Exhibit 10.54
AGREEMENT AND PLAN OF WARRANT RECAPITALIZATION
This Agreement and Plan of Warrant Recapitalization (this "Agreement")
is made as of the 25th day of February, 1999, by and among (i) Radio One, Inc.,
a Delaware corporation (the "Company"), (ii) ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") (the "Founding Investors" and each a "Founding
Investor"), (iii) Syncom Capital Corporation, Alta Subordinated Debt Partners
III, L.P., BancBoston Investments Inc., Alliance Enterprise Corporation,
Opportunity Capital Corporation, Medallion Capital, Inc., TSG Ventures, L.P.,
Fulcrum Venture Capital Corporation and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Preferred
Investors"), (iv) ▇▇▇▇▇ ▇. ▇▇▇▇▇ III ("▇▇▇▇▇") and (v) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇").
W I T N E S S E T H
WHEREAS, reference is made to the Preferred Stockholders' Agreement
dated as of May 14, 1997, by and among the investors listed on the schedules
thereto, the Company, Radio One Licenses, Inc., the Founding Investors and ▇▇▇▇▇
▇. ▇▇▇▇▇ III, as amended through the date hereof (the "Preferred Stockholders
Agreement");
WHEREAS, reference is made to the Warrantholders' Agreement dated as of
June 6, 1995, by and among the investors listed on the schedules thereto, the
Company, Radio One Licenses, Inc., the Founding Investors and ▇▇▇▇▇ ▇. ▇▇▇▇▇
III, as amended through the date hereof (the "Warrantholders' Agreement");
WHEREAS, the Company's Board of Directors and the holders of its common
stock have approved the adoption of an Amended and Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation");
WHEREAS, the Certificate of Incorporation provides for three classes of
Common Stock, including 1,000 shares of Class B Common which shall entitle its
holders to ten votes per share with respect to most issues presented for a vote
of the Company's stockholders;
WHEREAS, pursuant to a Plan of Recapitalization that will become
effective upon the adoption of the Certificate of Incorporation (the "Plan of
Recapitalization"), substantially all of the outstanding shares of Class B
Common, and a majority of the voting power represented by the Common Stock, will
be held by the Founding Investors;
WHEREAS, pursuant to the Preferred Stockholders' Agreement, adoption of
the Certificate of Incorporation required the approval of the holders of a
majority of the outstanding shares of the Company's Preferred Stock;
WHEREAS, in consideration of the Preferred Investors consenting to the
adoption of the Certificate of Incorporation the Founding Investors are willing
and desire to enter into this Agreement and to become bound by the terms and
provisions hereof;
WHEREAS, in connection with the recapitalization of the Company's
Common Stock contemplated by the Plan of Recapitalization the Preferred
Investors are willing and desire to recapitalize the Warrants (as such term is
defined in the Warrantholders' Agreement) held by them as provided in this
Agreement; and
WHEREAS, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ each wish to grant to ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
options to purchase Class C Common as provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Definitions. Except as otherwise specifically provided, capitalized
terms used in this Agreement will have the meanings set forth in the
Certificate of Incorporation.
2. Tag-Along Rights.
(a) Right of Participation in Sales by Founding Investor(s). If at
any time after the Initial Public Offering any Founding
Investor(s) or his, her or their Permitted Transferees
described in clause (i) of Section 2(e), below (the "Bound
Permitted Transferees") desire to sell all or any part of the
shares of Common Stock owned by them to any Person other than
to a Permitted Transferee (such Person or entity referred to
herein as a "Third Party Purchaser") for a per share purchase
price greater than Market Value as of the date of the notice
required pursuant to Section 2(b), below (a "Proposed Sale"),
each Preferred Investor shall have the right to sell to the
Third Party Purchaser, as a condition to such Proposed Sale by
the applicable Founding Investor(s) or Bound Permitted
Transferee, at the same price per share and otherwise upon
other terms and conditions that are in the aggregate the same
as involved in such Proposed Sale by such Founding Investor(s)
or Bound Permitted Transferee, up to such Preferred Investor's
Pro Rata Share (as defined below) of the total number of
shares of Common Stock proposed to be sold by such Founding
Investor(s) or Bound Permitted Transferee (subject to
subsection (c) below). For purposes of this Section 2(a), the
term "Pro Rata Share" shall mean, with respect to any
Preferred Investor, the percentage that the Common Stock held
by such Preferred Investor then represents of all of the
Common Stock then held by the Founding Investors, Bound
Permitted Transferees and Preferred Investors as a group, in
each case on a fully-diluted basis.
(b) Notice of Proposed Sale by Founding Investor(s). Written
notice of a Proposed Sale shall be submitted by the Founding
Investor(s) to each Preferred Investor at least 30 days prior
to the Proposed Sale. Such notice shall disclose the identity
of the Third Party Purchaser, the number of shares of Common
Stock proposed to be
2
sold by such Founding Investor(s), the total number of shares
of Common Stock owned by such Founding Investor(s), the terms
and conditions, including price, of the Proposed Sale, any
other material facts relating to the Proposed Sale, and
calculation as to the number of shares of Common Stock that
may be sold by each Preferred Investor to the Third Party
Purchaser pursuant to this Section 2.
(c) Participation in Proposed Sale by Preferred Investor. Each
Preferred Investor wishing to participate in any Proposed Sale
under this Section 2 shall notify the transferring Founding
Investor(s) in writing within 15 days after the receipt of
such notice described in Section 2(b). No shares of Common
Stock may be purchased by the Third Party Purchaser from the
transferring Founding Investor(s) unless the Third Party
Purchaser simultaneously purchases from the Preferred
Investors all shares of Common Stock which they have elected
to sell pursuant to this Section 2(c), with the sales to such
Third Party Purchaser to be consummated not prior to the
expiration of all notice periods described in this Section 2.
(d) Lapse of Restrictions/Benefits Upon Sale. Any shares of Common
Stock sold to a Third Party Purchaser pursuant to this Section
2 shall no longer be subject to the restrictions or benefits
imposed by this Section 2.
(e) Definitions: Permitted Transferees and Market Value.
(i) For purposes of this Section 2, "Permitted
Transferees" shall mean any recipient of shares of
Common Stock transferred by the Founding Investors:
(i) who is a Class B Permitted Transferee; provided,
that any such Permitted Transferee shall agree in
writing with the Preferred Investors, as a condition
to such transfer, to be bound by all of the
provisions of this agreement with respect to such
shares of Common Stock to the same extent as the
Founding Investors; (ii) by any sale or disposition
of shares of Common Stock pursuant to a registered
public offering in which the Preferred Investors have
rights to participate under any then effective
registration rights agreement; or (iii) by any sale
or disposition of shares of Common Stock in
connection with the exercise of remedies by the
Company's lenders under any of the Company's loan
agreements or credit agreements (including sales or
dispositions of the shares of Common Stock to any of
such lenders, to third parties and subsequent sales
by such lenders or third parties).
(ii) For purposes of this Section 2, "Market Value" as of
any date means the average market trading price of
the Class A Common over the preceding twenty (20)
trading days.
3
3. Retention of Voting Rights. For so long as any of the Preferred
Investors own any of the Company's Common Stock, determined on a
fully-diluted basis, neither of the Founding Investors shall sell,
assign or otherwise transfer any interest in any shares of Class B
Common to the spouse or former spouse of such Founding Investor, or to
any parent or grandparent or any lineal descendant (including any
adopted child) of any parent or grandparent of such Founding Investor's
spouse or former spouse (unless such lineal descendant is also a lineal
descendant (including any adopted child) of such Founding Investor),
including by gift, will, intestate succession or other operation of
law, unless, as a condition of such transfer (a) such Founding Investor
retains all voting power with respect to such Class B Common so long as
such Founding Investor is living, and (b) the estate of such Founding
Investor, in the case of the death of the Founding Investor, or the
transferee of such interest agrees (I) not to exercise any voting power
with respect to such Class B Common and (II) to cause such Class B
Common to be converted into shares of single vote or non-voting common
stock of the Company upon the death of such Founding Investor. The
Founding Investors agree that all shares of Class B Common held by them
will have affixed a legend describing the restrictions set forth above.
The provisions of this Section 3 will be binding upon the respective
transferees, successors, assigns, heirs and legatees of the Founding
Investors.
4. Recapitalization of Warrants.
(a) Definitions. For purposes of the Section 4, (i) the term
"Recapitalization Warrant" means a warrant to purchase shares
of Class A Common in the form attached hereto as Exhibit A,
and (ii) the term "Contingent Warrant" means a warrant to
purchase shares of Class A Common in the form attached hereto
as Exhibit B.
(b) Exchange of Warrants. Promptly after execution of this
Agreement, and effective as of the date hereof, each Preferred
Investor will surrender all Warrants held by him or it in
exchange for, and the Company will issue to such Preferred
Investor in exchange for the surrender of such Warrants, the
number of Recapitalization Warrants and Contingent Warrants
set forth next to such Preferred Investor's name on the
attached Schedule I. From and after the date hereof, the
Warrants held by each Preferred Investor will represent only
the right to receive the number of Recapitalization Warrants
and Contingent Warrants set forth next to such Preferred
Investor's name on the attached Schedule I.
(c) Continuing Application. The Warrantholders Agreement is hereby
amended by deleting the second parenthetical clause of the
second recital thereof in its entirety and replacing it with
the following:
▇
"(▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇" and together with
the New Warrants and the Recapitalization
Warrants and Contingent Warrants issued
pursuant to the Agreement and Plan of
Warrant Recapitalization dated as of
February 25, 1999, among the Company and the
Securityholders, the "Warrants")"
provided, however, that references in this Agreement to the
"Warrants" shall not include the Recapitalization Warrants or
the Contingent Warrants.
(d) Recapitalization Treatment. The parties intend that the
transactions described in this Section 4 qualify as a
recapitalization under Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, and each party agrees not to
take any action that would cause such transactions not to so
qualify.
5. Grant of Options.
(a) ▇▇▇▇▇ Options. ▇▇▇▇▇ hereby grants to each of ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ the right to purchase from ▇▇▇▇▇, and ▇▇▇▇▇ agrees to
sell to each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ on the terms and subject to
the conditions set forth in this Section 5, One-Thousand
Nine-Hundred and Fifty-Five Hundred-Thousandths (0.01955) of a
share of Class C Common (each such right, a "▇▇▇▇▇ Option").
The exercise price of each such option shall be Ten Dollars
($10.00).
(b) ▇▇▇▇▇▇▇ Options. ▇▇▇▇▇▇▇ hereby grants to each of ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ the right to purchase from ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ agrees
to sell to each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ on the terms and subject
to the conditions set forth in this Section 5, Two-Thousand
and Nine-Hundred and Forty-One Hundred Thousandths (0.02941)
of a share of Class C Common (each such right, a "▇▇▇▇▇▇▇
Option"). The exercise price of each such option shall be
Four-Thousand Four Hundred and One Dollars ($4,401.00).
(c) Exercise of Options. Provided that the Contingent Warrants
shall have expired prior to such date, each of ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ may exercise the ▇▇▇▇▇ Option and ▇▇▇▇▇▇▇ Option
granted to them at any time on or after January 1, 2000. Each
such option shall be exercised by delivery of written notice,
and the payment of the exercise price for such option in
lawful currency of the United States, to ▇▇▇▇▇ or ▇▇▇▇▇▇▇, as
applicable.
5
(d) Adjustment. The number of shares of Class C Common subject to
the ▇▇▇▇▇ Options and the ▇▇▇▇▇▇▇ Options shall be
proportionally adjusted to reflect any subdivision or
combination of the Class C Common, or any payment of a
dividend with respect to the Class C Common payable in, or any
other distribution with respect to the Class C Common
consisting of, shares of Common Stock.
(e) Termination. If the Contingent Warrants have not expired prior
to January 1, 2000, the ▇▇▇▇▇ Options and the ▇▇▇▇▇▇▇ Options
shall be terminated and shall thereafter be of no further
force or effect.
6. Consent to Transfer. Notwithstanding anything to the contrary set forth
in the Warrantholders' Agreement, each of the Preferred Investors
hereby consent to the following:
(a) The transfer by ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ of (i) 25 shares of Class
B Common to ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustee of the ▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ Revocable Trust dated ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) 0.4582
shares of Class C Common to ▇▇▇▇▇▇-▇▇▇▇▇▇▇ & Company, L.L.C.,
and (iii) 49.5418 shares of Class C Common to ▇▇▇▇▇▇-▇▇▇▇▇▇▇
Family Partners, L.P.; and
(b) The transfer by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III of (i) 20.82 shares of
Class B Common to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, as Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III Revocable Trust dated ▇▇▇▇▇ ▇, ▇▇▇▇,
(▇▇) 0.4582 shares of Class C Common to ▇▇▇▇▇▇-▇▇▇▇▇▇▇ &
Company, L.L.C., and (iii) 41.1718 shares of Class C Common to
▇▇▇▇▇▇-▇▇▇▇▇▇▇ Family Partners, L.P.
7. Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which together shall be deemed to constitute one and the same
agreement.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RADIO ONE, INC.
By:
------------------------------------------
Its:
-----------------------------------------
---------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
SYNCOM CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management
Partners III, L.P.
By:
------------------------------------------
Its:
-----------------------------------------
BANCBOSTON INVESTMENTS INC.
By:
------------------------------------------
Its:
-----------------------------------------
ALLIANCE ENTERPRISE CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
OPPORTUNITY CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
MEDALLION CAPITAL, INC.
By:
------------------------------------------
Its:
-----------------------------------------
TSG VENTURES, L.P.
By: TSGVI Associates, Inc.
Its: General Partner
By:
------------------------------------------
Its:
-----------------------------------------
FULCRUM VENTURE CAPITAL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ III
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SCHEDULE I
RECAPITALIZATION WARRANTS CONTINGENT WARRANTS
Syncom Capital Corporation 33.34260 2.77740
Alta Subordinated Debt Partners III,
L.P. 27.25009 2.26991
BancBoston Investments Inc. 18.60059 1.54941
Alliance Enterprise Corporation 17.26209 1.43791
Opportunity Capital Corporation 5.72326 0.47674
Medallion Capital, Inc. 14.06814 1.17186
TSG Ventures, L.P. 3.01856 0.25144
Fulcrum Venture Capital Corporation 14.40969 1.20031
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1.16311 0.09689
