Section 1 Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On April 28, 2011, Westwood One, Inc. (the “Company”) entered into an agreement with Wells
Fargo Capital Finance, LLC (“WFCF”) to amend the terms of the Credit Agreement, dated as of
April 23, 2009 (the “Senior Credit Facility”), among the Company, the lenders from time to
time party thereto and WFCF, as administrative agent, which Senior Credit Facility consists of a
$20.0 million term loan and $15.0 million revolving credit facility, respectively, to (x) change
the interest rate margin applicable to base rate loans and LIBOR rate loans provided thereunder to,
in each case, 4.00 percentage points and (y) remove the interest rate floors applicable to base
rate loans and LIBOR rate loans.
On April 29, 2011, the Company entered into a Stock Purchase Agreement (the “Stock Purchase
Agreement”), pursuant to which, among other things, Clear Channel Acquisition LLC purchased
from the Company all of the issued and outstanding equity interests of Metro Networks, Inc., a
Delaware corporation (“Metro Network”), SmartRoute Systems, Inc., a Delaware corporation
(“SmartRoute”) and TLAC, Inc., a Delaware corporation (“TLAC”, and together with
Metro Network and SmartRoute, collectively, the “Sold Entities”), held by the Company, but
excluding the Excluded Assets (as defined therein) (the transactions contemplated by the Stock
Purchase Agreement, the “Traffic Sale Transaction”).
On April 29, 2011, the Company entered into separate agreements with the holders of its senior
notes (the “Senior Notes”) and WFCF to amend the terms of the: (i) Securities Purchase
Agreement, dated as of April 23, 2009 (the “Securities Purchase Agreement”), which governs
the Senior Notes, and (ii) the Credit Agreement, in each case, to (x) provide for the consent of
the noteholders and the lenders, as applicable, to the Traffic Sale Transaction and the release of
the liens on the assets sold pursuant to the Stock Purchase Agreement and (y) make other amendments
to the Securities Purchase Agreement in order to permit the Traffic
Sale Transaction thereunder. As part of the amendments, the
Company’s debt leverage covenant was eliminated in its entirety and the Company obtained
increased flexibility to make new investments, enter into mergers and dispose of assets and incur
additional subordinated debt.
In addition, pursuant to the Securities Purchase Agreement, the Company was previously required to
pay, on the maturity date (or any earlier date on which the Senior Notes become due and payable),
to each holder of the Senior Notes (a “Senior Noteholder”) a fee equal to 2% of the
outstanding principal amount of the Senior Notes held by such Senior Noteholder as of such date
(the total of such fees to the Senior Noteholders, the “Senior Leverage Amendment Fee”).
Pursuant to the above amendment to the Securities Purchase Agreement, the Senior Leverage Amendment
Fee will now be due and payable on the earliest to occur of (i) July 15, 2012, (ii) the date on
which the Gores Notes (as defined in the Securities Purchase Agreement) are paid in full,
surrendered or refinanced and (iii) the date on which all of the collateral securing the Senior
Notes is released. The Company may prepay the Senior Leverage Amendment Fee in full at any time
prior to such date by paying to each Senior Noteholder an amount equal to the Senior Leverage
Amendment Fee discounted from July 15, 2012 to the date of such prepayment at a 15% per annum
discount rate.
The descriptions of the amendments contained in this Item 1.01 do not purport to be complete, and
are qualified in their entirety by reference to the actual amendments attached hereto as exhibits.
The information in Item 5.02(e)(1) of
this Current Report on Form 8-K is hereby incorporated by reference into this Item 1.01.
Section 5
Corporate Governance and Management
Item 5.02 Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain
Officers Compensatory Arrangements of Certain Officers
(e)(1) On April 29, 2011, effective upon consummation of the Traffic Sale
Transaction, the Company entered into an amendment to its employment
agreement with Steven Kalin whereby Mr. Kalin was given additional
time to exercise a termination for “Good Reason,” which termination
would be effective 120 days after the triggering event.
Additionally, the parties agreed the Traffic Sale Transaction
constitutes a triggering event for which he may elect a Good Reason
termination which may not be cured by the Company. The amendment
states that if Mr. Kalin should elect a Good Reason termination in
connection with the Traffic Sale Transaction, he
will receive: (1) an amount equal to one times the sum of his current
base salary (i.e., $425,000) to be paid in equal installments over a
one-year period consistent with the Company's payroll, (2)a bonus
equal to $225,000 payable on the sixtieth
(60th) day following such
termination (subject to a six-month delay to the extent such amount,
in combination with other severance payments, exceeds the threshold
specified under Section 17(b) of his employment agreement) and
(3)one-third of the stock option grant to purchase 200,000 shares of
Company common stock made to Mr. Kalin on February 12, 2010 (i.e., the
next tranche scheduled to vest on February 12, 2012) will immediately
vest as of the date of termination. The payment of the termination
amount set forth in clause (1) above is contingent on Mr. Kalin
executing and not revoking a fully effective waiver and general
release substantially in the form attached as Exhibit A to his
employment agreement.
The foregoing description of
Mr. Kalin’s amendment does not purport to be complete and is qualified in its
entirety by reference to such amendment, a copy of which is being
filed herewith as Exhibit 10.3.
(2) On April 27, 2011, in connection
with the Traffic Sale Transaction, the Company’s Compensation
Committee awarded Roderick M. Sherwood, III, President and CFO of the
Company, a bonus equal to $125,000 and David Hillman, General Counsel
and Chief Administrative Officer, a bonus equal to $115,000