EXHIBIT 10.45
February 23, 1999
Mr. Xxxxxx Xxxxxxxx
Xxxxxxxx Telecable
500 Dominion Tower
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: WCDX-FM, WPLZ-FM, WJRV-FM and WGCV-AM
Dear Xx. Xxxxxxxx,
This letter of Intent (the "Letter of Intent") outlines the principal terms
whereby Radio One, Inc., a Delaware corporation ("Radio One") or the "Buyer"),
or an entity controlled by the same principals who control Buyer, will purchase
from Xxxxxxxx Telecable, Inc. and Commonwealth Broadcasting, LLC ("Seller"), the
Stations' Assets, as defined below of Stations WCDX-FM, Mechanicsville,
Virginia, WPLZ-FM, Petersburg, Virginia, WJRV-FM, Richmond, Virginia, and WGCV-
AM, Petersburg, Virginia (the "Stations"). Buyer and Seller recognize that the
consummation of the transaction contemplated by this Letter of Intent is
conditioned upon the occurrence of a number of future events, including the
approval of the Federal Communications Commission ("FCC"), approval of the
Department of Justice and Federal Trade Commission, approval from the Seller's
and Buyer's Board of Directors and managers, investors and lenders, Xxxxx's
inspection of the Stations' Assets, a review of the Seller's books and records
and the negotiation and execution of a definitive, mutually acceptable asset
purchase agreement (the "Definitive Agreement"). The purpose of this Letter of
Intent is to set forth a summary of the specific terms contemplated by the
parties but this Letter of Intent is not a binding agreement of the parties
unless otherwise expressly indicated in Section 15(f) below.
1. Description of Assets to be Delivered. Subject to the provisions of Section
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3 hereof, upon the consummation of the Buyer's purchase of the Stations' Assets
as provided in the Definitive Agreement (hereinafter the Closing Date), Seller
will transfer to Buyer, free and clear of all liens, claims, and encumbrance of
every kind (except those expressly permitted by Buyer) all Seller's assets
(except those assets excluded hereinafter) used and useful in the conduct of the
business and operations of the Stations, including, but not limits to, the
following (collectively referred to as the "Stations' Assets").
(a) all of the licenses, permits, and other authorizations issued to Seller
by the FCC or any other governmental authority and used in the operation of the
Stations, including all of the rights in and to the call letters of the
Stations;
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(b) real property and towers owned or leased as transmission facilities and
studios for the Stations and, to the extent they are expressly assumed by Buyer
in the Definitive Agreement, other contracts of Seller;
(c) the equipment, office furniture and fixtures, office materials and
supplies, inventory, spare parts, and other tangible personal property of every
kind and description, owned, leased, or held by Seller and used in the operation
of the Stations;
(d) all programs, programming material, and music libraries of whatever
from or nature owned by Seller and used or intended for use in the operation of
the Stations;
(e) all of Seller's rights in and to the trademarks, trade names, service
marks, patents, franchises, copyrights, including registrations and applications
for registration of any of them, call letters and jingles, logos, slogans,
licenses, permits and privileges, trade secrets, and other similar intangible
property rights and interests owned by it and used in the operation of the
Stations; and
(f) all files, records, studies, data, lists, filings, general accounting
records, books of account, computer programs and software and logs, of every
kind, relating to the operation of the Stations.
2. Consideration to be Paid by Xxxxx. The consideration for the sale of the
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Stations' Assets shall be $34,000,000 (the "Purchase Price"), subject to
adjustment for any proration and contingent liabilities, payable on the Closing
Date, by wire transfer of immediately available funds to the Seller's bank
account.
3. Excluded Assets. Excluded from the assets to be sold to Buyer and from the
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definition of the terms "Stations" and "Stations' Assets" as used herein shall
be: (a) Seller's corporate records; (b) all cash, cash equivalents or similar
type investments of Seller and all accounts receivable of the Stations as of the
Closing Date; (c) any and all contracts of insurance and insurance proceeds of
settlement and insurance claims made by Seller relating to property or equipment
repaired, replaced, or restored by Seller prior to the Closing Date; unless
otherwise specified in the Definitive Agreement; (d) all contracts used in the
operations of the Stations, unless specifically assumed or assigned by Buyer at
its sole discretion; and (e) all such real estate located in Mechanicsville,
Virginia, owned personally by Xxxx and Xxxxxxxx Xxxxxxxx, upon which a tower is
constructed which holds backup transmission antenna for WCDX-FM. However, Xxxxxx
agrees to cause Xxxx and Xxxxxxxx Xxxxxxxx to enter into a lease for nominal
rent, at Xxxxx's option, for use of the site. In addition, Buyer shall not be
obligated to continue the employment of any current employees of the Stations
and shall assume and have no liabilities of any kind in connection with any such
employees whose employment is not continued by the Buyer as of the Closing Date.
However, Xxxxx will interview all of the Seller's employees and will consider
hiring as many as possible.
4. Time Sales Agreements. The Definitive Agreement will provide that Buyer
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will assume those obligations that exist on the Closing Date for the sale of air
time under any
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contracts of Seller provided that such time sales agreements are entered into in
the ordinary course of business at commercially reasonable rates and such other
obligations as may be mutually agreed to by the parties. The trade obligations
of the Stations to be assumed by Buyer shall be limited and shall be specified
in the Definitive Agreement.
5. Liabilities to be Assumed. The Definitive Agreement will provide that Buyer
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will assume only those obligations of Seller referred to in Section 4 or as
otherwise may be agreed to by the Buyer pursuant to Section 3(d).
6. Escrow; Closing.
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(a) The Closing Date shall occur no later that ten (10) days after the
consent of the FCC to the assignment of the licenses shall have become a Final
Order. If the FCC has not granted an assignment of the Stations' licenses
within nine months after the FCC's acceptance for filing of the application for
assignment of such licenses, each of Seller and Buyer shall have the right to
terminate its obligations under the Definitive Agreement, provided that such
terminating party is not then in material breach of the terms and conditions of
the Definitive Agreement. Upon such termination for failure of the FCC to act,
the Escrow Deposit required by Paragraph 6(b) hereof, plus all interest accrued
thereon, shall be returned to Buyer, unless the FCC's failure to act is due to
Buyer's material breach of its representations and warranties in which case the
Escrow Deposit shall be paid to Seller.
(b) Upon the execution and delivery of the Definitive Agreement, Buyer
shall make an escrow deposit in the amount of $1,250,000 (the "Escrow Deposit"),
which shall be paid to Seller as a credit toward the purchase Price on the
Closing Date.
(c) If Buyer materially breaches the Definitive Agreement or defaults in
the performance of its obligations thereunder, the total escrow deposit required
under this Paragraph 6 (plus accrued interest thereon) shall be paid to Seller
as liquidated damages in full satisfaction of any damages due to Seller.
(d) If Seller materially breaches the Definitive Agreement, Buyer shall
have the right of specific performance.
7. The Definitive Agreement. The Definitive Agreement will include the
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customary representations, warranties, and undertakings made by buyers and
seller in transactions of this type and will contain customary conditions that
must be satisfied on or prior to the Closing Date. Xxxxx and Seller agree that
the deadline to enter into Definitive Agreement should be forty five (45) days
form the date of acceptance of this Letter of Intent. Buyer and Seller will
jointly file an application requesting FCC approval of the assignment of the
Stations' licenses to Buyer as contemplated herein no late that five (5)
business days after execution of the Definitive Agreement, unless the parties
agree in the Definitive Agreement to a later date pursuant to LMA and tax free
exchange provisions in the Definitive Agreement.
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8. Agreement to Negotiate. Buyer and Seller agree to proceed diligently,
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expeditiously, and in good faith, to negotiate a Definitive Agreement in
accordance with the terms set forth in this Letter of Intent. Until the
expiration or earlier termination of this Letter of Intent, Seller shall not
solicit, or negotiate with, any other prospective purchaser of the Stations, the
Stations' Assets or the Seller's stock.
9. Fees and Expenses. Each party will be responsible for its own FCC, legal,
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engineering and other fees and expenses. Xxxx-Xxxxx-Xxxxxx filing fees will be
paid by Xxxxx. FCC filing fees will be divided equally by the Buyer and Seller.
10. Representations, Warranties, and Covenants.
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In order to induce Buyer to enter in to this Letter of Intent, Seller will, in
the Definitive Agreement, make such customary representations, warranties and
covenants, including, but not limited to:
(i) On the Closing Date, Seller will convey to Buyer all of the Stations'
Assets, free and clear of all liens, charges, pledges, mortgages, and other
encumbrances whatsoever, other than as those expressly permitted by Xxxxx and/or
assumed by Buyer thereunder.
(ii) On the Closing Date, the Stations will be operated, in all material
respects, in
accordance with their FCC licenses and authorizations and the rules and
regulations of the FCC.
(iii) All of the tangible personal property used or useful in the operation
of the Stations, subject to normal wear and tear, will be substantially in the
same condition on the Closing Date as exists on this date.
(iv) Seller has no knowledge of any pending or threatened claims or
lawsuits which would result in a material adverse effect upon the business,
operations or financial condition of the Stations, or which would prohibit
Seller from entering into the Definitive Agreement and consummating the
transactions contemplated thereby.
(v) Any financial statements that have been given to Buyer, including the
financial information set forth in the Stations' financial statements for the
year ending December 31, 1998 will fairly and accurately present the financial
performance and results of operations of the Stations for the periods indicated;
(b) any necessary regulatory requirements have been complied with; (c) the sales
and customer information given to the Buyer are accurate and complete in all
material aspects.
(vi) From the Date hereof, Seller will operate the Stations in the
ordinary course of business consistent with past practices.
11. Examination and Investigation. It is understood that Buyer has not had an
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opportunity to conduct a complete due diligence investigation of the Stations
and the
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Stations' Assets customarily performed with respect to a transaction of this
nature. Xxxxx's execution of a Definitive Agreement is subject to Buyer's
satisfaction with the results of its due diligence review of the Stations'
Assets, including, without limitation, a review of the Stations' contracts,
employee lists, leases, financial condition and technical facilities. Seller,
intending to be bound, shall give Buyer and its authorized representatives
reasonable access at reasonable times to the Stations and the Stations' Assets
and shall furnish all information relating thereto as they may request to enable
Buyer to make such examinations and investigations thereof as Buyer reasonably
shall deem necessary. In addition, Xxxxx's execution of the Definitive Agreement
is conditioned upon Xxxxx's obtaining approval from its Board of Directors,
investors and lenders.
12. Brokerage Fees. Seller and Buyer to split all brokerage fees fifty/fifty,
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provided that Buyer's portion shall not exceed $265,000.
13. Confidentiality Clause. All information, including documents, already
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provided or to be provided by the Seller to Buyer in the course of the
negotiations for the sale of the Stations' Assets shall be designated as
"Restricted Information." Buyer shall treat all such Restricted Information in
a confidential manner and shall not disclose it to any third parties, except
attorneys, accountants and advisors as may be necessary to secure such financing
consents and other approvals necessary to consummate the transactions
contemplated herein. When such disclosures are made, Xxxxx shall advise the
third party or parties of the confidentiality of the Restricted Information and
request that the restricted Information be so treated. Without the express
prior written consent of the other party or except as permitted herein or as
required by law, neither Seller nor Buyer shall make any announcements
concerning the matters set forth herein or otherwise release or disclose to any
other person or party information covering such matters set forth herein.
14. Tax Free Exchange. The parties acknowledge that Seller would prefer to
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effect this transaction as a tax free exchange. Buyer will use its reasonable
commercial efforts to assist Seller in effectuating a tax free exchange. Seller
agrees that all expenses directly related to the tax free exchange shall be paid
by it. The parties further agree that if a tax free exchange has not occurred
within 18 months of the date of the execution of the Definitive Agreement, that
Seller will effect the sale of the Stations as an ordinary sale and the parties
shall cooperate to take such steps necessary to effectuate such an ordinary
sale.
15. Miscellaneous. (a) This Letter of Intent shall be governed by the laws of
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the Commonwealth of Virginia without reference to such jurisdiction's conflict
of law principals.
(b) Section headings contained in this Letter of Intent have been inserted
for reference purposes only and shall not be construed as part of this Letter of
Intent.
(c) All notices, requests, demands and other communications hereunder shall
be in writing
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and shall be delivered or mailed, registered or certified mail, postage prepaid,
to each of the following:
To Seller: Mr. Xxxxxx Xxxxxxxx
Xxxxxxxx Telecable
500 Dominion Tower
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Copy to: Xxxxxx X. Xxxxx, Xxxxxxx
Xxxxxxxx Xxxxx & Xxxxxxxx
0000 X. 00xx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
To Buyer: Xxxxxx X. Xxxxxxx
CEO/President
Radio One, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxx 00000
or to such other address as any part may have furnished to the other in writing,
in accordance herewith.
(d) This Letter of Intent may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(e) This Letter of Intent shall expire and be null and void upon the
earlier of (i) the expiration of the 45th day after the date of acceptance of
this Letter of Intent (subject to a reasonable extension if the drafting of the
Definitive Agreement is proceeding diligently) and (ii) the execution and
delivery of the Definitive Agreement.
(f) This Letter of intent is not legally binding on the parties hereto
except for Section 8, 11, and 15 shall be legally binding upon the parties
thereto.
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This offer to enter into a Letter of Intent shall expire at 11:00 a.m. EST
on February 24, 1999, unless accepted by Seller prior to that date and time.
Very truly yours,
RADIO ONE, INC.
By: /s/ Xxxxxx Xxxxxxx
________________________________
Xxxxxx Xxxxxxx, CEO/President
Agreed: /s/ Xxx Xxxxxxxx
____________________________
Xxxxxxxx Telecable/ CommonWealth Broadcasting, LLC
By: Xxx Xxxxxxxx
________________________________
Name
Vice President & Partner
________________________________
Title
2/23/99
________________________________
Date of Acceptance
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