement in all equipment, electrical devices, antennas,
cables, vehicles, furniture, fixtures, towers, office materials and supplies,
hardware, tools, spare parts, and other tangible personal property of every kind
and description, including without limitation those listed and described on
Schedule 2.11 attached hereto, and any additions and improvements thereto
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between the date of this Agreement and the Closing Date.
"Tax" (including with correlative meaning the terms "Taxes" and "Taxable")
A4
shall mean (a) all foreign, federal, state, local and other income, gross
receipts, sales, use, entertainment, ticket, ad valorem, value-added,
intangible, unitary, withholding, transfer, franchise, license, payroll,
employment, estimated, excise, environmental, stamp, occupation, premium,
property, prohibited transactions, windfall or excess profits, customs, duties
or other taxes, levies, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, (b) any liability for payment of amounts described
in clause (a) as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of law, and (c) any liability for payment of amounts described
in clause (a) or (b) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other Person or Taxes.
"Tax Proceeding" shall mean any audit, examination, claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Return" shall mean any return (including any information return),
report, statement, schedule, notice, form, estimate or declaration of
estimated tax relating to or required to be filed with any governmental
authority in connection with the determination, assessment, collective or
payment of any Tax.
"Tax Authority" shall mean any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having jurisdiction with respect to
any Tax.
"Taxable Period" shall mean any taxable year or any other period that is
treated as a taxable year with respect to which any Tax may be imposed under any
applicable statute, rule or regulation.
"Time Sales Agreements" means those obligations of the ▇▇▇▇▇ Companies that
exist on the Closing Date for the sale of air time on the ▇▇▇▇▇ Stations for
cash entered in the ordinary course of business, at customary rates for the
periods in question and cancelable on 30 days notice or less without penalty.
"Total Consideration" means the sum of Twenty Four Million Dollars
($24,000,000).
"Transaction Fees and Costs" means fees and costs incurred by the ▇▇▇▇▇
Companies in connection with the transactions contemplated by this Agreement for
outside legal and accounting services and disbursements, recording and filing
fees and expenses.
"Websites" means all interests of the ▇▇▇▇▇ Companies in any Internet domain
leases and domain names relating to the ▇▇▇▇▇ Stations, the unrestricted right
to the use of HTML content located and publicly accessible from those domain
names, and the "visitor" email data base for those sites.
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Schedules
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1.15 Merger Reorganizations
2.2 Capitalization
2.6 Consents
2.8 Taxes
2.9 Liens
2.10 FCC Authorizations
2.11 Tangible Personal Property
2.12 Real Property
2.13 Station Contracts
2.14 Intangible Property
2.15 Employment Matters
2.17 Litigation
2.18 Insurance Policies
5.12 Subordinated Lenders' Waivers
Exhibit
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A Employment Agreement
B Company's Counsel Opinions
C Post-Closing Escrow Agreement
D Subscriptions
E Registration Rights Agreements