PUT AGREEMENT
AGREEMENT, dated as of December 11, 1998, between Audio Book Club, Inc., a
Florida corporation (the "Company") and ▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Amari").
WHEREAS, the Company, Classic Radio Holding Corp., which is wholly-owned by
the Company ("Classic Radio") and ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., an Illinois corporation
wholly-owned by Amari ("RSI") have entered into a plan and agreement of merger
and supplemental agreement (collectively the "Merger Agreement") on even date
herewith providing for the merger of RSI with and into Classic Radio (the
"Merger"). The capitalized terms used and not otherwise defined herein shall
have the meaning ascribed to such terms in the Merger Agreement;
WHEREAS, pursuant to the Merger Agreement Amari and his designees will
receive, as part of the merger consideration, an aggregate of up to 425,000
shares (the "ABC Shares") of the Company's common stock, no par value (the "ABC
Common Stock"); and
WHEREAS, the Company has agreed to provide Amari with certain "put" rights
with respect to 175,000 of the ABC Shares (the "Put Shares") to be issued free
from escrow to Amari on the Merger Date in accordance with the terms hereof;
NOW, THEREFORE, for good and valuable consideration receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Put Rights.
(a) Amari shall have the right and option (the "Put Option") to sell
to the Company, and the Company shall have the obligation to buy, provided
such redemption is not otherwise prohibited by applicable law, such number
of the Put Shares as set forth below on a cumulative basis on or after the
applicable put exercise date (each a "Put Exercise Date") during the Put
Period (as hereinafter defined) at a price per share equal to the
corresponding put price (each a "Put Price"), as determined pursuant to
Paragraph 2 below. The "Put Period" shall commence on the third anniversary
of the Closing Date (as such term is defined in the Purchase Agreement) and
shall end on the tenth anniversary of the Closing Date, unless and to the
extent the Put Option has otherwise been earlier terminated pursuant to the
terms of Paragraph 1(b) below.
Put Shares
Becoming Exercisable Put Exercise Date
-------------------- -----------------
150,000 Three (3) years from the Closing Date
25,000 additional Shares Four (4) years from the Closing Date
-------------------------
Total: 175,000 Shares
(b) If at any time during which the Put Shares are publicly tradeable
pursuant to an effective registration statement or Rule 144 promulgated
under the Securities Act of 1933, as amended (and are in fact tradeable by
Amari without restriction) the daily closing price of the Common Stock on
the American Stock Exchange (or such other stock exchange on which the
Common Stock is listed) is greater than the Put Price determined pursuant
to Paragraph 2 below for any Put Shares for ten (10) consecutive trading
days, the Put Option shall terminate with respect to those Put Shares
(whether or not those Put Shares were eligible to be put to the Company);
provided, however, that such Put Option may be restored in accordance with
Paragraph 2(b) below.
2. Put Price.
(a) The Put Option shall be exercisable at the Put Price provided for
below based on Classic Radio's annual EBITDA (as defined and calculated in
accordance with the Merger Agreement). Except as specifically provided in
Paragraph 2(b) below, (x) the Put Price shall be reduced with respect to
all of the Put Shares if the EBITDA for any year subsequent to the fiscal
year ending December 31, 1998 results in a lower Put Price as set forth
below; and (y) the Put Option will immediately terminate if the EBITDA for
any year subsequent to the fiscal year ending December 31, 1998 results in
the termination of the Put Option as provided below.
(i) If the EBITDA of Classic Radio for the fiscal year ending December
31, 1998 (which for fiscal year 1998 shall be based on the aggregate of
RSI's EBITDA through the Merger Date plus the EBITDA of Classic Radio and
its subsidiary, Classic Radio Acquisition Corp. (together with Classic
Radio, the "Classic Radio Companies") for the period commencing from the
day after the Merger Date through December 31, 1998 attributable to the
business of RSI and such other business as shall be included in the EBITDA
calculation for the fiscal year ending December 31, 1998 as provided in the
Merger Agreement) exceeds the indicated EBITDA figure, then the Put Option
shall be exercisable at the corresponding Put Price:
EBITDA Put Price
------ ---------
$950,000 $ 12.00
$900,000 $ 9.00
$850,000 $ 6.00
$800,000 $ 4.00
$800,000 or less Put Option shall terminate (subject
to Paragraph 2(b) below)
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(ii) If the EBITDA of the Classic Radio Companies for the fiscal year
ending December 31, 1999 exceeds the indicated EBITDA figure, then the Put
Option shall be exercisable at the corresponding Put Price:
EBITDA Put Price
------ ---------
$1,100,000 $ 12.00
$1,000,000 $ 9.00
$ 900,000 $ 6.00
$900,000 or less Put Option shall terminate (subject
to Paragraph 2(b) below)
(iii) If the EBITDA of the Classic Radio Companies for the fiscal year
ending December 31, 2000 exceeds the indicated EBITDA figure, then the Put
Option shall be exercisable at the corresponding Put Price:
EBITDA Put Price
------ ---------
$1,350,000 $ 12.00
$1,250,000 $ 9.00
$1,150,000 $ 8.00
$1,150,000 or less Put Option shall terminate (subject
to Paragraph 2(b) below)
(b) Notwithstanding the provisions of Paragraph 2(a), if (i) the
EBITDA of the Classic Radio Companies for the fiscal year ending December
31, 1998 (as calculated in accordance with Paragraph 2(a)(i) above) exceeds
$800,000, and (ii) the cumulative EBITDA for the Classic Radio Companies
for the three (3) year period ending December 31, 2000 exceeds $3,400,000,
then the Put Option shall be restored at $12.00 per Share if (x) the EBITDA
for the Classic Radio Companies for the fiscal year ending December 31,
1999 is greater than $855,000 and (y) the EBITDA for the Classic Radio
Companies for the fiscal year ending December 31, 2000 is greater than
$1,092,500, provided that the Put Option will not be restored with respect
to any Put Shares if at any time after such Put Shares became publicly
tradeable the daily closing price of the Common Stock on the American Stock
Exchange (or such other stock exchange on which the Common Stock is listed)
was greater than $12.00 per share for ten (10) consecutive trading days.
3. Exercise of Put Rights. The Put Option shall be exercisable by notice in
writing sent by Amari (a "Put Notice") to the Company advising of his election
to exercise the Put Option. Each Put Notice shall set forth the number of Put
Shares to be sold to Company. Amari shall have up to four (4) opportunities to
send a Put Notice with respect to any Put Shares eligible to be sold, provided
that no less than ten percent (10%) of such eligible Put Shares are included in
a Put Notice. The closing of the purchase and sale of the Put Shares being sold
by Amari shall take place ten (10) business days after the Company's receipt of
the Put Notice (the "Put Closing"). The exercise of the Put Option shall
constitute an unconditional and irrevocable commitment by Amari to
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sell, on the one hand, and the Company to purchase, on the other hand, all Put
Shares being put to the Company by Amari in accordance with the provisions of
this Agreement. On the date of the Put Closing, Amari shall deliver to the
Company at the Company's offices set forth in Paragraph 5 below the stock
certificate representing such Put Shares, free and clear of any lien or
encumbrance thereon, (except for the liens and encumbrances which may be
asserted by the Company) accompanied by a stock power duly endorsed in blank and
the Company shall deliver to Amari in immediately available funds the aggregate
Put Price for such Put Shares being sold to the Company, together with a stock
certificate representing the ABC Shares not sold by Amari to the Company (if
any).
4. Security Interest. In accordance with the terms of a security agreement
dated of even date hereof between the Classic Radio Companies and Amari, the
Classic Radio Companies have granted to Amari a security interest in the assets
of the Classic Radio Companies acquired from RSI (and all substitutes, additions
and proceeds thereof) to secure the Company's obligations to Amari hereunder.
5. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to the Company, to:
Audio Book Club, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Audio Book Club, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇.▇.
▇▇▇▇▇ ▇▇▇
P.O. Box 5010
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: 212-593-9175
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: 212-885-5001
if to Classic Radio, to:
Classic Radio Holding Corp.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Audio Book Club, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇.▇.
▇▇▇▇▇ ▇▇▇
P.O. Box 5010
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
Frankfurt, Garbus, ▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: 212-885-5001
if to Amari, to:
▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
6. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
7. Survivability. This Agreement shall survive the termination of Amari's
employment with Classic Radio for any reason.
8. Amendment. This Agreement may only be amended by the parties hereto by
execution of an instrument in writing signed on behalf of each of the parties
hereto.
9. Transferability. Except as set forth below, the Put Option granted to
Amari hereunder is not transferable by Amari at any time without the prior
written consent of the Company. Notwithstanding the foregoing, without the
consent of the Company, the Put Option relating to the Put Shares held by Amari
may be transferred (along with the Put Shares) to, and exercised by, an
immediate family member of Amari or trust(s) established by Amari for the
benefit of himself and/or his family for estate planning purposes, provided
Amari controls all decisions related to such Put Option including, without
limitation, the exercise thereof, on behalf of such trust. In the event of such
transfer, Amari will promptly provide the Company with notice of such transfer
and copies of
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all agreements pursuant to which Amari maintains decision-making authority and
all such transferees shall be subject to the terms and conditions of this
Agreement.
10. Enforcement. If either party institutes any legal proceeding to enforce
his or its rights hereunder, the prevailing party in such proceeding shall be
entitled to recover from the non-prevailing party his or its reasonable
attorneys' fees, costs and litigation expenses.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Company and RSI have caused this Agreement to be
signed by their duly authorized officers all as of the date first written above.
AUDIO BOOK CLUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CO-CEO
/s/ ▇▇▇▇ ▇▇▇▇▇
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