THIS WARRANT, AND THE SHARES ISSUABLE UPON EXERCISE HEREOF, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION
IS AVAILABLE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
APPLICABLE STATE SECURITIES OR "BLUE SKY LAWS". THE TRANSFER OF THIS
WARRANT IS SUBJECT TO THE CONDITIONS SET FORTH HEREIN, AND THE COMPANY
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS WARRANT UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. THE RIGHT TO
EXERCISE THIS WARRANT IS, AND THE NUMBER OF SHARES ISSUABLE UPON EXERCISE
HEREOF IS EXTREMELY LIMITED. ALL SUCH LIMITATIONS ARE SPECIFIED HEREIN.
RADIO ONE, INC.
STOCK PURCHASE WARRANT
Date of Issuance: ___________ Certificate No. W-______
FOR VALUE RECEIVED, Radio One, Inc., a Delaware corporation (the
"Company"), hereby grants to Allied Capital Financial Corporation or its
registered assigns (the "Registered Holder") the right to purchase from the
Company up to 40,000 shares (as adjusted from time to time in accordance
herewith, the "Maximum Warrant Shares") of the Company's 15% Series A Cumulative
Redeemable Preferred Stock, par value $.01 per share (the "Preferred Stock"), as
provided herein at an aggregate exercise price equal to the Deficiency Amount
(as adjusted from time to time in accordance herewith, the "Exercise Price").
This Warrant (the "Warrant") is issued pursuant to the terms of the Option and
Stock Purchase Agreement, dated as of November _____, 1997, by and among
Broadcast Holdings, Inc., G. Xxxxxx Xxxxxxxx, the sole shareholder thereof, the
Registered Holder and WYCB Acquisition Corp., a wholly-owned subsidiary of the
Company (the "Purchase Agreement"). Certain capitalized terms used herein are
defined in Section 5 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for such
securities are subject to adjustment pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may only exercise the purchase
rights represented by this Warrant during the period commencing on the
Deficiency Date and ending on the date which is six months after the occurrence
of the Deficiency Date (the "Exercise Period"). If this Warrant has not been
exercised prior to 5:00 P.M., New York City time, on the last day of the
Exercise Period, or, if prior to the Exercise Time, all outstanding monetary
obligations under the Note have been paid in full, this Warrant shall cease to
be exercisable and shall become null and void, and all rights of the Registered
Holder hereunder shall cease.
1B. Purchase Rights. During the Exercise Period, the Registered Holder
shall be entitled to purchase from the Company a number of shares of Preferred
Stock equal to (a) the quotient obtained by dividing (i) the Deficiency Amount
by (ii) the Liquidation Value; provided, however, that the maximum number of
shares of Preferred Stock for which this Warrant shall be exercisable shall be
limited to the Maximum Warrant Shares.
1C. Exercise Procedure.
(a) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(i) a completed Exercise Agreement, as described in paragraph 1D
below, executed by the Person exercising the purchase rights
represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in
Exhibit II hereto evidencing the assignment of this Warrant to the
Purchaser, in which case the Registered Holder shall have complied
with the provisions set forth in Section 8 hereof; and
(iv) a joinder agreement executed by the Purchaser evidencing
such Purchasers' agreement to be bound by the terms of that certain
Standstill Agreement effective as of May 19, 1997, by and among the
Company, the Company's subsidiaries who are a party thereto,
NationsBank of Texas, N.A., as Agent, and the other parties named
therein (the "Standstill Agreement"), as amended, as if such Purchaser
were designated an "Investor" as such term is defined in the
Standstill Agreement.
(b) Certificates for shares of Preferred Stock purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser the Company's
receipt of the originally executed Note, marked paid in full, together with
appropriate assignment agreements effecting the assignment of all of the
Purchase Documents to the Company.
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(c) The Preferred Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Preferred Stock at the Exercise Time so long as the Purchaser has
satisfied its delivery requirements under clauses (a) and (b) of this Section
1C.
(d) The issuance of certificates for shares of Preferred Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Preferred Stock. Each share of Preferred Stock issuable upon exercise
of this Warrant shall, upon payment of the Exercise Price therefor, be fully
paid and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(e) The Company shall not close its books against the transfer of this
Warrant or of any share of Preferred Stock issued or issuable upon the exercise
of this Warrant in any manner which interferes with the timely exercise of this
Warrant.
(f) The Company shall assist and cooperate with any Registered Holder
or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to, or in connection with, any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(g) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Preferred Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of shares of
Preferred Stock issuable upon the exercise of this Warrant. All shares of
Preferred Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Preferred Stock may be so issued without violation of any
applicable law or governmental regulation. The Company shall, from time to time,
take all such action as may be necessary to assure that the par value of the
unissued Preferred Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price. The Company shall not take any
action which would cause the number of authorized but unissued shares of
Preferred Stock to be less than the number of such shares required to be
reserved hereunder for issuance upon exercise of this Warrant.
1D. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
except that if the shares of Preferred Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Preferred Stock are to be issued. Such Exercise Agreement shall be dated the
actual date of execution thereof.
Section 2. Dilution Protection.
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2A. Adjustment of Exercise Price, Number of Maximum Warrant Shares and
Liquidation Value. In order to prevent dilution of the rights granted under this
Warrant, the Maximum Warrant Shares shall be subject to adjustment from time to
time as follows: (i) if the Company at any time subdivides (by any stock split,
stock dividend, recapitalization or otherwise) its outstanding shares of
Preferred Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
Maximum Warrant Shares will be proportionately increased; (ii) if the Company at
any time combines (by reverse stock split or otherwise) its outstanding shares
of Preferred Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
Maximum Warrant Shares will be proportionately decreased; and (iii) if the
Maximum Warrant Shares are adjusted pursuant to clause (i) or (ii) of this
Section 2A, then the Liquidation Value shall be increased or decreased, as
appropriate, such that the aggregate Liquidation Value of the Maximum Warrant
Shares shall at all times equal $4,000,000.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets or other transaction, in
each case which is effected in such a way that the holders of Preferred Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Preferred Stock is
referred to herein as "Organic Change." Prior to the consummation of any Organic
Change, the Company shall make appropriate provision to insure that the
Registered Holder of the Warrant shall thereafter have the right to acquire and
receive, in lieu of or addition to (as the case may be) the shares of Preferred
Stock immediately theretofore acquirable and receivable upon the exercise of
this Warrant, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for the number of shares of Preferred
Stock immediately theretofore acquirable and receivable upon exercise of this
Warrant had such Organic Change not taken place. In any such case, the Company
shall make appropriate provision with respect to such holder's rights and
interests to insure that the provisions of this Section 2 shall thereafter be
applicable to the Warrant. The Company shall not effect any such consolidation,
merger or sale unless, prior to the consummation thereof, the successor entity
(if other than the Company) resulting from consolidation or merger or the entity
purchasing such assets assumes by written instrument, the obligation to deliver
to such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
2C. Notices. The Company shall give written notice to the Registered Holder
at least 20 days prior to the date on which any Organic Change, dissolution or
liquidation shall take place.
Section 3. Definitions. The following terms have meanings set forth below:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the
4
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of 10%
or more of the voting securities of a Person shall be deemed to be control.
"Collateral" has the meaning given to such term in that certain Security
Agreement dated as of _________________ 1997 among Broadcast Holdings, Inc.,
WYCB Acquisition Corp., Allied Capital Financial Corporation and Allied
Investment Corporation.
"Deficiency Amount" means the amount that remains due and payable under the
Note on the Deficiency Date, which amount shall be certified to the Company by
each of a senior executive officer and the chief financial officer of the holder
of the Note.
"Deficiency Date" means the first date upon which a Deficiency Amount
exists following a default and acceleration of the indebtedness under the Note,
and after which Allied has exercised in full all of its rights (including
foreclosure) under the Security Agreement, at law or in equity with respect to,
and realized all proceeds or other amounts payable in respect of any sale or
other disposition of, the Collateral.
"Liquidation Value" means $100 per share of Preferred Stock (subject to
adjustment in accordance herewith).
"Market Price" means, as to any security, the average of the closing prices
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York City time, on such day, or, if on
any day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which "Market Price" is being determined and
the 20 consecutive business days prior to such day; provided that if such
security is listed on any domestic securities exchange the term "business days"
as used in this sentence means business days on which such exchange is open for
trading. If at any time such security is not listed on any domestic securities
exchange or quoted in the NASDAQ System or the domestic over-the-counter market,
the "Market Price" shall be the fair value thereof determined jointly by the
Company and the Registered Holder; provided that, if such parties are unable to
reach agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Registered
Holder. The determination of such appraiser shall be final and binding on the
Company and the Registered Holder, and the fees and expenses of such appraiser
shall be paid by the Registered Holder.
"Note" means that certain Promissory Note issued by WYCB Acquisition Corp.,
a Delaware corporation and wholly owned subsidiary of the Company, on
___________ 1998, to Allied Capital Financial Corporation in an original
principal amount of $3,750,000.
5
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"Purchase Documents" means the Purchase Agreement, the Note, and all of the
other agreements entered into in connection therewith including, without
limitation, all of the security and pledge agreements.
Section 4. Determination of the Deficiency Amount and Deficiency Date.
(a) Upon the occurrence of an Event of Default under the Note or the
Security Agreement, the Registered Holder, subject to any applicable cure
period, may exercise its rights under the Security Agreement and the Pledge
Agreement as permitted therein; the date of consummation of the sale of all or
substantially all of the assets ("Assignment") or the sale of all of the shares
("Transfer") which includes an assignment or transfer of the FCC Licenses (as
defined in the Purchase Agreement) shall be the Deficiency Date, provided, that
the Registered Holder has satisfied the conditions set forth in this Section 4
to effectuate an Assignment or Transfer and further provided that if no such
Assignment or Transfer occurs within two (2) years of the date of the Event of
Default, then the Deficiency Date shall be two (2) years from the date of the
Event of Default.
(b) The Deficiency Amount shall be $4,000,000 minus (i) the amount
actually received by the Registered Holder from the Assignment or Transfer net
of all costs and fees incurred in enforcing its rights under the Security
Agreement and Pledge Agreement; (ii) the proceeds of any other disposition of
Collateral or Shares occurring prior to the Deficiency Date and (iii) any other
amount received by the Registered Holder in satisfaction of amounts due under
the Note and the fair market value of any assets retained by or for the benefit
of, directly or indirectly, of the Registered Holder after the consummation of
the Assignment or Transfer. In the event that no Assignment of Transfer has
occurred before the Deficiency Date, the Deficiency Amount shall be $4,000,000,
subject to subparagraph (f) below.
(c) Prior to an Assignment or Transfer, the Registered Holder shall
obtain an appraisal of the fair market value of the business and assets of
WYCB-AM as a going concern, based upon the price a willing buyer would offer in
an arms-length negotiation to a willing seller not compelled to sell. The
Registered Holder shall retain two qualified media broker/appraisers to perform
appraisals, and the lower of the two appraisals shall be the Appraisal. The
Registered Holder shall promptly inform the Company as to the results of such
Appraisals.
(d) Subject to satisfying the conditions set forth in this Section 4,
the Registered Holder may consummate an Assignment or Transfer at any purchase
price, provided, that in the event the Assignment or Transfer is for
consideration less than ninety percent (90%) of the Appraisal ("Upset Price"),
then the Deficiency Amount shall be reduced by the amount that such
consideration is less than the Upset Price.
(e) The Registered Holder is under no obligation to consummate an
Assignment or Transfer at any price, provided, that the Registered Holder must
use commercially reasonable efforts
6
to sell the Collateral or the Shares for the highest available cash price. The
Registered Holder agrees to retain any nationally known media brokerage firm and
negotiate in good faith with any potential purchaser. The Registered Holder
shall inform the Company as to the broker's proposed price for a transaction
constituting an Assignment or Transfer and as to each offer such broker receives
with respect thereto.
(f) In the event the Registered Holder received a cash offer on
customary terms and condition greater than the Appraisal (the "Offer") and does
not accept such Offer, then the Deficiency Amount shall be reduced by the amount
of the Offer if no Assignment or Transfer occurs within two (2) years of an
Event of Default.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Preferred Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Preferred Stock
acquirable by exercise hereof or as a stockholder of the Company.
Section 6. Transfer of Warrant.
(a) This Warrant and the rights hereunder shall not be transferred
prior to the Deficiency Date, provided that Allied may transfer this Warrant and
the rights hereunder in whole but not in part to an Affiliate of Allied (subject
to compliance with applicable securities laws).
(b) On and after the Deficiency Date, this Warrant and the rights
hereunder may be transferred in whole but not in part as provided in this
Section 6(b). The Registered Holder shall deliver a written notice (an "Offer
Notice") to the Company disclosing the terms and conditions of the proposed
transfer at least 30 days prior to such transfer. The Company may elect to
purchase this Warrant at the price and on the terms specified in the Offer
Notice at any time within 20 days of receipt of such notice by delivering a
written acceptance to the Registered Holder and the closing of such purchase by
the Company shall occur within 30 days after the delivery of such written
acceptance. If the Company has not elected to purchase this Warrant within 20
days of receipt of the Offer Notice (the "Authorization Date"), the Registered
Holder may transfer this Warrant to the purchaser specified in the Offer Notice
during the thirty day period following the Authorization Date upon surrender of
this Warrant with a properly executed Assignment (in the form of Exhibit II
hereto) at the principal office of the Company. If the Registered Holder fails
to transfer this Warrant during the thirty day period following the
Authorization Date, any transfer of this Warrant shall again be subject to the
procedures set forth in this Section 6(b).
Section 7. Replacement. Upon receipt of evidence reasonably satisfactory to
the Company (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the
7
Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the same rights represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
Section 8. Notices. Except as otherwise expressly provided herein, all
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid,
and shall be deemed to have been given when so delivered, sent or deposited in
the U. S. Mail (i) to the Company, at its principal executive offices and (ii)
to the Registered Holder of this Warrant, at such holder's address as it appears
in the records of the Company (unless otherwise indicated by any such holder).
Section 9. Amendment and Waiver. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holder.
Section 10. Descriptive Headings; Governing Law. The descriptive headings
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The construction,
validity, interpretation and enforceability of this Warrant and the exhibits
hereto shall be governed by the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
RADIO ONE, INC.
By:
------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
8
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby (a) certifies that the Deficiency
Amount is equal to $_____, and (b) agrees to subscribe for the purchase of
______ shares of the Preferred Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant. As
further consideration for the purchase of _____ shares of the Preferred Stock
covered by such Warrant and as a condition to such purchase, the undersigned
hereby forever assigns all of its rights under the Purchase Documents to the
Company and agrees to take any and all necessary actions to effect this
assignment in full. Terms not defined herein have the meaning assigned to them
in the Warrant.
Signature______________________________
Address________________________________
________________________________
EX-I
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) unto:
NAME OF ASSIGNEE ADDRESS
Dated: Signature
--------------------------------
Witness
--------------------------------
EX-II
EXHIBIT 1
NOTICE OF EXERCISE
TO:______________
[Collective Exercise]
The undersigned, constituting the Requisite Holders, hereby elect to
exercise all of the Warrants contemplated by a certain Warrantholders= Agreement
dated as of June 6, 1995, as amended.
[Individual Exercise]
1. The undersigned hereby elects to purchase _________ shares of the
________ Common Stock of ________ pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
----------------------------
(Name)
----------------------------
----------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
Dated:
----------------------------
Signature
9
EXHIBIT 2
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto the rights represented by the within Warrant Certificate to purchase
[ ] shares of Common Stock of Radio One, Inc. to which the within Warrant
Certificate relates and appoints _______________________ to transfer such rights
on the books of Radio One, Inc. with full power of substitution in the premises.
Dated:__________________ ----------------------------
Signature
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