11.

STOCKHOLDERS’ EQUITY:

Common Stock

The Company has four classes of common stock, Class A, Class B, Class C and Class D. Generally, the shares of each class are identical in all respects and entitle the holders thereof to the same rights and privileges. However, with respect to voting rights, each share of Class A common stock entitles its holder to one vote and each share of Class B common stock entitles its holder to ten votes. The holders of Class C and Class D common stock are not entitled to vote on any matters. The holders of Class A common stock can convert such shares into shares of Class C or Class D common stock. Subject to certain limitations, the holders of Class B common stock can convert such shares into shares of Class A common stock. The holders of Class C common stock can convert such shares into shares of Class A common stock. The holders of Class D common stock have no such conversion rights.

Stock Repurchase Program

From time to time, the Company’s Board of Directors has authorized repurchases of shares of the Company’s Class A and Class D common stock. As of December 31, 2017, the Company had approximately $3.0 million remaining under its most recent and open authorization with respect to its Class A and Class D common stock. Repurchases may be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. Shares are retired when repurchased. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. The Company executes upon the stock repurchase program in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value. During the year ended December 31, 2017, the Company did not repurchase any Class A Common Stock and repurchased 2,039,065 shares of Class D Common Stock in the amount of approximately $4.0 million at an average of $1.95 per share. During the year ended December 31, 2016, the Company did not repurchase any Class A Common Stock and repurchased 1,255,592 shares of Class D Common Stock in the amount of approximately $3.0 million at an average of $2.40 per share.

In addition, the Company has limited but ongoing authority to purchase shares of Class D common stock (in one or more transactions at any time there remain outstanding grants) under the Company’s 2009 Stock Plan (as defined below) to satisfy any employee or other recipient tax obligations in connection with the exercise of an option or a share grant under the 2009 Stock Plan, to the extent that the Company has capacity under its financing agreements (i.e., its current credit facilities and indentures) (each a “Stock Vest Tax Repurchase”). During the year ended December 31, 2017, the Company executed a Stock Vest Tax Repurchase of 369,133 shares of Class D Common Stock in the amount of approximately $1.0 million at an average price of $2.79 per share. During the year ended December 31, 2016, the Company executed a Stock Vest Tax Repurchase of 330,111 shares of Class D Common Stock in the amount of $568,000 at an average price of $1.72 per share.

Stock Option and Restricted Stock Grant Plan

Our stock option and restricted stock plan currently in effect was originally approved by the stockholders at the Company’s annual meeting on December 16, 2009 (“the 2009 Stock Plan”). The Company had the authority to issue up to 8,250,000 shares of Class D Common Stock under the 2009 Stock Plan. Since its original approval, from time to time, the Board of Directors adopted and, as required, our stockholders approved certain amendments to and restatement of the 2009 Stock Plan (the “Amended and Restated 2009 Stock Plan”). The amendments under the Amended and Restated 2009 Stock Plan primarily affected (i) the number of shares with respect to which options and restricted stock grants may be granted under the 2009 Stock Plan and (ii) the maximum number of shares that can be awarded to any individual in any one calendar year. The Company uses an average life for all option awards. The Company settles stock options upon exercise by issuing stock. Most recently, on April 13, 2015, the Board of Directors adopted, and our stockholders approved on June 2, 2015, an amendment that replenished the authorized plan shares, increasing the number of shares of Class D common stock available for grant back up to 8,250,000 shares. As of December 31, 2017, 4,554,624 shares of Class D common stock were available for grant under the Amended and Restated 2009 Stock Plan.

On October 26, 2015, the Compensation Committee (“Compensation Committee”) of the Board of Directors of the Company awarded David Kantor, Chief Executive Officer, Radio Division, 100,000 restricted shares of the Company’s Class D common stock, and stock options to purchase 300,000 shares of the Company’s Class D common stock. The grants were effective November 5, 2015, and will vest in approximately equal 1/3 tranches on November 5, 2016, November 5, 2017 and November 5, 2018.

On August 7, 2017, the Compensation Committee awarded Catherine Hughes, Founder and Executive Chairperson, 449,630 restricted shares of the Company’s Class D common stock, and stock options to purchase 199,836 shares of the Company’s Class D common stock. The grants were effective August 7, 2017, and vested on January 5, 2018.

On August 7, 2017, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer and President, 749,383 restricted shares of the Company’s Class D common stock, and stock options to purchase 333,059 shares of the Company’s Class D common stock. The grants were effective August 7, 2017, and vested on January 5, 2018.

On August 7, 2017, the Compensation Committee awarded Peter Thompson, Executive Vice President and Chief Financial Officer, 256,579 restricted shares of the Company’s Class D common stock, and stock options to purchase 114,035 shares of the Company’s Class D common stock. The grants were effective August 7, 2017, and vested on January 5, 2018.

On August 7, 2017, the Compensation Committee awarded David Kantor, Chief Executive Officer, Radio Division, 50,000 restricted shares of the Company’s Class D common stock, and stock options to purchase 50,000 shares of the Company’s Class D common stock. The grants were effective August 7, 2017, and will vest in approximately equal 1/3 tranches on each of January 5, 2018, January 5, 2019, and January 5, 2020.

Also on August 7, 2017, the Compensation Committee awarded 575,262 shares of restricted stock and 470,000 stock options to certain employees pursuant to the Company’s long-term incentive plan (“LTIP”). The grants were effective August 7, 2017. 470,000 shares of restricted stock and 470,000 stock options will vest in three installments, with the first installment of 33% vesting on January 5, 2018, and the second installment vesting on January 5, 2019, and the remaining installment vesting on January 5, 2020. 105,262 shares of restricted stock vested on August 7, 2017. Pursuant to the terms of the Amended and Restated 2009 Stock Plan, and subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold in the open market for tax purposes on or about the vesting dates.

On October 2, 2017, Karen Wishart, our current Chief Administrative Officer, as part of her employment agreement, received an equity grant of 37,500 shares of the Company’s Class D common stock as well as a grant of options to purchase 37,500 shares of the Company’s Class D common stock. The grants vest in equal increments on each of October 2, 2018, October 2, 2019 and October 2, 2020.

The Company measures compensation cost for all stock-based awards at fair value on date of grant and recognizes the related expense over the service period for awards expected to vest. The restricted stock-based awards do not participate in dividends until fully vested. The fair value of stock options is determined using the BSM. Such fair value is recognized as an expense over the service period, net of estimated forfeitures, using the straight-line method. Estimating the number of stock awards that will ultimately vest requires judgment, and to the extent actual forfeitures differ substantially from our current estimates, amounts will be recorded as a cumulative adjustment in the period the estimated number of stock awards are revised. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate.

The Company’s use of the BSM to calculate the fair value of stock-based awards incorporates various assumptions including volatility, expected life, and interest rates. For options granted, the BSM determines: (i) the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110; (ii) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (iii) a risk-free interest rate that was consistent with the expected term of the stock options and based on the U.S. Treasury yield curve in effect at the time of the grant.

Stock-based compensation expense for the years ended December 31, 2017 and 2016, was approximately $4.6 million and $3.4 million, respectively.

The Company granted 1,204,000 stock options during the year ended December 31, 2017. The Company did not grant stock options during the year ended December 31, 2016. The per share weighted-average fair value of options granted during the years ended December 31, 2017 was $1.25.

These fair values were derived using the BSM with the following weighted-average assumptions:

	For the Years Ended December 31,
	2017			2016

Average risk-free interest rate		1.81	%		—
Expected dividend yield		0.00	%		—
Expected lives		6.00 years			—
Expected volatility		65.8	%		—

Transactions and other information relating to stock options for the years December 31, 2017 and 2016 are summarized below:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2015		3,712,000	$	2.06		5.20	$	733,000
Grants		—	$	—
Exercised		—	$	—
Forfeited/cancelled/expired		(12,000)	$	10.66
Outstanding at December 31, 2016		3,700,000	$	2.03		4.21	$	3,675,000
Grants		1,204,000	$	1.90
Exercised		—	$	—
Forfeited/cancelled/expired		(100,000)	$	7.50
Outstanding at December 31, 2017		4,804,000	$	1.89		4.90	$	795,000
Vested and expected to vest at December 31, 2017		4,707,000	$	1.88		4.81	$	795,000
Unvested at December 31, 2017		1,304,000	$	1.91		9.47	$	—
Exercisable at December 31, 2017		3,500,000	$	1.88		3.20	$	795,000

The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the year ended December 31, 2017, and the exercise price, multiplied by the number of shares that would have been received by the holders of in-the-money options had all the option holders exercised their in-the-money options on December 31, 2017. This amount changes based on the fair market value of the Company’s stock.

There were no options exercised during the years ended December 31, 2017 and 2016. The number of options that vested during the year ended December 31, 2017 was 149,999. The number of options that vested during the year ended December 31, 2016 was 505,832.

As of December 31, 2017, $662,000 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 6.5 months. The weighted-average fair value per share of shares underlying stock options was $1.31 at December 31, 2017.

The Company granted 2,211,378 and 237,728 shares, respectively, of restricted stock during the years ended December 31, 2017 and 2016, respectively. During the years ended December 31, 2017 and 2016, respectively, 23,256 and 72,728 shares of restricted stock were issued to the Company’s non-executive directors as a part of their compensation packages. Each of the four non-executive directors received 18,182 shares of restricted stock, or $50,000 worth, of restricted stock based upon the closing price of the Company’s Class D common stock on June 16, 2017. Each of the four non-executive directors received 18,182 shares of restricted stock, or $50,000 worth, of restricted stock based upon the closing price of the Company’s Class D common stock on June 16, 2016. All of the restricted stock grants vest over a two-year period in equal 50% installments.

Transactions and other information relating to restricted stock grants for the years ended December 31, 2017 and 2016 are summarized below:

	Shares		Average Fair Value at Grant Date
Unvested at December 31, 2015		953,000	$	2.76
Grants		238,000	$	2.22
Vested		(788,000)	$	2.80
Forfeited/cancelled/expired		(45,000)	$	2.75
Unvested at December 31, 2016		358,000	$	2.31
Grants		2,210,000	$	1.91
Vested		(265,000)	$	2.22
Forfeited/cancelled/expired		—	$	—
Unvested at December 31, 2017		2,303,000	$	1.94

Restricted stock grants were and are included in the Company’s outstanding share numbers on the effective date of grant. As of December 31, 2017, approximately $1.4 million of total unrecognized compensation cost related to restricted stock grants was expected to be recognized over a weighted-average period of 5.0 months.