U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 14, 1997
REDWOOD BROADCASTING, INC.
(Exact name of registrant as specified in its charter)
Colorado 33-80321 84-1295270
(State or Other Jurisdiction Commission file (I.R.S. Employer
of Incorporation) number Identification No.)
7518 Elbow Bend Road
P.O. Box 3463
Carefree, AZ 85377
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (602) 488-2596
N/A
(Former name or former address, if changed since last report)
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ITEM 2: DISPOSITION OF ASSETS
On October 10, 1997, Alta California Broadcasting, Inc. ("Alta"), a wholly-owned
subsidiary of Redwood Broadcasting, Inc. (the "COMPANY") entered into an
Agreement of Merger (the "MERGER") with Regent Communications ("REGENT") whereby
ALTA will be merged into a wholly-owned subsudiary of REGENT formed for purposes
of effectuating the MERGER.
ALTA is the owner, operator and licensee of Radio Station KRDG-FM, Shingletown,
California. ALTA also holds an option to purchase, and will purchase prior to
the closing date of the Merger, all of the tangible and intangible asstes used
or held by Power Surge, Inc. for use in the operation of KRRX-FM, Burney,
California and KNRO-AM, Redding, California. In addition, ALTA intends to
acquire, prior to the closing date of the MERGER, all of the tangible and
intangible assets used or held by Northern California Broadcasting, Inc., a
wholly-owned subsidiary of ALTA, for use in the operation of KNNN-FM, Central
Valley, California.
As consideration for ALTA entering into the MERGER with REGENT, the COMPANY will
receive, at closing, $1,000,000 in cash plus 200,000 shares of REGENT Series "E"
Preferred Stock valued at $5.00 per share. In addition, Regent is assuming
$1,500,000 in debt of Alta as part of this transaction.
Prior to the foregoing transactions, there existed no material relationship or
affiliation between the Company, or its affiliates, on the one hand, or REGENT,
or its respective affiliates, on the other.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
b. Pro forma fiancial information
(1) Filed herewith are the Company's Pro forma Balance Sheet as
of June 30, 1997 and the Company's Pro forma Statement of
Operations for the three months ended June 30, 1997 and 1996
giving effect to the Merger of ALTA into REGENT.
c. Exhibits
Exhibit No. Title
10.1 Agreement of Merger with Regent Communications dated
October 10, 1997.
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REDWOOD BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
RBI Pro Forma June 30,
Adjustments(1) 1997
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 19,611 $ 982,198 $1,001,809
Accounts receivable, net 192,066 (192,066) --
Receivable from sale of radio station 633,000 633,000
Other current assets 81,179 (4,670) 76,509
--------- -------- ---------
Total current assets 925,856 785,462 1,711,318
PROPERTY AND EQUIPMENT, net 231,529 (231,529) --
INTANGIBLE ASSETS, net 976,367 (976,367) --
NOTE RECEIVABLE FROM SALE OF RADIO STATION 200,000 -- 200,000
OTHER ASSETS 223,001 927,796 1,150,797
--------- -------- ---------
TOTAL $2,556,753 $ 505,362 $3,062,115
========= ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 344,855 $(212,291) $ 132,564
Accounts payable to related parties 202,032 -- 202,032
Current portion of notes payable 48,335 (48,335) --
Current portion of notes payable to
related parties 25,000 -- 25,000
Capital lease obligation 8,175 (8,175) --
--------- ------- ---------
Total current liabilities 628,397 (268,801) 359,596
NOTES PAYABLE 605,208 (605,208) --
NOTES PAYABLE TO RELATED PARTIES 710,479 -- 710,479
--------- ------- ---------
Total liabilities 1,944,084 (874,009) 1,070,075
--------- ------- ---------
COMMITMENTS
REDEEMABLE COMMON STOCK 154,419 -- 154,419
--------- ------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.04;
2,500,000 shares authorized;
none issued and outstanding
Common stock, par value $.004;
12,500,000 shares authorized;
997,054 shares issued and outstanding 3,988 1,314 5,302
Additional paid-in capital 1,069,740 327,229 1,396,969
Accumulated deficit (520,478) 1,050,828 530,350
Note receivable from stockholder (45,000) -- (45,000)
Common stock subscribed (50,000) -- (50,000)
--------- --------- ---------
Total stockholders' equity 458,250 1,379,371 1,837,621
--------- --------- ---------
TOTAL $2,556,753 $ 505,362 $3,062,115
========= ========= =========
See note 1 to consolidated financial statements.
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REDWOOD BROADCASTING, INC.
AND CONSOLIDATED SUBSIDIARIES
PRO-FORMA
STATEMENTS OF OPERATIONS
June 30, 1997
(unaudited)
RBI ALTA RBI-PRO RBI ALTA RBI-PRO
Three Three Three Three Three Three
Months Months Months Months Months Months
Ended Ended Ended Ended Ended Ended
6/30/97 6/30/97 6/30/97 6/30/97 6/30/97 6/30/97
------- ------- ------- ------- ------- -------
REVENUE
Broadcast revenue $ 373,317 $373,317 $ -- $ $ -- $ --
Less agency commissions 33,399 33,399 -- -- -- --
--------- -------- ------- ------- ------ ------
Net revenue 339,918 339,918 -- -- -- --
--------- -------- ------- ------- ------ ------
OPERATING EXPENSE
General and administrative 120,026 (8,637) 111,389 13,722 -- 13,722
Station operating expenses 191,302 (191,302) -- 60,416 -- 60,416
Depreciation and
amortization 28,460 (28,460) -- 24,102 -- 24,102
--------- -------- ------- ------- ------ ------
Total 339,788 (228,399) 111,389 98,240 -- 98,240
--------- -------- ------- ------- ------ ------
INCOME/(LOSS)
FROM OPERATIONS 130 (111,519)(111,389) (98,240) -- (98,240)
--------- -------- -------- ------- ------ -------
OTHER INCOME (EXPENSE)
Interest expense (10,960) 11,729 767 (1,200) -- (1,200)
Other income (expense) 42,751 (41,132) 1,619 (28,009) -- (26,009)
--------- -------- -------- ------- ------ -------
Total other - net 31,791 (29,405) 2,386 (29,209) -- (29,209)
--------- -------- -------- -------- ------ -------
NET INCOME/(LOSS) 31,921 (140,924)(109,003)(127,449) --(127,449)
--------- -------- -------- -------- ------ -------
NET INCOME (LOSS) PER
COMMON SHARE $ 0.03 $ (0.15) $ (0.12) $ (.22) -- $ (0.22)
========= ======== ======== ======== ====== =======
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 934,523 934,523 934,523 590,000 590,000 590,000
========= ======== ======== ======== ====== =======
See notes to consolidated financial statements.
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,
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Redwood Broadcasting, Inc.
Notes to Pro Forma Financial Statements
(Unaudited)
(1) General
On October 10, 1997, Alta California Broadcasting, Inc. ("Alta"), a wholly-owned
subsidiary of Redwood Broadcasting, Inc. (the "COMPANY") entered into an
Agreement of Merger (the "MERGER") with Regent Communications ("REGENT") whereby
ALTA will be merged into a wholly-owned subsudiary of REGENT formed for purposes
of effectuating the MERGER.
ALTA is the owner, operator and licensee of Radio Station KRDG-FM, Shingletown,
California. ALTA also holds an option to purchase, and will purchase prior to
the closing date of the Merger, all of the tangible and intangible asstes used
or held by Power Surge, Inc. for use in the operation of KRRX-FM, Burney,
California and KNRO-AM, Redding, California. In addition, ALTA intends to
acquire prior to the closing date of the MERGER, all of the tangible and
intangible assets used or held by Northern California Broadcasting, Inc., a
wholly-owned subsidiary of ALTA, for use in the operation of KNNN-FM, Central
Valley, California.
As consideration for ALTA entering into the MERGER with REGENT, the COMPANY will
receive, at closing, $1,000,000 in cash plus 200,000 shares of REGENT Series "E"
Preferred Stock valued at $5.00 per share. In addition, Regent is assuming
$1,500,000 in debt of Alta as part of this transaction.
The Company's pro forma balance sheet as of June 30, 1997 gives effect to the
merger of Alta with Regent as if the transaction had been consummated on June
30, 1997. The Company's pro forma statement of operations for the three months
ended June 30, 1997 and 1996 also gives effect to the merger as if the
transaction had been consummated on June 30, 1997.
The unaudited pro forma financial statements should be read in conjunction with
the historical financial statements of the Company. The unaudited pro forma
financial statements do not purport to project the Company's financial position
or results of operations for any future period.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant hascaused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Signature Title Date
/s/ John C. Power President 10/29/97
JOHN C. POWER
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AGREEMENT OF MERGER
AMONG
ALTA CALIFORNIA BROADCASTING, INC.
AND
REGENT ACQUISITION CORP.
AND
REGENT COMMUNICATIONS, INC.
October 10, 1997
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TABLE OF CONTENTS
Page
DEFINITION OF TERMS
1. Definition of Terms
(a) Alta Stock........................................2
(b) Best Knowledge....................................2
(c) Broadcast Assets..................................2
(d) Budget............................................3
(e) Closing Date......................................3
(f) Commission........................................3
(g) Commission's Order................................3
(h) Constituent Corporations..........................3
(i) Final Order.......................................3
(j) Financials........................................3
(k) Licenses..........................................4
(l) Series E Preferred Stock..........................4
(m) Stations..........................................4
AGREEMENT TO MERGE
2. Agreement..................................................4
3. Action to Effect Merger....................................4
4. Certificate of Incorporation and By-Laws...................4
5. Directors..................................................4
6. Officers...................................................4
7. Stockholder Approval; Effectiveness of Merger..............5
8. Authorized Shares of Surviving Corporation.................5
9. Authorized Shares of Disappearing Corporation..............5
MODE OF EFFECTING MERGER
10. Cancellation of Shares.....................................5
11. Funding of Consideration for Alta Stock....................6
12. Payment of Cash and Issuance of Preferred Stock............6
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Page
PURCHASE PRICE
13. (a) Consideration Before Adjustment...................6
(b) Consideration After Adjustment....................6
FCC MATTERS
14. Commission Consent to Transfer of Control..................7
15. Applications for Consent - Cooperation of the Parties......7
16. Costs and Expenses.........................................7
17. Operation of the Stations Before Closing...................8
18. Control and Access.........................................8
19. Time for Commission Consent - Termination..................8
COVENANTS, REPRESENTATIONS AND WARRANTIES OF ALTA
20. Covenants, Representations and Warranties of Alta..........8
(a) Corporate Standing and Authority..................8
(b) Ownership of Alta Stock...........................9
(c) Corporate Power...................................9
(d) Capital Stock.....................................9
(e) Due Authorization, Etc............................9
(f) Affiliates.......................................10
(g) Rights to Acquire Securities.....................10
(h) Corporate Records................................10
(i) Title to Broadcast Assets........................10
(j) Financial Statements; Budget.....................10
(k) Contracts........................................11
(1) Government Authorizations........................12
(m) Management, Key Employees and Accounts...........13
(n) Tax Elections....................................13
(o) Related Transactions.............................13
(p) Taxes............................................14
(q) Employee Benefit Plans...........................14
(r) Compliance With FCC Regulations..................14
(s) Personal Property................................15
(t) Real Property....................................15
(u) Environmental....................................16
(v) Insurance........................................16
(w) Accounts and Notes Receivable....................16
(x) Laws, Regulations and Instruments................16
(y) Conduct of Stations..............................17
(z) Disposition of Assets............................17
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Page
(aa) Transmitter Sites................................17
(bb) Litigation.......................................17
(cc) No Conflict......................................17
(dd) Required Consents................................18
(ee) Intellectual Property............................18
(ff) Qualifications for Transfer of Control...........18
(gg) Public Inspection File...........................18
(hh) Absence of Certain Changes.......................18
(ii) Personnel Information............................19
(jj) Outstanding Debt.................................20
(kk) Negative Covenants...............................20
(ll) Affirmative Covenants............................21
(mm) Additional Agreements............................21
(nn) Join in Execution of Documents...................21
(oo) Full Disclosure..................................21
COVENANTS, REPRESENTATIONS AND WARRANTIES OF REGENT AND SUBSIDIARY
21. Covenants, Representations and Warranties of Regent and
Subsidiary..............................................22
(a) Corporate Standing and Authority.................22
(b) Corporate Power..................................22
(c) Capitalization...................................22
(d) Join in Execution of Documents...................23
(e) Litigation.......................................23
(f) No Conflict......................................23
(g) Licenses.........................................23
(h) Required Consents................................24
(i) Absence of Certain Changes.......................24
(j) Laws, Regulations and Instruments................25
(k) Issuance of Series E Preferred Stock.............25
(l) Financial Statements.............................25
(m) No Adverse Changes...............................25
(n) Qualifications for Transfer of Control...........26
(o) Insurance........................................26
(p) Taxes............................................26
(q) Full Disclosure .................................26
INDEMNIFICATION
22. Indemnification ..........................................27
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Page
RISK OF LOSS
23. Risk of Loss..............................................28
(a) Broadcast Assets.................................28
(b) Broadcast Transmission of the Stations
Prior to Closing...............................28
CONDITIONS PRECEDENT TO SUBSIDIARY'S AND REGENT'S OBLIGATION TO CLOSE
24. Conditions Precedent to Subsidiary's and Regent's
Obligations.............................................29
(a) Representations, Warranties and Covenants........29
(b) Delivery of Closing Documents....................29
(c) Licenses.........................................29
(d) Consents.........................................20
(e) Final Order......................................30
(f) Adverse Proceedings..............................30
(g) Title, Engineering and Environmental Examination.30
(h) Time Brokerage Agreement Compliance..............30
(i) Material Adverse Change..........................30
(j) Acquisition of Assets............................30
(k) Lease Extension..................................30
(l) Repair or Correction of Existing Condition.......30
CONDITIONS PRECEDENT TO ALTA'S OBLIGATION TO CLOSE
25. Conditions Precedent to Alta's Obligations................31
(a) Representations, Warranties and Covenants........31
(b) Purchase Price...................................31
(c) Delivery of Closing Documents....................31
(d) Final Order......................................31
(e) Consents.........................................31
(f) Adverse Proceedings..............................31
(g) Issuance of Preferred Stock......................31
(h) Title, Engineering and Environmental Examination.32
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CLOSING DOCUMENTS
26. Closing Documents to be Delivered by Alta.................32
27. Closing Documents to be Delivered by Regent and
Subsidiary..............................................33
28. Escrow Deposit............................................35
29. Remedies on Default-Prior to Closing......................36
30. Brokerage.................................................36
31. Survival of Representations and Warranties................37
MISCELLANEOUS PROVISIONS
32. Time Brokerage Agreement..................................37
33. Headings..................................................37
34. Execution.................................................37
35. Notices...................................................37
36. Disclosure................................................38
37. Receipt of Series E Preferred Stock.......................38
38. Amendment or Termination..................................39
39. Entire Agreement..........................................39
40. Governing Law.............................................39
41. Successors and Assigns....................................39
42. Exhibits..................................................39
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<PAGE>
AGREEMENT OF MERGER
THIS AGREEMENT is made and entered as of this 10th day of October,
1997, by and among REGENT COMMUNICATIONS, INC., a Delaware corporation
(hereinafter referred to as "Regent"), REGENT ACQUISITION CORP., a Delaware
corporation (hereinafter referred to as "Subsidiary"), and ALTA CALIFORNIA
BROADCASTING, INC., a California corporation (hereinafter referred to as
"Alta").
PREAMBLE
W I T N E S E T H:
THAT, WHEREAS, Alta is the owner, operator and licensee of Radio
Station KRDG(FM), Shingletown, California; and
WHEREAS, Alta holds an option to purchase, and will purchase prior to
the Closing Date, all of the tangible and intangible assets used or held by
Power Surge, Inc. for use in the operation of KRRX(FM), Burney, California and
KNRO-AM, Redding, California; and
WHEREAS, Alta intends to acquire, and will acquire prior to the Closing
Date, all of the tangible and intangible assets used or held by Northern
California Broadcasting, Inc. for use in the operation of KNNN(FM), Central
Valley, California; and
WHEREAS, Subsidiary is a wholly-owned subsidiary of Regent; and
WHEREAS, the Board of Directors of Alta and the Board of Directors of
Subsidiary deem it advisable that Alta (sometimes referred to as "the
Disappearing Corporation") be merged into Subsidiary (sometimes referred to as
"the Surviving Corporation") under the laws of the State of Delaware and
California in the manner provided therefor pursuant to Section 251 and related
sections of Title 8 of the Delaware Code and Section 1108 and related sections
of Chapter 11 of the California Corporation's Code; and
WHEREAS, as a result of such merger, Regent will own all of the
outstanding capital stock of Alta; and
WHEREAS, control of Alta may not be transferred without prior written
consent of the Federal Communications Commission; and
WHEREAS, Regent, Subsidiary, and Alta have negotiated the terms and
conditions of such merger, including the consideration to be paid to Redwood
Broadcasting, Inc., the sole stockholder of Alta (hereinafter sometimes referred
as "Redwood" or "Stockholder").
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<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and the
conditions hereinafter contained, and subject to the conditions hereinafter set
forth, the parties hereto agree as follows:
DEFINITION OF TERMS
1. Definition of Terms. In addition to the words and terms defined in
the recitals and elsewhere in this Agreement, the following terms shall have the
following meanings:
(a) "Alta Stock" means all shares of the capital stock of Alta
outstanding on the Closing Date and all options, warrants and other rights to
acquire the capital stock of Alta (by exchange, conversion, exercise of options,
or otherwise) outstanding on the Closing Date.
(b) "Best Knowledge" means actual knowledge plus knowledge
which should be possessed by a reasonably prudent person in the same or similar
capacity as the person or persons to whom Best Knowledge is attributed. "Best
Knowledge of Alta" means the Best Knowledge of those persons who are the members
of the Board of Directors, the executive officers, Chief Engineer and Chief
Financial Officer of Alta on the date of this Agreement, in their capacities as
such, as well as in all other capacities, including but not limited to that of
officer or employee of Alta. "Best Knowledge of Regent" means the Best Knowledge
of Terry S. Jacobs and William L. Stakelin.
(c) "Broadcast Assets" means:
(i) The Licenses listed on Exhibit l(k) and the
Public Inspection File maintained in connection therewith.
(ii) All contracts for the sale of broadcast time
or advertising on the Stations for cash which are valid and enforceable as of
the Closing Date.
(iii) All contracts for the sale of broadcast time or
advertising on the Stations in exchange for merchandise or services (or
a combination of merchandise or services and cash) which are valid and
enforceable as of the Closing Date.
(iv) All other leases, contracts and agreements
relating to the operation of the Stations and which are in effect on the
Closing Date, including without limitation those described in Exhibit 20(k-1).
(v) All the tangible property, assets,furniture,
fixtures, supplies, materials, goods, transmitters and equipment of Alta
used or useful in the operation of the Stations, including, without
limitation, those listed on Exhibit 20(s) and including replacements
thereof or additions thereto made between the date hereof and the Closing
Date, less any retirements made in the ordinary and usual course of business.
(vi) Goodwill, privileges, permits, copyrights,
logos, jingles, service marks, trademarks and trade names (including rights in
applications in connection therewith), and
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other intangible rights (including rights to the call letters of the Stations)
used or owned by Alta for use in the operation of the Stations or in connection
therewith.
(vii) The correspondence, files, records, stock
books, minute books, books
of account, logs, advertising lists, copy and other files, books, writings and
records of Alta.
(viii) All accounts and notes receivable of Alta as
of the Closing Date.
(ix) The real property owned by Alta as of the
Closing Date, including
without limitation that which is described in Exhibit 20(t).
(x) All other things owned by Alta (including,
without limitation, cash on
hand) used or useful in the operation of the Stations and not disposed of in the
ordinary and usual course of business; provided, however, the Broadcast Assets
shall not include those items listed on Exhibit 1(c)(x).
(d) "Budget" means the Consolidated 1997 Budget projections of
Alta, a copy of which is attached hereto as Exhibit 1(d).
(e) "Closing Date" means the date, time and place designated
by not less than four (4) days' written notice from Subsidiary to Alta, which
date shall not be less than five (5) days and not more than ten (10) days after
the occurrence of the later of the Final Order or the satisfaction of any
condition imposed by the Commission pursuant to the Commission's Order, or such
other date within the effective period (including any extension thereof) of the
Commission's order as shall be mutually agreed upon by Alta and Subsidiary.
"Closing" means the redemption and cancellation of the Alta Stock, the delivery
of the consideration therefor to Redwood, and the execution and delivery of the
other documents as provided herein.
(f) "Commission" means the Federal Communications Commission.
(g) "Commission's Order" means the action of the Commission
consenting to the transfer of control contemplated herein.
(h) "Constituent Corporations" means Alta California
Broadcasting, Inc. and Regent Acquisition Corp.
(i) "Final Order" means the Commission's Order as to which the
time for filing a request for all administrative or judicial review shall have
expired without any such filing having been made, or in the event of such
filing, the Commission's Order shall have been reaffirmed or upheld and the time
for seeking further administrative or judicial review with respect thereto shall
have expired without any request for such further review having been filed.
(j) "Financials" means the audited financial statements for
the Stations for the period for the years ended December 31, 1994, 1995, and
1996, and the unaudited financial statements for the Stations for the nine
months ended September 30, 1997, and for monthly periods thereafter up to and
including the Closing Date, furnished and to be furnished to Regent and
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consisting of balance sheets, statements of income and retained earnings, and,
except for the unaudited Financials, statements of changes in financial
position.
(k) "Licenses" means all licenses, permits and authorizations
issued by the Commission relative to the Stations, as listed and described on
Exhibit 1(k) attached hereto and incorporated by reference herein.
(l) "Series E Preferred Stock" means the $5 Series E
Convertible Preferred Stock of Regent being issued and delivered to, and
acquired by, Redwood under the terms of this Agreement, and having the
attributes described on Exhibit 1(l).
(m) "Stations" means radio stations KRDG(FM), KNNN(FM),
KRRX(FM), and KNRO-AM and the auxiliary stations of all such Stations.
AGREEMENT TO MERGE
2. Agreement. Alta, a corporation duly organized under the State of
California, and Subsidiary, a corporation duly organized and existing under the
laws of the State of Delaware, hereby agree that, in accordance with and subject
to the terms and conditions set forth herein, upon Effectiveness, Alta shall be
merged with and into Subsidiary, the separate corporate existence of Alta shall
cease, Subsidiary shall continue in existence and such merger shall in all
respects have the effect provided for in Section 259 of the General Corporation
Law of the State of Delaware and California Code Section 1107.
3. Action to Effect Merger. Prior to, from and after Effectiveness,
Alta, Subsidiary and Regent shall take all such action as shall be necessary or
appropriate, in order to effectuate this merger in accordance with and subject
to the terms of this Agreement of Merger and the laws of the State of Delaware
and California.
4. Certificate of Incorporation and By-Laws. From and after
Effectiveness and until thereafter amended as provided by law, the Certificate
of Incorporation and the By-Laws of Subsidiary as in effect immediately prior to
Effectiveness shall be and continue to be the Certificate of Incorporation and
By-Laws of the Surviving Corporation.
5. Directors. The Board of Directors of Subsidiary shall be the Board
of Directors of the Surviving Corporation as of and after Effectiveness.
6. Officers. The following shall be the officers of the Surviving
Corporation as of and after Effectiveness to hold office as provided in the
Certificate of Incorporation and By-Laws of the Surviving Corporation:
Chairman of the Board,
Chief Executive Officer,
Treasurer.............................................Terry S. Jacobs
President, Chief Operating
Officer, Secretary................................William L. Stakelin
Vice President-Finance,
Assistant Secretary....................................Matthew Yeoman
Assistant Secretary .....................Christina Tenhundfeld
Assistant Secretary....................................Alan C. Rosser
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7. Stockholder Approval; Effectiveness of Merger. This Agreement of
Merger has been approved by the stockholder of Alta and the stockholder of
Subsidiary as provided by the applicable laws of the States of Delaware and
California. If this Agreement is not terminated or abandoned in accordance with
its terms, this Agreement of Merger shall be executed and certified by Alta and
Subsidiary pursuant to Section 251(c) of the General Corporation Law of the
State of Delaware, and the Constituent Corporations shall prepare, file and
record with the Secretary of State of Delaware a Certificate of Merger in the
form provided under such Section 251(c) as soon as practicable after the
Closing, and shall thereafter file with the California Secretary of State a
certified copy of the Certificate of Merger. The merger shall become effective
upon the due and proper filing of the Certificate of Merger as herein provided,
herein sometimes called the "Effectiveness."
8. Authorized Shares of Surviving Corporation. Subsidiary presently has
authorized capital stock of 1,000 common shares, $1.00 per share par value, of
which 100 shares are issued and outstanding to Regent.
9. Authorized Shares of Disappearing Corporation. Alta presently has
authorized and outstanding capital stock consisting of the following:
Total Total
Authorized Outstanding
Capital Stock Shares Shares
Common 1,000,000 30,000
MODE OF EFFECTING MERGER
10. Cancellation of Shares.
(a) At Effectiveness, by virtue of the merger and without any
action on the part of the holder of the capital stock of Subsidiary, each issued
and outstanding share of the capital stock of Subsidiary shall continue
unchanged and remain outstanding as a share of common stock of the Surviving
Corporation.
(b) At Effectiveness, all outstanding shares of Alta stock and
all outstanding options and warrants to purchase Alta stock shall be redeemed
and canceled, and each share held in Alta's treasury shall, by virtue of the
merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired and shall cease to exist. At the
Closing, Redwood shall surrender for redemption and cancellation its certificate
or certificates evidencing all of the outstanding shares of Alta Stock.
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11. Funding of Consideration for Alta Stock. On or before the Closing
Date, Regent shall have made a contribution to the capital of Subsidiary, in
cash or cash equivalent, in the amount of at least $1,000,000. In addition, on
or before the Closing Date, Regent shall have issued to Subsidiary at least
200,000 shares of Series E Preferred Stock.
12. Payment of Cash and Issuance of Preferred Stock. Subject to the
provisions of paragraph 13 hereof, at the Closing, Subsidiary shall:
(a) Cause to be delivered to Escrow Agent 20,000 shares of
Series E Preferred Stock, to be held, administered and released in accordance
with the Indemnification Escrow Agreement provided for in paragraph 22 hereof
(the "Indemnification Escrow Agreement"), which securities will be held in
escrow for a period of one (1) year after the Closing Date, and will be used to
satisfy indemnification claims of Regent or Subsidiary pursuant to paragraph 22
hereof; and
(b) Cause to be delivered to Redwood a certificate or
certificates for 180,000 fully paid and nonassessable shares of Series E
Preferred Stock; and
(c) Deliver to Redwood One Million Dollars ($1,000,000) by
wire transfer of immediately available funds subject to adjustment pursuant to
the provisions of paragraph 13(b) below.
PURCHASE PRICE
13. (a) Consideration Before Adjustments. The consideration
to be paid for the Alta Stock before adjustments as provided in paragraph 13(b)
below (the "Consideration Before Adjustments") will consist of the following:
(i) One Million Dollars ($1,000,000) in cash; plus
(ii) Two Hundred Thousand (200,000) shares of Series E
Preferred Stock.
(b) Consideration After Adjustments. At the Closing, a
computation shall be compiled by Alta setting forth as of the Closing Date the
amount of Alta's Cash (as hereinafter defined) and all known Liabilities of Alta
as set forth below ("Closing Statement"). The Consideration Before Adjustments
shall be adjusted by (a) an increase by the amount of Cash and (b) a decrease by
the amount of Liabilities shown on the Closing Statement. The Consideration, as
so adjusted, shall hereinafter be referred to as the "Consideration After
Adjustments". In the event any adjustments are made to the Consideration Before
Adjustments pursuant to the terms of this paragraph 13(b), such adjustments
shall be made such that of the total Consideration After Adjustments payable to
Redwood for the Alta Stock, one half shall be payable in cash and one half shall
be payable in shares of Series E Preferred Stock, based on a per share stated
value of $5.00.
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As used herein, "Cash" shall mean cash on hand and in banks,
certificates of deposit, treasury bills and marketable securities and other cash
equivalents, accounts receivable (less adequate reserves) and any other current
asset listed on Alta's balance sheet).
As used herein, the term "Liabilities" shall mean at the Closing Date
the amount of all the liabilities of Alta that should be recorded on a balance
sheet or disclosed in the notes to the financial statements as of that date
computed in accordance with generally accepted accounting principles applied on
a basis consistent with those followed in the preparation of the financial
statements described in paragraph 1(i) and shall include (i) accounts payable,
(ii) all indebtedness, (iii) any unpaid bonuses, severance or vacation pay
accrued to employees for the period ending on the day prior to the Closing Date,
(iv) trade and barter obligations, and (v) all other items which in accordance
with generally accepted accounting principles consistently applied should be
included as Liabilities of Alta. For purposes of the determination of
Liabilities, all expenses relating to Alta and arising from the conduct of
Alta's business and operation of the Stations (including without limitation such
items as taxes, license fees, utilities, and rents) shall be prorated between
Regent and Alta in accordance with generally accepted accounting principles as
of 11:59 p.m. Pacific time, on the date immediately preceding the Closing Date.
FCC MATTERS
14. Commission Consent to Transfer of Control. Notwithstanding anything
herein to the contrary, the terms and conditions of this Agreement are subject
to a Final Order prior to Closing granting consent to the transfer of control of
Alta as a result of the merger.
15. Applications for Consent - Cooperation of the Parties. Regent and
Alta shall file an application for transfer of control by not later than five
(5) business days from the date of this Agreement. They shall promptly and
diligently file and expeditiously prosecute all necessary or desired amendments
to such application, briefs, pleadings, documents and supporting data, and take
all such actions and give all such notices as may be required or requested by
the Commission or as may be appropriate in an effort to expedite the consent of
the Commission to the transfer of control of Alta as a result of the merger.
16. Costs and Expenses. Alta, Subsidiary and Regent each shall bear its
own legal fees and other costs and expenses with respect to this transaction,
including preparation and prosecution of Commission applications. The cost of
filing fees and grant fees, if any, imposed by the Commission shall be borne
equally by the parties. Alta shall pay all sales, transfer and documentary
taxes, if any, in respect of the Alta Stock. All other fees and expenses payable
by Alta but not paid prior to Closing shall be treated as a current liability of
Alta at Closing and will be paid by the surviving entity at Closing.
17. Operation of the Stations Before Closing. Subject to Regent's time
brokering of the Stations pursuant to the Time Brokerage Agreement, between the
date of this Agreement and the Closing Date, Alta (i) will continue to operate
the Stations in good faith, in the ordinary and usual course of business, under
the terms of the Licenses substantially in accordance with past practices, and
as stated in paragraph 20(y) of this Agreement and (ii) will file with the
Commission all
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documents required to be filed in connection with the operation of the Stations.
Between the date hereof and the Closing Date, Alta and Regent shall each provide
the other with copies of all correspondence received from or filed with the
Commission relating to the Stations, the above applications or any amendments of
the same.
18. Control and Access. Subject to Regent's time brokering of the
Stations pursuant to the Time Brokerage Agreement, prior to Closing, Regent and
its agents shall not directly or indirectly (i) control, supervise or direct, or
(ii) attempt to control, supervise or direct, the operations of the Stations.
Except as otherwise provided herein, such operations shall be the sole
responsibility of and in the complete discretion of Alta. Regent shall, however,
be permitted reasonable observation, access and inspection of the records and
property of the Stations during regular business hours and be furnished on a
monthly basis (within 20 days following the end of each month) a profit and loss
statement and such other financial statements including historical statements,
relating to the Stations as it may reasonably request and as are regularly
prepared by Alta in the ordinary course of the business of the Stations.
19. Time for Commission Consent-Termination. If no Final Order
consenting to the transfer of control of Alta to Regent is secured on or before
September 30, 1998, this Agreement may be terminated at the option of either
Alta or Subsidiary upon the giving of ten (10) days written notice to the other
and, in the absence of material breach by any of the parties, Regent, Subsidiary
and Alta shall thereupon be released and discharged of all obligations
hereunder, and the Escrow Deposit under paragraph 28 shall be refunded to
Regent.
COVENANTS, REPRESENTATIONS
AND WARRANTIES OF ALTA
20. Covenants, Representations and Warranties of Alta. Alta makes the
following covenants, representations and warranties:
(a) Corporate Standing and Authority.
(i) Alta is, and on the Closing Date will be, a
corporation duly organized, validly existing and in good standing under the laws
of the State of California; authorized to conduct business within the State of
California (being the only state in which Alta's offices, equipment,
facilities and other tangible Broadcast Assets are situated); and with all
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby.
(ii) This Agreement and the transactions
contemplated hereby have been ratified, adopted and approved by the Board of
Directors and the Stockholder of Alta, and copies of all corporate
proceedings of Alta relating to such authorization and approval, certified
by its Secretary, will be promptly delivered to Regent. This Agreement
constitutes a valid and binding obligation of Alta, enforceable against it in
accordance with its terms, subject to bankruptcy laws, other federal and
state laws affecting creditors' rights generally and the availability of
equitable remedies.
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<PAGE>
(b) Ownership of Alta Stock. Based upon a certificate of
Redwood to be delivered on or before the Closing Date and upon the stock records
of Alta:
(i) all of the Alta Stock is owned by Redwood
free and clear of all liens, encumbrances, charges and assessments;
(ii) at the Closing, Redwood will own the Alta
Stock, which will be all of the outstanding capital stock of Alta and all of the
outstanding options, warrants or other rights to acquire capital stock of Alta;
(iii) there will be no restrictions with respect
to the redemption and cancellation of the Alta Stock in accordance with the
terms of this Agreement;
(iv) the Alta Stock is free and clear of all
liens, encumbrances, claims, charges, assessments and restrictions (other than
restrictions on transferability imposed under federal or state securities laws);
and
(v) none of the Alta Stock is owned or voted by
an alien or a foreign government or a corporation organized under the laws of a
foreign country or by the representative of any of the above.
(c) Corporate Power. Alta:
(i) has all requisite corporate power and
authority to own, lease and operate the Broadcast Assets and to carry on the
business of the Stations as now being conducted by it and as proposed to be
conducted by it between the date hereof and the Closing Date;
(ii) has obtained all licenses, permits or other
authorizations and has taken all actions required by applicable law or
governmental regulations which are material to its business as now conducted;
(iv) has taken all necessary and proper corporate
action to enter into this Agreement and to consummate the transactions
referred to or set forth in this Agreement.
(d) Capital Stock. Alta has authorized and outstanding capital
stock consisting solely of the following:
Total Total
Authorized Outstanding
Capital Stock Shares Shares
Common 1,000,000 30,000
(e) Due Authorization, Etc. All of the outstanding capital
stock of Alta has been duly and validly authorized and issued and is fully paid
and nonassessable and none of such securities
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has been issued or acquired in violation of any preemptive, subscription or
other rights to purchase or acquire such securities or in violation of the
Securities Act of 1933, as amended (the "Act"), or the securities or blue sky or
any other applicable laws or regulations of any jurisdiction.
(f) Affiliates. Except as set forth on Exhibit 20(f), Alta
does not own, directly or indirectly, any interest in any corporation, business
trust, joint stock company or other business organization, association,
partnership or venture.
(g) Rights to Acquire Securities. Except as identified on
Exhibit 20(g), there are no outstanding rights, warrants, options,
subscriptions, agreements, or commitments giving anyone any current or future
right to require Alta to sell or issue any capital stock or other securities or
any agreement or arrangement restricting the right of Alta to issue or sell any
capital stock or other securities.
(h) Corporate Records. The minute books of Alta reflect
accurately all action taken by the Stockholder, the Board of Directors and the
committees of such Board and will reflect accurately all action required to be
taken by the Closing by the Stockholder, such Board and the committees of such
Board to enable Alta to execute and perform this Agreement and all transactions
contemplated hereunder, and contain true and complete copies of the Certificate
of Incorporation and By-Laws of Alta, and all amendments thereto. The stock
certificate books and share ledger of Alta reflect accurately all information
called for thereon and all issuances and transfers in the capital stock of all
classes. All issuances and transfers reflected in said stock certificate books
and ledger were duly and validly taken in compliance with the laws of the
applicable jurisdiction.
(i) Title to Broadcast Assets. Alta has with respect to
KRDG(FM), and will have prior to the Closing Date with respect to the other
Stations, good and marketable title to all of the Broadcast Assets, free and
clear of all liens, mortgages, pledges, conditional sales agreements, security
interests, charges and encumbrances, except those listed on Exhibit 20(i), all
of which will be released and discharged on or prior to the Closing Date, except
as noted on Exhibit 20(i).
(j) Financial Statements; Budget. The Financials heretofore
furnished to Regent, as well as all financial information supplied, or to be
supplied, pursuant to paragraph 18 fairly present or will fairly present the
financial position and results of operations of Alta as of the dates thereof and
for the periods represented. All said Financials and financial information,
where applicable, have been or will be prepared in accordance with generally
accepted accounting principles consistently applied, subject in the case of
interim statements to standard year-end audit adjustments, the absence of
footnotes, and accounting for barter transactions.
The Budget was prepared based upon assumptions which were reasonable
and justifiable at the time of its preparation and, after taking into account
actual conditions known to Alta to, and as of, the date of this Agreement,
continue to be reasonable as of the date of this Agreement.
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<PAGE>
(k) Contracts.
(i) Exhibit 20(k-1) is a complete list or
description of all written and oral contracts relative to the Stations in
existence at the date of this Agreement which are enforceable against Alta,
excluding:
(A) oral employment arrangements with Station employees;
(B) written employment arrangements with Station employees
terminable without penalty or severance pay on no more than two (2) weeks'
notice;
(C) contracts for the sale of radio time or advertising
which conform to the representations of subparagraph (k)(ii) below;
(D) contracts for the use, rental, or lease
of office equipment (other
than telephone and computer equipment); and
(E) other miscellaneous contracts not uncommon to broadcast
properties which do not exceed $50,000 of expenditures or revenues annually in
the aggregate. All contracts for the sale of broadcast time or advertising on
the Stations in exchange for merchandise or services on or after the date hereof
which will not be fully performed by the Closing Date to which Alta is a party
or by which it is bound are listed on Exhibit 20(k-2) and are pre-emptible for
cash sales with the exception of those identified on Exhibit 20(k-2) as not
pre-emptible for cash sales. True and complete copies of all contracts, leases
and agreements listed in Exhibit 20(k-1) have been made available to Regent.
Alta is and on the Closing Date will be current in all of its obligations under
all of the contracts, leases and agreements listed on Exhibit 20(k-1) and
identified by mutual agreement of the parties hereto as a material contract,
lease or agreement, and each such material contract, lease and agreement shall
be in full force and effect and will not be impaired by any acts or omissions
within the reasonable control of Alta, its agents or employees on the Closing
Date except for those that shall previously have expired by passage of time in
accordance with their respective terms. Except as set out on Exhibit 20(k-1),
there shall not, on the Closing Date, be any other contracts not of the types
excluded from being listed on Exhibit 20(k-1) outstanding with respect to the
operation of the Stations.
(ii) Except as set forth on Exhibit 20(k-1), none of the contracts for the
sale or provision of radio time or advertising to be fulfilled in whole or in
part after the Closing Date (A) shall be for rates substantially below the
generally prevailing rates, as opposed to existing rate card rates, in effect as
of the date such contracts were executed, (B) shall be commissionable to any
employee after he has left the employ of any of the Stations, (C) shall be
commissionable (exclusive of incentive bonuses) at more than fifteen percent
(15%) of net with respect to national account business and, with respect to all
other account business, in excess of the percentages set forth on Exhibit
20(k-3) except where procured by a recognized representative of the particular
Station the contract with whom is set forth on such Exhibit, or (D) shall be
subject to end-rate discounts.
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(iii) on the Closing Date, to the extent any assignment may be
necessary, Alta will have full legal right and power to assign its rights
under all the material contracts, leases and agreements to Regent or any
wholly owned subsidiary of Regent as a result of the merger.
(iv) Except as set forth on Exhibit 20(k-1) or Exhibit 20(i), Alta is
not a party to any written or oral:
(A) agreement or indenture relating to
the borrowing of money or to the mortgaging or pledging of, or otherwise placing
a lien on, any material asset or material group of assets of Alta;
(B) guarantee of any obligation; or
(C) agreement whereunder Alta or any
successor is obligated to make any conditional or other payment based upon the
future performance of Alta or the Stations.
(l) Government Authorizations.
(i) Exhibit 1(k) hereto contains a true and complete list of all
Licenses and other licenses, permits or other authorizations from
governmental and regulatory authorities which are required for
the lawful conduct of the business and operations of the Stations
in the manner and to the full extent they are presently conducted
(including, without limitation, auxiliary licenses associated
with each Station), except for such licenses, permits and
authorizations the failure of which to obtain would not have an
adverse effect on Regent or the Stations. Alta has delivered to
Regent true and complete copies of the Stations' Licenses and the
other licenses, permits and authorizations listed in Exhibit
1(k), including any and all amendments and other modifications
thereto.
(ii) As specified in Exhibit 1(k), Alta is the authorized legal holder
of the Licenses and other licenses, permits and authorizations
listed in Exhibit 1(k). Except as set forth in Exhibit 1(k), none
of the Licenses and other licenses, permits and authorizations
listed in Exhibit 1(k) is subject to any restrictions or
conditions which would materially limit the full operation of the
Stations as now operated.
(iii)Except as set forth in Exhibit 1(k), and except for matters
affecting the radio broadcast industry generally, there are no
applications, complaints, petitions or proceedings pending or, to
the Best Knowledge of Alta, threatened as of the date hereof
before the FCC or any other governmental or regulatory authority
relating to the business or operations of the Stations. Except as
set forth in Exhibit 1(k), the Licenses and the other licenses,
permits and authorizations listed in Exhibit 1(k) are in good
standing, are in full force and effect and are unimpaired by any
act or omission of Alta or its stockholder, officers, directors
or employees. The operations of the Stations are in accordance
with the Licenses and the underlying construction permits and the
other licenses, permits and authorizations listed in Exhibit
1(k). No proceedings are pending or, to the Best Knowledge of
Alta, threatened, and there has not been any act or omission of
Alta or any of its officers, directors, stockholder or employees,
which may result in the revocation, modification, non-renewal or
suspension of any of the Licenses or the other licenses, permits
and authorizations
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listed in Exhibit 1(k), the denial of any pending applications,
the issuance of any cease and desist order, the imposition of any
administrative actions by the FCC or any other governmental or
regulatory authority with respect to the Licenses or the other
licenses, permits and authorizations listed in Exhibit 1(k) or
which may affect Regent's ability to continue to operate the
Stations as they are currently operated.
(iv) Each Station is operating with the maximum facilities specified
in the respective Station License.
(v) To the Best Knowledge of Alta: (i) none of the Stations is
causing objectionable interference to the transmissions of any
other broadcast station or communications facility nor have any
of the Stations received any complaints with respect thereto; and
(ii) no other broadcast station or communications facility is
causing objectionable interference to respective transmissions of
either Station or the public's reception of such transmissions.
(vi) Alta has no reason to believe that the Licenses and the other
licenses, permits, or authorizations listed in Exhibit 1(k) will
not be renewed in their ordinary course.
(vii)All reports, forms, and statements required to be filed by Alta
with the FCC with respect to the Stations since the grant of the
last renewal of the Licenses have been filed and are
substantially complete and accurate.
(viii) To the Best Knowledge of Alta, there are no facts which, under
the Communications Act of 1934, as amended, or the existing rules
and regulations of the FCC, would disqualify Alta as assignor of
the Licenses or cause the Licenses and the other licenses,
permits and authorizations listed in Exhibit 1(k) not to be
renewed in their ordinary course.
(ix) The operation of the Stations and all of the Broadcast Assets are
in compliance in all respects with ANSI Radiation Standards C95.1
- 1982.
(m) Management, Key Employees and Accounts. Exhibit 20(m-1)
sets forth the names of all employees whose compensation (including without
limitation, salaries, bonuses and commissions) from Alta for the year ended
December 31, 1996 or for the current year on an annualized basis exceeds
$20,000. Exhibit 20(m-2) sets forth the name of each bank or savings institution
in which Alta has an account or safe deposit box.
(n) Tax Elections. Alta has not filed a consent to the
application of Section 341(f)(2) of the Internal Revenue Code of 1954, as
amended, with regard to any property held, acquired or to be acquired at any
time.
(o) Related Transactions. All outstanding debts and other
obligations of Alta to its Stockholder or officers or directors are listed on
Exhibit 20(o), except for those incurred for normal travel and entertainment in
connection with the conduct of the business of the Stations, and were incurred
in return for fair and adequate consideration paid or delivered by them in cash,
services, or other property. All debts of the Stockholder or any of Alta's
officers or directors to Alta are listed on Exhibit 20(o) and reflected on the
Financial Statements. Since December 31,
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1996, Alta has not made any advances or loans to its Stockholder or any
officers, directors, employees or agents or its affiliates or associates, or
advances for reasonable and necessary business expenses and salespersons'
commissions, except as disclosed in Exhibit 20(o).
(p) Taxes. Except as set forth on Exhibit 20(p), Alta has
filed all federal, state, local and foreign income, franchise, sales, use,
property, excise, payroll and other tax returns required by law to be filed by
it. All returns identified on Exhibit 20(p) to be filed will be filed and all
taxes required to be paid in respect of the periods covered by such returns will
be paid prior to the Closing Date. Alta has delivered to Regent true and
complete copies of all federal, state and local tax returns of the Company as
filed for the years ended December 31, 1993, 1994, 1995, and 1996. Alta has duly
paid or accrued all taxes required to be paid by it in respect of the periods
covered by all such returns, whether or not shown on such returns, and all
interest and penalties thereon, whether disputed or not, and Alta has no
liability for taxes in excess of the amounts so paid. All of the tax liabilities
of Alta for the current year to date and all prior years, whether or not they
have become due and payable, have been paid in full or adequately reserved for,
and to the extent tax liabilities have accrued but not become payable, they are
reflected on the books of Alta or in the Financials. Alta has not requested any
extension of time within which to file any tax returns which have not since been
filed, and no deficiencies for any tax, assessment or governmental charge have
been claimed, proposed or assessed by any taxing authority and there is no basis
for any such deficiency or claim. The federal income tax returns of Alta have
been examined by the federal tax authorities or closed by applicable statute and
satisfied for all periods to and including fiscal year 1992; all deficiencies
asserted as a result of such examinations have been paid or finally settled; and
no state of facts exists or has existed which might constitute grounds for the
assessment of any further tax liability with respect to the periods which have
been audited by the federal, state, local or foreign taxing authorities. There
are no present disputes as to taxes of any nature payable by Alta which in any
event could adversely affect any of the Broadcast Assets or the operation of the
Stations. Except as set forth on Exhibit 20(p), Alta has not been advised that
any of its tax returns, federal, state, local or foreign, have been or are being
audited. Alta does not have as of the date hereof any liability, fixed or
contingent, for any unpaid federal, state or local taxes or other governmental
or regulatory charges whatsoever (including without limitation withholding and
payroll taxes). As used herein, the term "tax" includes, without limitation, all
federal, state, local and foreign income, profits, sales, use, occupancy,
excise, added value, employees' income withholding, social security, franchise,
property, and all other governmental taxes, license fees and other changes of
every kind and description and related governmental charges imposed by the laws
and regulations of any governmental jurisdiction, whether such taxes are due or
claimed to be due from them by federal, state, local or foreign taxing
authorities.
(q) Employee Benefit Plans. On the date hereof and on the
Closing Date, Alta will not have in effect any bonus, premium, group insurance,
retirement, stock option, pension, profit sharing or similar plan or any
employment agreement with respect to any of its employees except as set forth on
Exhibit 20(q), Exhibit 20(k-1) and Exhibit 20(k-3).
(r) Compliance with FCC Regulations. Except as specified in
Exhibit 20(r), the operation of the Stations and all of the Broadcast Assets are
in compliance in all material respects with: (a) all applicable engineering
standards required to be met under applicable FCC rules; and (b) all other
applicable federal, state and local rules, regulations, requirements and
policies, including,
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but not limited to, equal employment opportunity policies of the FCC, and all
applicable painting and lighting requirements of the FCC and the Federal
Aviation Administration to the extent required to be met under applicable FCC
rules and regulations, and there are no filed claims to the contrary.
(s) Personal Property. Without material omission, Exhibit
20(s) hereto contains a list of all items of tangible personal property owned by
Alta and used in the conduct of the business and operations of the Stations.
Exhibit 20(s) also separately lists any tangible personal property leased by
Alta pursuant to leases included within the Contracts. Except as disclosed in
Exhibit 20(s), Alta has good and marketable title to all of the items of
tangible personal property which are included in the Broadcast Assets (other
than those subject to lease) and none of such Broadcast Assets is, or at the
Closing will be, subject to any security interest, mortgage, pledge, lease,
license, lien, encumbrance, title defect or other charge, except for liens for
taxes not yet due and payable. The properties listed in Exhibit 20(s), along
with those properties subject to lease and included among the Contracts,
constitute all tangible personal property necessary to operate the Stations as
the same are now being operated. Except as set forth in Exhibit 20(s), all items
of tangible personal property included in the Broadcast Assets are in good and
technically sound operating condition and repair (ordinary wear and tear
excepted), are free from all material defect and damage, are suitable for the
purposes for which they are now being used, and have been maintained in a manner
consistent with generally accepted standards of good engineering practice.
(t) Real Property.
(i) Exhibit 20(t) hereto contains a complete and accurate
list and description of all real property (including
without limitation, real property relating to the
towers, transmitters, studio sites and offices of the
Stations) used by Alta in connection with the
operations of the Stations (the "Real Estate") and
includes the name of the record title holder(s) thereof
and a list of all indebtedness secured by a lien,
mortgage or deed of trust thereon. Alta has good and
marketable title in fee simple to all the Real Estate
specified as owned by it in Exhibit 20(t), free and
clear of all liens, charges, security interests,
physical and financial encumbrances, leases, covenants,
restrictions, rights of way, easements, encroachments,
other matters affecting title, and adverse claims of
any kind, direct or indirect, whether accrued,
absolute, contingent or otherwise, except for those of
the nature set forth in Exhibit 20(s) or 20(t). With
respect to each of the buildings, structures and
appurtenances situated on the Real Estate, Alta has
adequate rights of ingress and egress for operation of
the business of the Company in the ordinary course.
None of the buildings, structures, improvements, or
fixtures constructed on the Real Estate, including
without limitation towers, guy wires and guy anchors,
and ground radials, nor the operation or maintenance
thereto, violates any restrictive covenant or any
provision of any federal, state or local law,
ordinance, rule or regulation, or encroaches on any
property owned by others, and all such buildings,
structures, improvements and fixtures are constructed
and operated and used in conformance with all "set
back" lines, easements, covenants, restrictions, and
all applicable building, fire, zoning and health codes.
No utility lines serving such real property pass over
the lands of a third party except where appropriate
easements have been obtained. No condemnation or other
legal proceeding or action of any kind relating to such
real property and/or title thereto is pending, or to
the Best Knowledge of Alta, threatened which would
preclude or impair the continued use of any such
property by Alta for the purposes for which it is
currently used.
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(ii) Except as described in Exhibit 20(t), all buildings,
structures, towers, antennae, improvements and fixtures
situated on the Real Estate are in good and technically
sound operating condition, ordinary wear and tear
excepted, have no latent structural, mechanical or
other defects of material significance, are reasonably
suitable for the purposes for which they are being
used, and each has adequate rights of ingress and
egress, utility service for water and sewer, telephone,
electric and/or gas, and sanitary service for the
conduct of the business and operations of the Stations
as presently conducted.
(u) Environmental. Except as set forth in Exhibit 20(u), Alta
has complied with all federal, state and local environmental laws, rules and
regulations as in effect on the date hereof applicable to each of the Stations
and its operations, including but not limited to the FCC's guidelines regarding
RF radiation. The technical equipment included in the Broadcast Assets does not
contain any PCBs. No hazardous or toxic waste, substance, material or pollutant
(as those or similar terms are defined under the Comprehensive Environmental
Response, Compensation and Liability, Act of 1980, as amended, 42 U.S.C. ss.ss.
9601 et seq., Toxic Substances Control Act. 15 U.S.C. ss.ss. 2601 et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.ss. 6901 et seq. or
any other applicable federal, state and local environmental law, statute,
ordinance, order, judgment rule or regulation relating to the environment or the
protection of human health ("Environmental Laws")), including but not limited
to, any asbestos or asbestos related products, oils or petroleum-derived
compounds, CFCs, PCBs, or underground storage tanks, have been released, emitted
or discharged (in violation of applicable laws or regulations), or are currently
located (in quantities in violation of applicable laws and regulations) in, on,
under, or about the real property on which the Broadcast Assets are situated,
including without limitation the transmitter sites, or contained in the tangible
personal property included in the Broadcast Assets. The Broadcast Assets and
Alta's use thereof are not in violation of any Environmental Laws or any
occupational, safety and health or other applicable law now in effect.
(v) Insurance. Exhibit 20(q) and Exhibit 20(v) contain a list
and summary of the terms of all insurance coverage owned by Alta. Subject to the
terms of the Time Brokerage Agreement, Alta will maintain or cause to be
maintained all insurance coverage described in such Exhibits until the Closing
Date, and copies of all insurance policies have been delivered to Regent or will
be delivered to Regent within three (3) days of when received by Alta but not
later than 30 days from the date hereof.
(w) Accounts and Notes Receivable. All accounts and notes
receivable of Alta reflected on the Balance Sheet of the Financials or referred
to in the notes thereto, and all accounts and notes receivable of Alta created
after December 31, 1996, arose from valid transactions in the ordinary course of
business with unrelated third parties (except as otherwise disclosed in the
Financials or on Exhibit 20(o)), and to the Best Knowledge of Alta, are
collectible at their full amount except for bad debt allowance indicated
therein.
(x) Laws, Regulations and Instruments. Alta is not in
violation of any term of its Certificate of Incorporation or By-Laws. On the
date hereof and at Closing, except as set forth on Exhibit 20(l), the Stations
are and will be in compliance with all applicable federal, state and local laws,
ordinances and regulations. Alta agrees that prior to the Closing Date, if it
becomes aware of any violations of the Communications Act of 1934, as amended,
or of the Rules and Regulations
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of the Commission, it will remove all such violations or be responsible for the
costs of removing such, including the payment of any fines or forfeitures that
may be assessed before or after Closing for any such violations. Alta is not in
default with respect to any judgment, order, injunction or decree of any court,
administrative agency, or other governmental authority to which Alta is a named
party or of which it has received notice.
(y) Conduct of Stations. Subject to Regent's time brokering of
the Stations pursuant to the Time Brokerage Agreement, until the Closing Date,
the business of the Stations will be conducted in good faith in substantially
the same manner as heretofore. Alta shall use its best efforts (based upon the
exercise of reasonably prudent business judgment) to maintain and preserve the
present character of the Stations, the quality of their programs, their business
organization and makeup and present customers and present business reputation,
to keep available to the Stations the services of their present employees, and
to maintain and preserve the good will of their advertisers and listeners.
(z) Disposition of Assets. Between the date hereof and the
Closing Date, Alta will not, without the prior written consent of Regent,
transfer, convey or assign to any other person any of the Broadcast Assets
unless, (i) in the case of tangible assets included in the Broadcast Assets, the
same are replaced by assets of equal quality and usefulness or (ii) such
disposition is in the ordinary course of Alta's business and does not exceed
$25,000 in the aggregate.
(aa) Transmitter Sites. Except as otherwise disclosed on
Exhibit 20(l), none of the Stations' transmitter sites is the subject of any
official complaint or notice of violation of any applicable zoning ordinance or
building code and no such violation is known to exist. Alta has no knowledge of
any encroachment on adjacent property, violation of any zoning ordinance or
building code or use or occupancy restriction, or pending or threatened
condemnation proceeding which would preclude or impair the use of such real
estate or the improvements thereon by Regent, consistent with the terms of the
respective Station's transmitter site lease and in the manner and for the
purpose for which it is presently used.
(bb) Litigation. Except as disclosed in Exhibit 20(bb), there
is no litigation, action, suit, investigation or proceeding pending, or to the
Best Knowledge of Alta, threatened, against Alta which may give rise to any
claim against any of the Broadcast Assets material to the operation of the
Stations or upon Alta's ability to perform in accordance with the terms of this
Agreement, or which might result in a monetary forfeiture in excess of $15,000,
in any material adverse effect upon the business operations or assets of Alta,
or in any impairment of the right or ability of Alta to carry on its business as
now conducted.
(cc) No Conflict. Subject to obtaining the required consents
under material contracts, leases and agreements identified on Exhibits l(c)(ix),
20(k-1) and 20(i), the execution, delivery and performance of this Agreement are
not prohibited by and will not conflict with, constitute grounds for termination
of, or result in any breach or violation of, or constitute a default under, the
provisions of any material contract, Alta's Certificate of Incorporation or
By-laws (or other charter or organizational documents) or any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Alta is a party or by which Alta or any of the
Broadcast Assets are bound.
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(dd) Required Consents. Except as specifically identified in
Exhibits l(c)(ix), 20(k-1) and 20(i), Alta is not a party to or bound by any
mortgage, lien, deed of trust, lease, agreement, instrument, order, judgment or
decree which would require the consent of another to the execution of this
Agreement or prohibit or require the consent of another to, or make unduly
burdensome the consummation of, the merger contemplated by this Agreement; and
the consummation of the merger contemplated by this Agreement will not result
(immediately or upon the giving of notice and/or upon the passage of a period of
time) in a breach of any term or provision of or constitute a default under any
mortgage, deed of trust, note or other contract, agreement, instrument, license
or permit to which Alta is a party, or otherwise give any other party thereto a
right to terminate the same or result in an acceleration in the payment due
under any note or other contract, agreement, instrument, license or permit which
is binding on Alta, or in the creation of any lien, security interest,
encumbrance or charge under any of the foregoing on any assets or properties of
Alta.
(ee) Intellectual Property. Exhibit 20(ee) hereto is a true
and complete list of all material Intellectual Property applied for, registered
or issued to, and owned by Alta or under which Alta is a licensee and which is
used in the conduct of Alta's business and operations. Except as set forth on
Exhibit 20(ee): (i) Alta's right, title and interest in the Intellectual
Property as owner or licensee, as applicable, is free and clear of all liens,
claims, encumbrances, rights, or equities whatsoever of any third party and, to
the extent any of the Intellectual Property is licensed to Alta, such interest
is valid and uncontested by the licensor thereof or any third party; (ii) all
computer software located at the Stations' facilities or used in the Stations'
business or operations is properly licensed to Alta, and all of Alta's uses of
such computer software are authorized under such licenses; (iii) all of Alta's
right, title and interest in and to the Intellectual Property and computer
software shall be assignable to Regent at Closing, and upon such assignment
(should such assignment be necessary), Regent shall receive complete and
exclusive right, title, and interest in and to all tangible and intangible
property rights existing in the Intellectual Property; and (iv) there are no
infringements or unlawful use of such Intellectual Property by Alta in
connection with Alta's business or operations.
(ff) Qualifications for Transfer of Control. Alta is presently
a licensee in good standing with the Commission, and Alta has no knowledge of
any fact or circumstance that could reasonably prevent approval of the
transaction contemplated by this Agreement or the renewal of the Licenses.
(gg) Public Inspection File. All the documents required by the
rules, regulations and policies of the Commission to be maintained in each
Station's local public records file are, and will at Closing be, contained in
such file and available for public inspection.
(hh) Absence of Certain Changes. Since December 31, 1996,
except as specifically noted in the Financials or the Budget heretofore
delivered or the Exhibits hereto:
(i) Alta has not created, assumed, or suffered
any mortgage, pledge, lien or encumbrance on any of the Broadcast Assets;
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(ii) Alta has conducted the business of the
Stations only in the ordinary course consistent with past practices;
(iii) there has not been:
(A) any material adverse change in the
business, assets, capitalization, operations, properties, prospects, or
condition (financial or otherwise) of Alta, or any damage, destruction or
loss (whether or not covered by insurance) materially and adversely affecting
any of the Broadcast Assets;
(B) any sale, assignment, lease or other
transfer or disposition of any of the properties or assets used or intended
for use in the operation of the Stations except in the ordinary course of
business, in connection with the acquisition of similar property or assets
in the normal and usual course of business;
(C) any lease, agreement, contract,
obligation, or commitment entered into in connection with the operation of the
Stations except in the normal and usual course of business;
(D) any issuance of bonds, notes or other
corporate securities by Alta;
(E) any declaration of payment or payments
or distribution of cash or other property to the Stockholder with respect to
Alta's capital stock; or
(F) any purchase or redemption of any shares
of Alta's capital stock.
(ii) Personnel Information.
(i) Exhibit 20(ii) contains a true and complete list of all
persons employed at the Stations, including date of hire, a
description of material compensation arrangements (other than
employee benefit plans set forth in Exhibit 20(q)) and a list of
other material terms of any and all agreements affecting such
persons and their employment by Alta. Alta has received no notice
that, and Alta is not aware of, any individual employee who shall
or is likely to terminate his or her employment relationship with
the Stations upon the execution of this Agreement.
(ii) Alta, with respect to the Stations, is not a party to
any contract or agreement with any labor organization, nor has
Alta agreed to recognize any union or other collective bargaining
unit, nor has any union or other collective bargaining unit been
certified as representing any employees of Alta at the Stations.
Alta has no knowledge of any organizational effort currently
being made or threatened by or on behalf of any labor union with
respect to employees of Alta at the Stations.
(iii) Except as disclosed in Exhibit 20(ii), Alta, with
respect to the Stations, has complied in all material respects
with all laws relating to the employment of labor, including,
without limitation, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"),
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and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
(jj) Outstanding Debt. Exhibit 20(jj) correctly lists all outstanding debt
of Alta as of the date specified therein (other than short term debt payable on
demand or within one year from the creation thereof and incurred in the ordinary
course of business).
(kk) Negative Covenants. Subject to Regent's time brokering of the Stations
pursuant to the Time Brokerage Agreement (which provisions shall control over
any inconsistent provision in this paragraph 20(kk), between the date hereof and
the Closing Date, Alta will not, without the prior written consent of Regent:
(i) Increase the compensation payable or to become payable to any of
the employees of Alta except on a case by case basis and then only such
that any increase shall not exceed 6% of any such employee's current salary
or except pursuant to contractual commitments described on Exhibit 20(k-1);
(ii) Enter into any contract, lease or commitment or engage in any
transaction relating to any of the Stations, other than in the ordinary
course of business consistent with past practices;
(iii) Cancel, modify, amend, or in any manner within its reasonable
control impair any of the material contracts, leases or other agreements
identified on Exhibit 20(k-1) relating to any of the Stations which are
included in the Broadcast Assets;
(iv) Create any mortgage, pledge, lien or encumbrance affecting any of
the Broadcast Assets which is not paid off concurrently with the Closing;
(v) Sell, assign, lease or otherwise transfer or dispose of any of the
Broadcast Assets;
(vi) Consolidate with or merge into any other person or entity or
permit any person or entity to merge into or consolidate with it;
(vii) Declare, make or incur any liability to make any dividends or
other distributions on its capital stock;
(viii) Redeem or otherwise acquire any shares of its capital stock;
(ix) Issue or sell any shares of its capital stock, warrants, options
or other rights to acquire any shares of its capital stock, except for
shares issued pursuant to the exercise of warrants or options outstanding
as of the date hereof;
(x) Amend its Certificate of Incorporation or By-Laws; or
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(xi) Borrow or incur any indebtedness unless such indebtedness is to
be paid off concurrently at Closing.
(ll) Affirmative Covenants. Between the date hereof and the Closing
Date,
Alta ---------------------
will:
(i) Give to Regent and its authorized representatives full access
during normal business hours to all properties, books, records, contracts
and documents and furnish or cause to be furnished to Regent or its
authorized representatives all information with respect to the affairs and
business of the Stations as Regent may reasonably request, including
monthly profit and loss statements and notice of changes in full-time
employees;
(ii) Notify Regent in writing of any new litigation pending or
threatened against Alta or any damage to or destruction of any Broadcast
Assets;
(iii) Furnish to Regent, at Alta's expense, Financials for each month
up to the Commencement Date under the Time Brokerage Agreement;
(iv) Promptly notify Regent in writing of any material adverse
developments with respect to the business or operations of Alta; and
(v) Immediately following the execution of this Agreement, Alta agrees
to diligently pursue obtaining all consents and approvals required to be
obtained by it, including those required under the material contracts,
leases and agreements identified on Exhibits l(c)(ix), 20(k-1) and 20(i).
Within forty-five (45) days after the execution of this Agreement and every
twenty (20) days thereafter, Alta will notify Regent of the status of
obtaining the required consents and approvals, which consents and approvals
have been obtained, and any other information relating thereto.
(mm) Additional Agreements. Subject to the terms and
conditions herein provided, Alta agrees to use its best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transaction
contemplated by this Agreement. In case at any time after the Closing any
further action is reasonably necessary to carry out the purposes of this
Agreement, Alta shall take, or cause to be taken, such action.
(nn) Join in Execution of Documents. Alta will join with
Subsidiary and Regent, and shall request its Stockholder to join with Subsidiary
and Regent, at such time as all conditions precedent to the transactions
contemplated by this Agreement have been fulfilled, in executing and delivering
all documents which may be necessary or appropriate to effect the transactions
contemplated by this Agreement.
(oo) Full Disclosure. No representation or warranty made by
Alta contained in this Agreement nor any certificate, document or other
instrument furnished or to be furnished by Alta pursuant hereto contains or will
contain any untrue statement of a material fact, or omits or shall omit to state
any material fact required to make any statement contained herein or therein not
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misleading. Alta is not aware of any impending or contemplated event or
occurrence that would cause any of the foregoing representations not to be true
and complete on the date of such event or occurrence as if made on that date.
There is no fact which materially adversely affects the business, conditions,
affairs or operations of Alta or the Stations which has not been set forth in
this Agreement or otherwise disclosed in writing by Alta to Regent or its
representatives.
COVENANTS, REPRESENTATIONS
AND WARRANTIES OF REGENT AND SUBSIDIARY
21. Covenants, Representations and Warranties of Regent and Subsidiary.
Regent, on behalf of itself and on behalf of Subsidiary, makes the following
representations, warranties, and covenants:
(a) Corporate Standing and Authority.
(i) Each of Regent and Subsidiary is now and on the Closing Date will
be a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and on the Closing Date will be in
good standing under the laws of any other states in which its offices,
equipment, facilities and other tangible assets are situated (except to the
extent Subsidiary is deemed to have offices in Kentucky); and has all
corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
(ii) Each of Regent's other subsidiaries is now and on the Closing
Date will be a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation; and is qualified
as a foreign corporation in good standing under the laws of any other
states in which its offices, equipment, facilities and other tangible
assets are situated.
(iii) This Agreement and the transactions contemplated hereby have
been ratified, adopted and approved by the Boards of Directors of each of
Regent and Subsidiary, and by Regent in its capacity as the sole
stockholder of Subsidiary, and copies of all corporate proceedings of each
of Regent and Subsidiary relating to such authorization and approval,
certified by its Secretary, will be promptly delivered to Alta. This
Agreement constitutes a valid and binding obligation of Regent and
Subsidiary, enforceable in accordance with the terms, subject to bankruptcy
laws, other federal and state laws affecting creditors' rights generally
and availability of equitable remedies.
(b) Corporate Power. To its Best Knowledge, Regent has
obtained all licenses, permits or other authorizations and has taken all actions
required by applicable law or governmental regulations which are material to its
business as now conducted and as of the Closing Date as will be conducted, and
has conducted its business in compliance in all material respects with all
applicable laws and regulations.
(c) Capitalization. The authorized capital stock of Regent is
10,000,000 shares of Common Stock (of which 591,408 shares are issued and
outstanding as of October 10, 1997), and 10,000,000 shares of Preferred Stock,
of which 540,000 shares have been designated (and 620,000
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shares will be, prior to the Closing Date, designated) Series A Preferred
(540,000 shares of which are issued and outstanding as of October 10, 1997),
1,000,000 shares prior to the Closing Date will be designated Series B Preferred
(1,000,000 shares of which prior to the Closing Date may be issued and
outstanding), 4,000,000 shares prior to the Closing Date will be designated
Series C Preferred (up to as many as 4,000,000 shares of which prior to the
Closing Date may be issued and outstanding), 1,000,000 shares prior to the
Closing Date will be designated Series D Preferred (1,000,000 shares of which
prior to the Closing Date may be issued and outstanding), and 250,000 shares
prior to the Closing Date will be designated Series E Preferred available for
issuance pursuant to the terms of this Agreement. As of the Closing Date and
taking into account the issuance of the Series E Preferred Stock pursuant to
this Agreement and assuming no other shares of Preferred Stock other than as
projected in this paragraph have been issued, the holders of all of the
Preferred Stock would be entitled to convert the same into approximately
5,750,000 Common Shares (without taking into account the application of the
anti-dilution provisions of such Preferred Stock). Except as stated herein,
there are no other outstanding rights, warrants, options, subscriptions,
agreements, or commitments giving any current or future right to require Regent
to sell or issue any capital stock or other securities or any agreement or
arrangement restricting the right of Regent to issue or sell any capital stock
or other securities. Between the date hereof and the Closing Date Regent will
not issue any additional Common Shares or Preferred Stock, except (i) pursuant
to the conversion of the outstanding Preferred Stock, (ii) pursuant to the
exercise of options granted after the date hereof providing for an exercise
price no less than the lesser of $5.00 per share and the per share fair market
value of the Common Shares on the date of grant, or (iii) for a consideration no
less than the lesser of $5.00 per share and the per share fair market value of
the Common Shares on the date of issue.
(d) Join in Execution of Documents. Regent and Subsidiary will
join with Alta at such time as all conditions precedent to the transactions
contemplated by this Agreement have been fulfilled, in executing and delivering
all documents which may be necessary or appropriate to effect the transactions
contemplated by this Agreement.
(e) Litigation. There is no litigation, action, suit,
investigation or proceeding pending, or to the Best Knowledge of Regent and
Subsidiary, threatened, against Regent or Subsidiary which may give rise to any
claim upon any of Regent's Assets or upon Regent's or Subsidiary's ability to
perform in accordance with the terms of this Agreement, or which might result in
a monetary forfeiture in excess of $5,000, in any material adverse effect upon
the business, operations or assets of Regent or Subsidiary, or in any impairment
of the right or ability of Regent or Subsidiary to carry on its business as now
conducted.
(f) No Conflict. Subject to the obtaining of the consents
referred to in paragraph 21(h), the execution, delivery and performance of this
Agreement are not prohibited by and will not conflict with, constitute grounds
for termination of, or result in any breach or violation of, or constitute a
default under, any material laws or regulations or agreement, Certificate of
Incorporation or Bylaws, each as amended, or other instrument to which Regent or
Subsidiary is a party or by which either is bound.
(g) Licenses. Regent's subsidiaries (other than Subsidiary)
hold licenses, permits and authorizations ("Regent's Licenses") issued by the
Commission to operate the radio stations
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owned by said subsidiaries ("Regent's Stations"). Regent's Licenses are free and
clear of legal disqualifications or other restrictions of such a nature as would
materially limit the full operation of Regent's Stations as presently authorized
and conducted. Regent's Licenses are in good standing and have been regularly
renewed with the normal expiration date. The operation of Regent's Stations is
in accordance with Regent's Licenses. Regent has no knowledge of any matter that
might result in the suspension or revocation of Regent's Licenses. There are no
Commission citations outstanding with respect to Regent's Stations or their
operations. Said Licenses constitute the only permission necessary from the
Commission to enable Regent to conduct its broadcasting business as presently
conducted and contemplated. There are no petitions to deny, material complaints
or proceedings, or applications known by Regent to be pending before the
Commission and relating to the business and operation of Regent's Stations.
(h) Required Consents. Except for consents or waivers that may
be required under the Company's Certificate of Incorporation or the terms of a
Credit Agreement to be executed between Regent and Bank of Montreal, or any of
the Loan Documents (as defined in said Credit Agreement), and except for
approval of the terms of this Agreement by General Electric Capital Corporation
and BMO Financial, Inc. under the terms of certain letter agreements between
Regent and each of said parties, neither Regent nor Subsidiary is a party to or
bound by any mortgage, lien, deed of trust, lease, agreement, instrument, order,
judgment or decree which would require the consent of another to the execution
of this Agreement or prohibit or require the consent of another to or make
unduly burdensome the consummation of, the merger contemplated by this
Agreement; and, except as above noted, the consummation of the merger
contemplated by this Agreement will not result (immediately or upon the giving
of notice and/or upon the passage of period of time) in a breach of any term or
provision of or constitute a default under any mortgage, deed of trust, note or
other agreement or instrument to which Regent or Subsidiary is a party, or
otherwise give any other party thereto a right to terminate the same or result
in an acceleration in the payment due under any note or other agreement or
instrument which is binding on Regent or Subsidiary, or in the creation of any
lien, security interest, encumbrance or charge under any of the foregoing on any
assets or properties of Regent or Subsidiary.
Immediately following the execution of this Agreement, Regent and
Subsidiary agree to diligently pursue obtaining the consent and approval of each
of Bank of Montreal, BMO Financial, Inc., and General Electric Capital
Corporation to this transaction and of any other party whose consent to the
issuance of the Series E Preferred Stock is now or hereafter required. Within
thirty (30) days after the execution of this Agreement, Regent will notify Alta
of the status of obtaining such consents and approvals and any other information
relating thereto. In the event such consents and approvals have not been
obtained, despite diligent efforts, such failure of Regent to obtain such
consents prior to the Closing shall be deemed a material breach for which Alta
shall be entitled to the remedies provided in paragraph 29(a).
(i) Absence of Certain Changes. Since December 31, 1996, other
than as set forth in Exhibit 21(i) there has not been:
(i) Any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the
properties of Regent and its subsidiaries, taken as a whole;
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(ii) Any issuance of bonds, notes or other corporate
securities by Regent;
(iii) Any declaration of payment or payments or
distribution of cash or other property to stockholders of
Regent with respect to Regent's capital stock; or
(iv) Any purchase or redemption by Regent of any shares
of Regent's capital stock.
(j) Laws, Regulations and Instruments. Neither Regent nor
Subsidiary is in violation of any term of its Certificate of Incorporation, as
may be amended, or By-laws, as may be amended. On the date hereof and at
Closing, Regent's Stations will be in compliance in all material respects with
all applicable federal, state and local laws, ordinances and regulations. Regent
agrees that prior to the Closing Date, if it becomes aware of any violations of
the Communications Act of 1934, as amended, or of the Rules and Regulations of
the Commission, it will remove all such violations or be responsible for the
costs of removing such, including the payment of any fines or forfeitures that
may be assessed before or after Closing for any such violations. To its Best
Knowledge, neither Regent nor Subsidiary is in default with respect to any
judgment, order, injunction or decree of any court, administrative agency, or
other governmental authority in any respect material to this transaction.
(k) Issuance of Series E Preferred Stock. The Series E
Preferred Stock, when and if issued in accordance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances (other than those created by Redwood), and
will not be subject to any restrictions on transferability contained in Regent's
Certificate of Incorporation, as amended, or in any agreement to which Regent is
a party that are not similarly applicable to other Series of Preferred Stock;
provided, however, that such shares may be subject to restrictions on transfer
under state securities laws and federal communications and/or securities laws.
(l) Financial Statements. The unaudited financial statements
of Regent, as of December 31, 1996, together with the related statements of
operations, stockholders' equity and changes in financial position for the
periods then ended, and balance sheets as of such dates, will be delivered to
Alta when they have been prepared. Regent will also deliver to Alta as soon as
such are available unaudited balance sheets, income statements and statements of
changes in financial position of Regent for the nine-month period ended
September 30, 1997 (all the foregoing financial statements of Regent referred to
as "Regent's Financial Statements"). Regent's Financial Statements will fairly
present the financial position of Regent as of the pertinent dates and the
results of Regent's operations for the year or periods then ended, in each case
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except for the absence of
footnotes and year-end adjustments).
(m) No Adverse Changes. Except as set forth in Regent's
Financial Statements, since December 31, 1996, there has been no material
adverse change in the business, operations, prospects, properties or condition
(financial or otherwise) of Regent.
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(n) Qualifications for Transfer of Control. Regent has no
knowledge of any fact or circumstance that could reasonably prevent approval of
the transaction contemplated by this Agreement or the renewal of the licenses
for any of the Regent Stations.
(o) Insurance. Exhibit 21(o) contains a list and summary of
the terms of all insurance coverage carried by Regent. Regent will maintain or
cause to be maintained all insurance coverage described in such Exhibit through
the Closing Date, and copies of all insurance policies have been delivered to
Alta or will be delivered to Alta within three (3) days of when received by
Regent but not later than 30 days from the date hereof.
(p) Taxes. Regent has filed all federal, state, local and
foreign income, franchise, sales, use, property, excise, payroll and other tax
returns required by law to be filed by it. Regent has duly paid or accrued all
taxes required to be paid by it in respect of the periods covered by all such
returns, whether or not shown on such returns, and all interest and penalties
thereon, whether disputed or not, and Regent has no liability for taxes in
excess of the amounts so paid. All of the tax liabilities of Regent for the
current year to date and all prior years, whether or not they have become due
and payable, have been paid in full or adequately reserved for, and to the
extent tax liabilities have accrued but not become payable, they are reflected
on the books of Regent. Regent has not requested any extension of time within
which to file any tax returns which have not since been filed, and no
deficiencies for any tax, assessment or governmental charge have been claimed,
proposed or assessed by any taxing authority and there is no basis for any such
deficiency or claim. There are no present disputes as to taxes of any nature
payable by Regent which in any event could adversely affect any of the Broadcast
Assets or the operation of the Stations. Regent has not been advised that any of
its tax returns, federal, state, local or foreign, have been or are being
audited. Regent does not have as of the date hereof any liability, fixed or
contingent, for any unpaid federal, state or local taxes or other governmental
or regulatory charges whatsoever (including without limitation withholding and
payroll taxes). As used herein, the term "tax" includes, without limitation, all
federal, state, local and foreign income, profits, sales, use, occupancy,
excise, added value, employees' income withholding, social security, franchise,
property, and all other governmental taxes, license fees and other changes of
ever kind and description and related governmental charges imposed by the laws
and regulations of any governmental jurisdiction, whether such taxes are due or
claimed to be due from them by federal, state, local or foreign taxing
authorities.
(q) Full Disclosure. No representation or warranty made by
Regent contained in this Agreement nor any certificate, document or other
instrument furnished or to be furnished by Regent pursuant thereto contains or
will contain any untrue statement of a material fact, or omits or shall omit to
state any material fact required to make any statement contained herein or
herein not misleading. Regent is not aware of any impending or contemplated
event or occurrence that would cause any of the foregoing representations not to
be true and complete on the date of such event or occurrence as if made on that
date. There is no fact which materially adversely affects the business,
condition, affairs or operations of Regent which has not been set forth in this
Agreement or otherwise disclosed in writing by Regent to Alta or its
representatives.
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INDEMNIFICATION
22. Indemnification.
(a) After the Closing, subject to subparagraphs 22(e) and (f),
Redwood shall indemnify and hold Regent and Subsidiary, their respective
affiliates, successors and assigns, harmless from and against:
(i) Any and all damages or deficiency resulting from
any misrepresenta- tion or breach of warranty by Alta, or
nonfulfillment of any agreement or obligation assumed or
required to be assumed by Alta or Redwood under this
Agreement, or from any misrepresentation in or omission from
any certificate or other instrument furnished to Regent or
Subsidiary pursuant to this Agreement or in connection with
any of the transactions contemplated hereby; and
(ii) Any and all claims, actions, suits, proceedings,
damages, assessments, judgments, costs and expenses,
including reasonable attorneys' fees, incurred by Regent as
a result of Alta's or Redwood's failure or refusal to
compromise or defend any claim incident to the foregoing
provision, or failure otherwise to comply with the foregoing
provision.
(b) As security for the performance of the indemnification of
Regent and Subsidiary herein, Regent, Subsidiary and Alta (on behalf of itself
and Redwood) shall enter into an Indemnification Escrow Agreement with Security
Title & Guaranty, Inc., as Escrow Agent, in substantially the form attached
hereto as Exhibit 22(b). The Indemnification Escrow Agreement shall be funded by
Twenty Thousand (20,000) shares of the Series E Preferred Stock to be issued to
Redwood at Closing. Said shares will be held in escrow pursuant to the
Indemnification Escrow Agreement for a period of one (1) year.
(c) After the Closing, subject to subparagraphs 22(e) and (f),
Regent and Subsidiary shall jointly and severally indemnify and hold Redwood and
their respective successors and assigns harmless from and against:
(i) Any and all damages or deficiency resulting from
any misrepresenta- tion, breach of warranty, or
nonfulfillment of any agreement or obligation assumed or
required to be assumed by Regent or Subsidiary under this
Agreement, or from any misrepresentation in or omission from
any certificate or other instrument furnished to Alta
pursuant to this Agreement or in connection with any other
transactions contemplated hereby; and
(ii) Any and all claims, actions, suits, proceedings,
damages, assessments, judgments, costs and expenses,
including reasonable attorneys' fees, incurred by Alta or
Redwood as the result of Regent's or Subsidiary's failure or
refusal to defend or compromise any claim incident to the
foregoing provision, or failure otherwise to comply with the
foregoing provision.
(d) If any claim or liability shall be asserted against
Redwood which would give rise to a claim by Redwood against Regent or Subsidiary
for indemnification under the provisions of this paragraph, Redwood shall
promptly notify Regent or Subsidiary of the same, and Regent or Subsidiary shall
be entitled at its own expense to compromise or defend any such claim.
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(e) No party shall be entitled to indemnification hereunder
unless such claim for indemnification is asserted prior to one (1) year after
the Closing Date, except that this time limitation shall not apply (i) to claims
relating to title, tax, or environmental matters, or (ii) to limit recovery of
damages resulting from any intentional or fraudulent action or inaction which
results in a material breach or the failure of a condition precedent to be met
or any intentional or fraudulent misrepresentation or omission of a material
fact.
(f) No party shall be entitled to indemnification under this
paragraph 22 for damages or deficiencies in the event there is a failure to
close this Agreement. The remedies of the parties prior to Closing shall be
governed by paragraphs 28 and 29.
RISK OF LOSS
23. Risk of Loss.
(a) Broadcast Assets. The risk of loss, damage or destruction
from any cause to the tangible Broadcast Assets shall be borne by Alta at all
times between the date of this Agreement and the Closing Date. In the event of
any such loss, damage or destruction, Alta shall repair, replace or restore any
such Broadcast Asset prior to the Closing Date. In the event of substantial
damage to any of the Broadcast Assets or in the event of the occurrence of any
damage or event which prevents broadcast transmission of any of the Stations in
the normal and usual manner and substantially in accordance with its license,
Alta shall promptly notify Regent of the same in writing, specifying with
particularity the loss or damage incurred, the cause thereof if known or
reasonably ascertainable, and an estimate of the extent to which restoration,
replacement and repair of the property lost or destroyed will be reimbursed
under the insurance coverage. In the event the damage has not been restored or
repaired by the Closing Date, then Regent and Subsidiary shall have the option
to:
(i) postpone the Closing Date until such time not later
than December 31, 1998 as the property has been completely
repaired, replaced or restored; or
(ii) terminate this Agreement and be refunded the
Escrow Deposit under paragraph 28 if Alta has not acted
diligently to repair, replace or restore such Broadcast
Assets; or
(iii) elect to consummate the Closing and accept the
property in its then condition in which event all proceeds
of insurance received or to be received shall be the
property of the Surviving Corporation but shall not be
included in current assets for purposes of the calculations
in paragraph 13(b).
In the event Regent and Subsidiary elect to postpone the Closing Date,
Alta, Regent and Subsidiary will cooperate to extend the time during which this
Agreement must be closed as specified in the Commission's Order.
(b) Broadcast Transmission of the Stations Prior to Closing.
Notwithstanding the provisions of paragraph 23(a) above, if prior to the Closing
Date any event occurs which prevents the full power broadcast transmission of
any of the Stations in the manner which it has heretofore
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been operating, for a period of thirty-six (36) hours or more or five (5)
periods of more than five (5) hours each, then Alta shall give prompt written
notice thereof to Regent. In the event the problems have been caused by fire,
storm, casualty, strike or other labor disturbance, war, insurrection, riot, or
other cause beyond its control, Alta shall use its best efforts to restore the
operations to substantially full licensed power and antenna height as soon as
possible. Otherwise, if such facilities are not restored so that operation is
resumed with substantially full licensed power and antenna height as described
in the particular Station's licenses issued by the Commission within five (5)
consecutive days or eight (8) non-consecutive days of the date of the
interruption, Regent and Subsidiary shall have the right, by giving written
notice to Alta of its election to do so, to terminate this Agreement forthwith
without any further obligation hereunder, provided that such notice is given
before normal operation is resumed or within ten (10) days of first receiving
from Alta the notice of interruption. In the event this Agreement is terminated
by Regent and Subsidiary in accordance with this Paragraph 23(b), the Escrow
Deposit under paragraph 28 hereof shall be returned to Regent, provided that
neither Subsidiary nor Regent is then in material default under this Agreement.
CONDITIONS PRECEDENT TO SUBSIDIARY'S AND REGENT'S
OBLIGATION TO CLOSE
24. Conditions Precedent to Subsidiary's and Regent's Obligations. If
at the Closing Date the following conditions are satisfied, Subsidiary, subject
to the provisions of paragraph 23 hereof, shall be obligated to merge with Alta
in accordance with the terms and conditions of this Agreement:
(a) Representations, Warranties and Covenants. The
representations and warranties of Alta contained herein or in any exhibit hereto
or in any list, certificate or document delivered pursuant to the provisions
hereof shall be true in all material respects as of the date of this Agreement
and as of and at the Closing Date as though made on such Closing Date except for
changes (a) expressly permitted or contemplated by the terms of this Agreement;
(b) caused by the acts of Regent during the term of the Time Brokerage
Agreement; or (c) in the ordinary course of business which are not individually
or in the aggregate, material and adverse. Alta shall have performed and
complied with all obligations and covenants required by this Agreement to be
duly performed or complied with by Alta on or prior to the Closing Date. Alta
shall have delivered to Subsidiary a certificate dated the Closing Date and
signed by an officer of Alta attesting to the above.
(b) Delivery of Closing Documents. Alta shall have delivered
to Subsidiary the Closing Documents described in paragraph 26 of this Agreement.
(c) Licenses. Alta shall be the holder of the Licenses, and
such Licenses shall be free and clear of conditions, competing applications,
petitions to deny, material complaints, appeals or any restrictions as might
limit the operation or prospects of the Stations as presently authorized.
(d) Consents. On the Closing Date, each person, association,
corporation or other entity, the consent or approval of which to the surrender
and cancellation of the Alta Stock, the merger of Alta into Subsidiary, and the
payment of cash and issuance of the Series E Preferred Stock to Redwood, as
herein provided, is then required shall have duly consented thereto, and all
other
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consents referenced in Section 21(h) or required under the terms of the material
contracts, leases and agreements identified on Exhibits l(c)(ix), 20(k-1) and
20(i) shall have been obtained.
(e) Final Order. The Commission's Order shall have become a
Final Order.
(f) Adverse Proceedings. As of the Closing Date, no suit,
action, claim or governmental proceeding or investigation shall be pending or
shall have been instituted, taken, presented or threatened against Alta which
makes unlawful the carrying out of this Agreement, causes it to be rescinded or
imposes a lien on or requires Regent to divest itself of, any shares of Alta
Stock.
(g) Title and Environmental Examination. Regent shall have
conducted and/or obtained (i) a satisfactory review and examination of the title
to and condition of the properties owned by Alta (including such environmental
assessments of said properties as may be currently in existence or as Regent may
elect to have conducted at its expense), to be completed within sixty (60) days
after the execution of this Agreement.
(h) Time Brokerage Agreement Compliance. The Time Brokerage
Agreement shall not have been terminated by Regent or its affiliate as permitted
by the Time Brokerage Agreement as a result of Alta's material noncompliance
with its obligations under the Time Brokerage Agreement.
(i) Material Adverse Change. No material adverse change in
condition or status of the Stations or the Broadcast Assets, which change is
caused by or arises out of any breach by either Alta or Redwood of any of its
representations, warranties, covenants or agreements hereunder or under the Time
Brokerage Agreement, shall have occurred, be threatened or be reasonably likely
to occur.
(j) Acquisition of Assets. All of the tangible and intangible
assets of Power Surge, Inc. and Northern California Broadcasting, Inc. that are
of the nature of Broadcast Assets used or useful in the operation of Station
KRRX(FM), KNRO-AM, or KNNN(FM) shall have been validly and effectively
transferred to Alta, shall be owned by Alta, and all representations, warranties
and covenants of Alta contained in this Agreement shall be true and correct and
shall have been performed with respect to such assets.
(k) Lease Extension. Alta shall have obtained the binding
written agreement of the landlord of the KRDG(FM) antenna/tower site lease to
extend the term of such lease on terms and conditions acceptable to Regent until
such time as Regent has been able to enter into a lease of alternative space
acceptable to Regent for the relocation of the KRDG(FM) antenna/tower.
(l) Repair or Correction of Existing Condition. Alta shall
have remedied or caused to be remedied to the satisfaction of Regent those items
or conditions listed on Exhibit 24(l), which was prepared by Regent as a result
of its examination of the studio and transmitter facilities of the Stations.
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CONDITIONS PRECEDENT TO ALTA'S
OBLIGATION TO CLOSE
25. Conditions Precedent to Alta's Obligations. If at the Closing Date
the following conditions are satisfied, Alta and Redwood shall be obligated to
surrender or cause to be surrendered the Alta Stock to the extent set forth and
in accordance with the terms and conditions of this Agreement:
(a) Representations, Warranties and Covenants. The
representations and warranties of Regent and Subsidiary contained herein or in
any list, certificate or document delivered pursuant to the provisions hereof
shall be true in all material respects as of the date of this Agreement and as
of and at the Closing Date as though made on such date except for changes
permitted by this Agreement. Regent and Subsidiary shall have performed and
complied with all obligations and covenants required by this Agreement to be
performed or complied with by Regent and Subsidiary on or prior to the Closing
Date. Regent and Subsidiary shall have delivered to Alta a certificate dated the
Closing Date and signed by an officer of each entity attesting to the above.
(b) Purchase Price. All consideration as set forth under
paragraphs 12 and 13 of this Agreement which is due on the Closing Date shall
have been paid in accordance with the terms of this Agreement.
(c) Delivery of Closing Documents. Regent and Subsidiary shall
have delivered to Alta the Closing Documents described hereafter in paragraph 27
of this Agreement.
(d) Final Order. The Commission's Order shall have become a
Final Order.
(e) Consents. On the Closing Date, each person, association,
corporation or other entity, the consent or approval of which to the issuance
and delivery of the Series E Preferred Stock, if applicable, and the merger of
Alta into Subsidiary, as herein provided, is then required shall have duly
consented or approved such merger.
(f) Adverse Proceedings. As of the Closing Date, no suit,
action, claim or governmental proceeding or investigation shall be pending or
shall have been instituted, taken, presented or threatened against Regent or
Subsidiary which makes unlawful the carrying out of this Agreement, or causes it
to be rescinded.
(g) Issuance of Series E Preferred Stock. The issuance of the
Series E Preferred Stock pursuant to the terms of this Agreement shall be
legally permitted by all applicable laws and regulations.
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(h) Title and Environmental Examination. Alta shall have
conducted and/or obtained a satisfactory review and examination of the title to
and condition of the properties owned by Regent (including such environmental
assessments of said properties as may be currently in existence or as Alta may
elect to have conducted at its expense) to be completed within sixty (60) days
after the execution of this Agreement.
(i) Refinancing of Alta Senior Debt. Effective as of the
Closing Date, Regent shall have arranged for the repayment or refinancing of
that portion of Alta's debt listed on Exhibit 20(j) which is identified as Alta
Senior Debt.
CLOSING DOCUMENTS
26. Closing Documents to be Delivered by Alta. On the Closing Date,
Alta shall deliver to Regent and Subsidiary:
(a) A certificate signed by the President of Alta to the
effect set forth in paragraph 24(a) hereof [certificate of Alta's compliance
with all its warranties and representations].
(b) Such other assignments, documents and instruments as
counsel for Regent and Subsidiary may reasonably require.
(c) An opinion of Pepper & Corazzini, as legal counsel for
Alta and Redwood, in form satisfactory to counsel for Regent and Subsidiary,
dated the Closing Date, to the effect that:
(i) Alta is a corporation duly organized and in good
standing under the laws of the State of California, with full
corporate power to execute, deliver, and perform this Agreement;
Alta is in good standing as a foreign corporation in California;
and Alta has all requisite corporate power and authority to own
its properties and carry on its business as conducted on the date
of Closing;
(ii) The execution of this Agreement by Alta and the
performance by it of the various terms and provisions hereof have
been duly authorized by proper corporate action and its
obligations hereunder are valid, binding, and enforceable against
Alta in accordance with the terms hereof;
(iii) Neither the execution and delivery of this Agreement
nor the performance hereof will constitute or result in the
breach of any term, condition or provision of, or constitute a
default under, the Certificate of Incorporation or By-laws of
Alta or, to the knowledge of counsel, under any material
agreement or other material instrument to which Alta is a party
or by which Alta or any part of the Broadcast Assets will be
bound after the Closing, or to the knowledge of counsel, under
any law, regulation, judgment or order binding upon Alta or
Redwood;
(iv) To the Best Knowledge of such counsel, there are no
actions, suits, investigations, or proceedings pending against or
affecting Alta, at law or in equity, or before or by any federal,
state, local or other governmental department, commission, board,
bureau, agency or
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instrumentality, the eventual outcome of which could,
individually or in the aggregate, have a material adverse effect
on the Broadcast Assets or the Stations; and to the Best
Knowledge of such counsel, Alta is not subject to any currently
existing order, writ, injunction or decree relating to the
operation of any of the Stations;
(v) All approvals of applications to the Commission and all
other approvals the granting of which is necessary for the
consummation of the transactions contemplated hereby, have been
obtained and have become final in accordance with applicable law;
(vi) Such counsel is not aware of any claim that any of the
material leases, contracts and agreements under which Alta is
obligated are not valid, enforceable and in full force and
effect; and
(vii) Alta has authorized and outstanding capital stock as
set forth in paragraph 20(d); all shares of Alta's outstanding
capital stock have been duly and validly authorized and issued
and are fully paid and nonassessable and have been issued in
compliance with all applicable federal and state securities laws;
and there are no outstanding rights, warrants, options,
subscriptions, agreements or commitments giving anyone any rights
to require Alta to sell, issue or reissue any capital stock or
other securities, other than as set forth in Exhibit 20(g).
In rendering such opinion, such counsel may rely upon opinions
or provide opinions of other counsel satisfactory to Regent and Subsidiary,
copies of which opinions upon which there is reliance shall be delivered to
Regent and Subsidiary, and such counsel may rely as to factual matters upon
certificates of one or more officers of Alta and of public officials.
The foregoing opinions may be qualified to the extent that (i) the
enforceability of any provisions of the Agreement, any documents executed
pursuant to the Agreement or any other documents referred to in this opinion, or
any rights granted pursuant to any such documents, shall be subject to and may
be affected by limitations, restrictions and/or other matters imposed under
state and/or federal bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors or debtors generally, (ii) the
enforceability thereof may be limited by the application of general principles
of equity, (iii) any right to indemnity may be limited by principles of public
policy, and (iv) any provisions requiring payment of attorneys' fees may not be
enforceable.
(d) Certificates, duly endorsed, from Stockholder, evidencing
all of the outstanding shares of Alta Stock.
(e) Certified copies of resolutions of Alta's Board of
Directors and its Stockholder authorizing the execution, delivery and
performance of this Agreement and all instruments referred to herein to which
Alta or the Stockholder are a party.
(f) All necessary consents to be obtained by Alta as set
forth under paragraph 24(d).
27. Closing Documents to be Delivered by Regent and Subsidiary. On the
Closing Date, Regent and Subsidiary shall deliver:
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(a) The consideration to be paid for the Alta Stock, as may be
adjusted pursuant to paragraph 13(b).
(b) An opinion of Strauss & Troy, counsel for Regent and
Subsidiary, in form satisfactory to counsel for Alta and dated the Closing Date
to the effect that:
(i) Each of Regent and its subsidiaries is a corporation
duly organized and in good standing under the laws of its state
of incorporation; and is in good standing under the laws of any
other states where its offices, equipment, facilities and other
tangible assets are located (except to the extent Subsidiary may
be deemed to have offices in Kentucky);
(ii) Regent and Subsidiary have full corporate power to
execute, deliver, and perform this Agreement, and Regent,
Subsidiary and the other wholly-owned subsidiaries of Regent have
all requisite corporate power and authority to own their
properties and carry on their business as conducted on the
Closing Date;
(iii) The execution of this Agreement by Regent and
Subsidiary and the performance by Regent and Subsidiary of the
various terms and provisions hereof have been duly authorized by
proper corporate action, and Regent and Subsidiary have the
authority and power to complete the transactions provided for
herein;
(iv) This Agreement has been duly executed by Regent and
Subsidiary and the obligations hereunder are valid, binding and
enforceable against Regent and Subsidiary in accordance with the
terms hereof subject to bankruptcy laws, other federal and state
laws affecting creditors' rights generally and the availability
of equitable remedies;
(v) Neither the execution and delivery of this Agreement nor
the performance hereof will constitute or result in the breach of
any term, condition or provision of, or constitute a default
under, the Certificate of Incorporation, as amended, or By-Laws,
of Regent or Subsidiary or, to the knowledge of counsel, under
any material agreement or other instrument to which Regent or
Subsidiary is a party or by which Regent is bound, or to the
knowledge of counsel, under any law, regulation, judgment or
order binding upon Regent or Subsidiary;
(vi) The Series E Preferred Stock is duly and validly
authorized, and when issued to the Stockholder pursuant to the
terms of this Agreement, will be validly issued, fully paid, and
non-assessable;
(vii) To the Best Knowledge of such counsel, there are no
actions, suits, investigations, or proceedings pending against or
affecting Regent, at law or in equity, or before or by any
federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality, the
eventual outcome of which could, individually or in the
aggregate, have a material adverse effect on Regent's Stations;
and to the Best Knowledge of such counsel, neither Regent nor
Subsidiary is subject to any currently existing order, writ,
injunction or decree relating to the operation of any of Regent's
Stations;
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(viii) To the Best Knowledge of such counsel, all approvals
of applications to the Commission and all other approvals the
granting of which is necessary for the consummation of the
transactions contemplated hereby, have been obtained and have
become final; and
In rendering such opinion, such counsel may rely upon opinions or
provide opinions of other counsel satisfactory to Alta, copies of which opinions
upon which there is reliance shall be delivered to Alta, and such counsel may
rely as to factual matters upon certificates of representatives of Regent and
Subsidiary and of public officials.
The foregoing opinions may be qualified to the extent that (i) the
enforceability of any provisions of the Agreement, any documents executed
pursuant to the Agreement or any other documents referred to in this opinion, or
any rights granted pursuant to any such documents, shall be subject to and may
be affected by limitations, restrictions and/or other matters imposed under
state and/or federal bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors or debtors generally, (ii) the
enforceability thereof may be limited by the application of general principles
of equity, (iii) any right to indemnity may be limited by principles of public
policy, and (iv) any provisions requiring payment of attorneys' fees may not be
enforceable.
Regent has retained separate special counsel to advise it with respect
to all laws administered by and matters pending before the Commission, all
rules, regulations and orders promulgated thereunder and all other laws,
regulations, rules, orders and other requirements, federal, state or local,
relating to the licenses. Consequently, the opinion of Strauss & Troy may be
qualified with respect to such laws, matters, regulations, rules, orders and
requirements, provided that an opinion of such special counsel to Regent which
addresses such items is furnished in a form satisfactory to Alta's counsel.
(d) A certificate signed by the President of Regent and
Subsidiary to the effect set forth in paragraph 25(a) hereof [certificate of
Regent's compliance with all its warranties and representations].
(e) Certified copies of resolutions of the Boards of Directors
of Regent and Subsidiary authorizing the execution, delivery and performance of
this Agreement and all instruments referred to herein to which Regent or
Subsidiary is a party.
(f) A certified copy of a resolution of the Board of Directors
of Regent authorizing the issuance of the Series E Preferred Stock to be
transferred to Redwood by Subsidiary.
(g) All necessary consents to the issuance of the Series E
Preferred Stock, the redemption and cancellation of the Alta Stock, and the
merger of Alta into Subsidiary to be obtained by Regent or Subsidiary.
28. Escrow Deposit. In accordance with the provisions in Section 42,
Regent shall deposit with Security Title & Guaranty, Inc., as Escrow Agent, an
irrevocable, stand-by letter of credit, substantially in the form of Exhibit
28-A, in the amount of One Hundred Seventy-Five Thousand Dollars ($175,000) (the
"Escrow Deposit"). The Escrow Deposit shall be held and applied by the Escrow
Agent in accordance with the terms of a Deposit Escrow Agreement in the form of
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Exhibit 28-B attached hereto (the "Deposit Escrow Agreement"), executed by the
parties thereto contemporaneously with the execution of this Agreement.
29. Remedies on Default-Prior to Closing.
As more fully described in the Deposit Escrow Agreement:
(a) In the event this Agreement is terminated solely because
of a material breach by Subsidiary or Regent prior to Closing of any term or
agreement contained in this Agreement or any warranty or representation
contained herein, the Escrow Deposit shall be delivered to Redwood (which may
exercise its rights to draw on the Letter of Credit) as its sole remedy and as
liquidated damages. The rights conferred in this subparagraph may not be
exercised unless either Redwood or Alta has given Subsidiary or Regent, as the
case may be, thirty (30) days' written notice (or such lesser number of days as
are remaining until September 30, 1998 of the specific nature of the breach and
Subsidiary or Regent has failed to correct it within that period.
(b) In the event of a material breach by Alta prior to Closing
of any term or agreement contained in this Agreement or any warranty or
representation contained herein, or in the event the Time Brokerage Agreement is
terminated by Regent or its affiliate pursuant to paragraphs 16 or 17 thereof,
Regent and Subsidiary may, at their option, terminate the Agreement, the Escrow
Deposit shall be delivered to Regent, and Regent and Subsidiary may recover
damages from Alta and/or Redwood in the stipulated amount of One Hundred
Seventy-Five Thousand Dollars ($175,000), no more, no less, or, without
terminating this Agreement, demand and receive a return of the Escrow Deposit
and obtain specific performance of this Agreement, which Alta and Redwood
acknowledge is an appropriate remedy because the actual damages recoverable at
law may be inadequate or there may not be any other adequate remedy at law. The
rights conferred by this subparagraph may not be exercised unless either
Subsidiary or Regent has given Alta thirty (30) days' written notice (or such
lesser number of days as are remaining until September 30, 1998 of the specific
nature of the breach and Alta has failed to correct it within that period.
(c) In the event this Agreement is terminated for any reason
other than a breach by Subsidiary or Regent, the Escrow Deposit shall be
returned to Regent.
(d) Notwithstanding the provisions of subparagraphs 29(a), (b)
and (c) above, neither party shall be entitled to damages or expenses from the
other in the event this Agreement fails to close solely due to the failure to
obtain in a timely manner the Final Order, provided that such failure is not
attributable, in whole or in part, to circumstances or events within the control
of a party hereto or to the failure of such party to use its best efforts to
obtain such Final Order.
30. Brokerage. The parties agree that other than The Miller Group, no
broker or finder was connected with or brought about this transaction. Each of
Regent and Redwood shall pay one-half of the $105,000 fee due to The Miller
Group, and each shall pay its one-half share in the form of 5,250 shares of
Series E Preferred Stock and $26,250 in cash. Alta and Redwood agree to
indemnify and save Regent and Subsidiary harmless, and Regent and Subsidiary
agree to indemnify and save Alta and Redwood harmless, with respect to any other
claimant for a broker's fee for this transaction.
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31. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements herein contained shall be deemed and
construed to be continuing representations, warranties, covenants, and
agreements which shall survive the consummation of this transaction; and neither
the acceptance of delivery of the Regent Stock or any other consideration
hereunder shall constitute a waiver of any covenant, representation, or warranty
herein contained. Regent and Subsidiary, on the one hand, and Alta, on the
other, shall remain liable to each other for any damage (subject to the
limitations contained in this Agreement) resulting from any breach, failure,
non-performance or non-fulfillment of any of their respective covenants,
representations or warranties herein notwithstanding that the injured party may
elect to close this transaction with such breach outstanding. No waiver or
forbearance by either party in any instance shall constitute or be deemed a
waiver or forbearance in any other instance. Any party hereto may waive the
conditions to its performance hereunder other than those pertaining to
regulatory approval.
MISCELLANEOUS PROVISIONS
32. Time Brokerage Agreement. Simultaneously with the execution hereof,
Alta, Power Surge, Inc., and Northern California Broadcasting, Inc.
(collectively, "Licensees") shall enter into with Regent or its affiliate a Time
Brokerage Agreement, in the form of Exhibit 32 hereto (the "Time Brokerage
Agreement"), pursuant to which Licensees will make available to Regent and/or
its affiliate the broadcasting transmission facilities to the Stations and/or
cause to be broadcast on the Stations Regent's programming from the Commencement
Date (as defined in the Time Brokerage Agreement) during the term thereof. An
Event of Default by any party under the Time Brokerage Agreement shall
constitute a material default under this Agreement and insofar as the cure
period specified in the Time Brokerage Agreement has expired with respect to the
default, no further cure period shall be afforded under the provisions of this
Agreement.
33. Headings. The headings of paragraphs of this Agreement are for
convenience of reference only, and do not form a part hereof, and do not in any
way modify, interpret or construe the meanings of the parties.
34. Execution. This Agreement may be executed in one or more
counterparts, all of which shall be construed one and the same Agreement, and
shall become effective when one counterpart has been signed by each party and
delivered to the others hereto.
35. Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch) and
shall be addressed to the following addresses, or to such other address as any
party may request, in the case of Alta, by notifying Regent, and in the case of
Regent or Subsidiary, by notifying Alta:
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<PAGE>
If to Regent or Subsidiary:
Terry S. Jacobs, Chairman
Regent Communications, Inc.
50 East RiverCenter Blvd., Suite 180
Covington, Kentucky 41011
Fax: (606) 292-0352
copy to:
STRAUSS & TROY
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: Alan C. Rosser, Esq.
Fax: (513) 241-8289
If to Redwood or Alta:
John C. Power, President and Chief Executive Officer
Redwood Broadcasting, Inc.
7518 Elbow Bend Road
P.O. Box 3463
Carefree, Arizona 85377
Fax: (602) 488-2384
copy to:
PEPPER & CORAZZINI
1776 K Street, N.W.
Suite 200
Attn: Peter Gutmann, Esq.
Fax: 202/296-5572
36. Disclosure. The parties agree that the subject matter of this
Agreement is one of the utmost confidentiality and the release of information is
a matter of great importance to both parties. Both parties agree that no
disclosure of any aspect of this Agreement, no press release or other publicity
shall be released by either party without the consent of the other; provided,
however, any party may release any information that is required by state or
federal law, customarily transmitted to any potential or present Senior Lender,
or a matter of public record on file with the Commission.
37. Receipt of Series E Preferred Stock. Receipt of the shares of the
Series E Preferred Stock by Redwood shall be deemed to be acceptance,
ratification and consent by Redwood in all respects to the terms and provisions
of this Agreement.
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<PAGE>
38. Amendment or Termination. At any time prior to the filing of a
Certificate of Merger with the Secretary of State of Delaware, the Boards of
Directors of Subsidiary and Alta, by mutual consent, may amend or terminate this
Agreement, notwithstanding favorable action on the merger by the stockholder of
either or both of Subsidiary and Alta, provided that any such amendment shall
not affect the rights of the stockholder in a manner which is materially adverse
to such stockholder in the judgment of the Board of Directors of Subsidiary or
Alta, as the case may be. At any time after the execution of this Agreement
pursuant to the favorable resolutions of their Boards of Directors, neither
Subsidiary or Alta may terminate or modify this Agreement without the consent of
the other except in accordance with the terms hereof.
39. Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto and the Time Brokerage Agreement, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof.
40. Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the State of Delaware.
41. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
42. Exhibits. Alta will deliver to Regent, within five (5) business
days immediately following the date if this Agreement all Exhibits and related
documents required to be delivered under this Agreement by Alta. Regent shall
ten (10) business days following receipt of all such Exhibits and related
documents to approve or disapprove the Exhibits. At the conclusion of such
10-day review period, unless Regent exercises its right to terminate this
Agreement, Regent shall promptly deposit the Escrow Deposit pursuant to Section
28. In the event Regent decides in its sole discretion not to approve any
Exhibit because it reveals conditions of which Regent is not fully aware as of
the date of this Agreement and/or any breaches of Alta's representations,
warranties and/or covenants hereunder or for any other reason, Regent shall
notify Alta of the reason(s) for such rejection and what actions can be taken,
if any, to eliminate Regent's reasons for rejection within two (2) business days
of the expiration of Regent's review period. If no action can be taken to
eliminate the cause for Regent's dissatisfaction with an Exhibit, Regent may
terminate this Agreement, and neither party shall have any further obligations
hereunder. If actions can be taken to eliminate the cause for Regent's
dissatisfaction, within ten (10) business days of receipt of such notice, Alta
shall proceed diligently and with its best efforts to take such action as is
necessary to eliminate to the reasonable satisfaction of Regent the cause for
Regent's disapproval of the Exhibit; provided however, that in the event Regent
and Alta agree (or if they are unable to agree on the costs involved, then if a
mutually acceptable independent third party determines) that the costs required
to cure or eliminate the condition(s) which Regent determines is (are)
unacceptable exceed $175,000, (i) Alta shall not be obligated to cure or
eliminate such conditions(s), and (ii) Regent shall have the right, in its sole
discretion, to (a) terminate this Agreement or (b) proceed to close the
transaction and receive a credit toward the Purchase Price of $175,000. In the
event the costs to cure or eliminate such condition(s) are less than $175,000,
if Alta is unable to cure or eliminate such condition(s) prior to the Closing
Date, Regent shall have the option (i) to extend the Closing Date for a period
of up to sixty (60) days until such time as Alta shall have cured or eliminated
such condition(s), or (ii) to proceed to close the transaction and receive a
credit toward the Purchase Price
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<PAGE>
equal to the costs which Regent and Alta agree (or if they are unable to agree
on the costs involved, then if a mutually acceptable independent third party
determines) are necessary to complete the cure or elimination of the
condition(s), provided that such credit shall not exceed $175,000.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
WITNESS: ALTA CALIFORNIA BROADCASTING, INC.
______________________ By:
Its:
WITNESS: REGENT ACQUISITION CORP.
______________________ By:
Its:
WITNESS: REGENT COMMUNICATIONS, INC.
______________________ By:
Its:
As to Section 32. Agreed:
WITNESS: POWER SURGE, INC.
______________________ By:
Its:
WITNESS: NORTHERN CALIFORNIA BROADCASTING, INC.
_______________________ By:
Its:
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<PAGE>
I, ______________________, Secretary of Alta California Broadcasting,
Inc., a corporation organized and existing under the laws of the State of
California ("Alta") hereby certify, as such Secretary, that the Agreement of
Merger dated October 10, 1997, between Alta, Regent Acquisition Corp. and Regent
Communications, Inc., to which this certificate is attached, was duly consented
to in writing by Redwood Broadcasting, Inc., the holder of all the outstanding
stock of Alta, in accordance with Section 228 of Title 8 of the General
Corporation Law of the State of Delaware and thereby such Agreement of Merger
was duly adopted as the act of the stockholder of Alta, and the duly adopted
agreement of such corporation.
WITNESS my hand on this _________ day of __________________, 1997.
- --------------------------------
Secretary
I, William L. Stakelin, Secretary of Regent Acquisition Corp., a
corporation organized and existing under the laws of the State of Delaware
("Subsidiary"), hereby certify, as such Secretary, that the Agreement of Merger
dated October 10, 1997, between Alta Broadcasting, Inc., Subsidiary and Regent
Communications, Inc., to which this certificate is attached, was duly consented
to in writing by Regent Communications, Inc., the holder of all the outstanding
stock of Subsidiary, in accordance with Section 228 of Title 8 of the General
Corporation Law of the State of Delaware and thereby such Agreement of Merger
was duly adopted as the act of the stockholder of Subsidiary, and the duly
adopted agreement of such corporation.
WITNESS my hand on this _________ day of __________________, 1997.
- --------------------------------
Secretary
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<PAGE>
The above Agreement of Merger, having been approved by the Board of
Directors of each of Alta California Broadcasting, Inc. and Subsidiary and
having been adopted separately by the stockholder of Alta California
Broadcasting, Inc. and Subsidiary, in accordance with the provisions of the
General Corporation Law of the State of Delaware, and that fact having been
certified on said Agreement of Merger by the Secretary of each of Alta
California Broadcasting, Inc. and Subsidiary, the President of Alta California
Broadcasting, Inc. and the Chairman of the Board of Regent Communications, Inc.
and Subsidiary, do now hereby execute the said Agreement of Merger by authority
of the directors and stockholders thereof, as the respective act, deed and
agreement of each of such corporation, on this _____ day of _____________, 1997.
WITNESS: ALTA CALIFORNIA BROADCASTING, INC.
______________________ By:
Its:
WITNESS: REGENT ACQUISITION CORP.
______________________ By:
Its:
DOCS\SMY\AGRE\211391.3
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